Thursday, August 6, 2009

Carrots in North Korea: Some Smart Foreign Policy

Although Obama’s foreign policy is often off-base, the administration must be commended for its recent handling of the North Korean journalist-cum-hostage situation. Two American journalists, held by Kim Jong-Il’s regime were released after Former President Bill Clinton descended on North Korea.

The exploit was truly a move of smart diplomacy. It allowed the United States to stick course with its current spoken strategy, while enabling sufficient stroking of Kim Jong-Il’s ego to facilitate the release of Laura Ling and Euna Lee. While the Obama administration has generally claimed non-involvement, it is clear that they played a predominant role in approving and developing the mission. Apparently, much pre-planning occurred; including discussions with the North Koreans on what unofficial American envoy would have high enough stature to make the trip.

This recent event highlights an important characteristic of North Korea – they want things from America. Unlike Iran which views itself largely as a counter-weight and antagonist of America, North Korea sees, at least some aspects of the West which it desires. While not all of North Korea’s behavior can be understood as motivated by wanting something from America, in this instance that is precisely the case. North Korea wanted recognition from the United States– represented by the visitation of a prestigious emissary.

The North Korean desire for items of value gives the United States considerable power over the regime. The U.S. can use these “shiny objects” to coerce North Korea into behaving in an acceptable fashion. In many ways, North Korea is like a defiant child. It wants recognition; it wants to feel important. If it fails to get what it wants it throws a temper-tantrum. However as most parents know, the logic in dealing with such a child (although not always the practice) is straightforward. Misbehavior is punished; good behavior is rewarded.

This is something that the Obama administration needs to exploit. While Bill Clinton's journey into the third pillar of the Axis-of-Evil demonstrates the administration’s understanding of rewarding good behavior, the administration, as has been argued before, has yet to show a strong commitment to punishing misbehavior. A failure to punish misbehavior severely weakens the equally important goal of rewarding good behavior. In fact, it encourages misbehavior. Nations (and people) will misbehave if they can then backtrack and be rewarded for ‘good behavior’.

Because of this, the two tactics in conjunction are necessary when dealing with North Korea. Carrots and sticks will help push the regime in the right direction. Too many carrots, however, will deplete America’s ability to influence North Korea’s behavior. After all, if Kim Jong-Il gets everything he wants he’ll have no incentive to listen to us. While this episode of Clintonian mediation may be a strong and successful example of diplomacy at its best, care must be taken to avoid the mistaken belief that anything has fundamentally changed in the relationship with North Korea. The regime will test the United States again. The administration must be ready to respond with punishment and show the regime what behavior is and is not acceptable.

Tuesday, August 4, 2009

What Are They Thinking?!! – Socializing and Destroying Our Economy

On Friday, the House voted to give the government sweeping control over pay in the private sector. This plan continues the radical-leftist Congress’s assault on free enterprise and the capitalist system. Essentially the bill, H.R. 3269, prevents large companies from rewarding their employees in ways that may cause excessive risk taking. What excessive risks are is undefined.

Such a power grab greatly hampers the abilities of companies to structure their businesses according to what works best. While companies certainly have, and will continue, to make mistakes, there is no reason to assume that the government can make better decisions. In fact, there is much reason to believe that government interest does not coincide with what is best for a company. Governments have a whole host of groups that they must pander to; including, constituents, lobbyists, party members, and others.

Government meddling in corporate business strategy can only lead to bad situations where politics trump good business sense, sapping initiative and dampening the industrious and innovative American spirit. In such instances, the government role is inefficient, impractical, and downright foolish. It brings politics into a realm where they don’t belong. The very motivation for greater government involvement is completely imbued with political motivations. Such bills are precisely motivated by the populist rage that the Congressional Democrats are nurturing and harnessing, rather than any objective logic. Destroying the fictitious ‘fat-cat Wall Street’ apparently wins votes, even if it hurts the very Americans who cry for blood.

The damage that this bill could cause is foreshadowed by the government’s meddling in the relationship between Citigroup and one of its prime breadwinners, Andrew Hall. Hall, who runs a division of Citigroup called Phibro, which often earns a large chunk of revenue for the company, is admittedly a well compensated man (he owns a castle). He is now demanding a contractually committed bonus of $100 million. Citigroup, which received a lot of taxpayer cash through the bailout, is under immense pressure to renege.

The tensions in this are obvious. However, whether he is right or wrong, Hall, and his massive amounts of revenue, will leave Citigroup if his contract is not upheld. Citigroup is naturally in a tough position– stuck between the same populist anger that is pressuring the government and a large capital outlay that may reap future rewards. This tough decision is only complicated by the presence of government decision makers who, motivated by reasons not necessarily in line with Citigroup’s financial success, can severely influence what happens.

Proponents argue that government intervention is necessary to mitigate excessive risk taking on Wall Street. However, the excessive risk taking that this bill attempts to eradicate, is the very same excessive risk taking that Congress has helped build into the system. The financial bailout and other such programs encourage risky behavior. After all, if one knows one will not have to suffer the consequences, one will be more likely to take risks. When the suffered consequences do not match the risk level it encourages individuals to have a surplus of hazard. The bailout encourages just that.

Congress is in the process of establishing such a backwards system. If a system cushions the consequences of missteps, it simultaneously encourages missteps to be taken. Ultimately, people and institutions need to be able to feel the pinch in order to learn to avoid behavior in the future. The only alternative to eradicate risk is to have one party dictate every action– compensation, production, consumption. This is a failed political system often called communism.

Sunday, August 2, 2009

Not a God - Part II: Obama’s Descent from Heaven

As recent polls, including Rasmussen Reports, suggest Obama’s support is on a steep downward trend. From the beginning of his campaign, Obama has built his own demise into his presidency. As is clearly being seen today, the Obama administration has greatly over promised and severely under delivered. Such a mismatch between pledges given and kept is expected and unsurprising given the near god-like image cultivated by his campaign. The world was promised and for many Obama was viewed as a savior. It is only natural, that given the realities of politics, such promises could not be kept.

Nevertheless, such a relative failure is turning out to be quite harmful for Obama. In at least some circles, the Obama facade is chipping, stripping his godliness and reverting him to a man–a failing man. America is beginning to see Obama for what he is; a politician with ideas, often ideas that do not resonate with the American people. Having fallen from such high regard, the loss of faith in the president is continuing to hamstring his policy objectives and weaken his presidency.

Obama has shown such miscalculation in a wide swatch of policy. While he has always been strongly criticized on foreign policy, Obama’s recent handling of the economy and healthcare and his insertion into the Gates-Crowley affair have proven disastrous.

Having missed the opportunity to fix the national healthcare on a self-imposed deadline, Obama is losing traction in overhauling the system. Successful attacks from the Right have hampered his attempts to hammer through a sweeping change. Furthermore, his own party is severely at odds with him and with each other. But most importantly, most Americans are happy with their current healthcare and see no need to implement the socialist programs that would destroy the private system. If ObamaCare follows the path of HillaryCare, it will destroy much of Obama’s remaining political capital.

Likewise, Obama made a huge mistake with the Gates-Crowley affair. Without reiterating the issue, Obama’s handling of the situation was a disastrous mistake. He inserted himself into a mediator role where no president should be. While his Beer Summit may have humorously corrected for some of his mistake, his snafu was at an inopportune time causing a loss of momentum on more important things on his agenda. It also showed that he is grossly out of touch with America, as some 62% of Americans believe race relations are improving.

As Obama’s presidency continues, he is showing and convincing more and more Americans that he is not the god that was he was portrayed as in his campaign. His human and policy failings are showing through his veneer at an ever increasing rate. This is good news for Republicans. As the saying goes, “The higher you climb, the farther you fall.” Unless he can pull some magic rabbit out of his hat, Obama’s decline will become precipitous. Obama seems to lack the political insights and understanding of policy to do this. The Republicans need to keep chipping away at him and firmly create the modern day Jimmy Carter.