Opinion

The Great Debate

Russia: Where has all the money gone?

Russian President Vladimir Putin has had a good run over the past few months.

Edward Snowden, the former NSA contractor, landed on his doorstep, a gift from the PR gods. Agreement on Syria went from no chance to golden opportunity in the course of one afternoon. Forbes dubbed Putin the most powerful man in the world. Yet all these successes obscure a basic fact: Russia is running out of money.

To be fair, Russia is far from broke. Revenues continue to stream in from oil and gas sales, and Moscow maintains healthy financial reserves for future rainy days. Russia also dislikes budget deficits and keeps its foreign debt down — a model of fiscal rectitude that most Western countries can only dream about.

Yet despite these accomplishments, the Russian government submitted an austere budget to the Duma in September that contemplated freezing government salaries and significant across-the-board cuts for most government agencies. Though the Duma restored some social spending in its budget amendments, Russia will be working under tight financial constraints for several years to come.

Where has all the money gone? Much of it left the country due to catastrophic rates of capital flight and corruption. So much money gets siphoned off the top that Russian economic growth has fallen to below 2 percent this year, with no prospects for any dramatic improvement in the immediate future.

Alternative sources of revenue have also dried up. Putin returned to office in 2012 with ambitious plans to privatize numerous state-owned enterprises, in the process raising billions of dollars for the Treasury. His subsequent demand, however, that all such privatizations take place on the Moscow Exchange (to encourage domestic investment and limit capital flight) means that these assets remain underpriced and subject to limited demand.

Antitrust enforcement goes global

As one of the world’s top cops on the antitrust beat, the U.S. has long led the fight to curtail price-fixing, collusion, and other anticompetitive behavior in global commerce. And the Justice Department’s antitrust division has wielded an especially big club of late.

In each of the past two years, criminal penalties in antitrust cases have exceeded more than $1 billion, thanks to groundbreaking settlements with DOJ following investigations into collusion in interbank lending rates among banks as well as price-fixing in the global auto parts industry. The $1.4 billion in fines collected in fiscal year 2012 was the largest recovery ever for the antitrust enforcement division in a 12-month span. Fiscal 2013 wasn’t far behind, hitting $1.02 billion.

Now that sequester-mandated budget cuts have taken hold, it may be tough for Justice to score another billion-dollar bounty in the year ahead. With fewer staff and tighter resources, trying existing cases and getting new investigations in the pipeline could be a challenge for U.S. antitrust enforcers.

JFK’s legacy: The party’s over

The current commemoration of the 50th anniversary of the assassination of President John F. Kennedy raises one lingering question: What explains JFK’s enduring hold on the national imagination?

Why does Kennedy figure so largely in American memory when his presidency was so short, his accomplishments so few (particularly in the domestic arena where he cannot compare with his successor) and his legacy transient?

So is our collective fascination with Kennedy just superficial — a product of the remarkably attractive, compellingly visual nature of his presidency?

Even with a working website, we must tackle healthcare’s opacity

Would you purchase a new phone without knowing its data plan? For almost everybody, the answer is an obvious “no.” We simply cannot make a good choice if we don’t know how much coverage the phone will offer, or how much money it will end up costing us.

Unfortunately, this type of blind decision is exactly the sort that many could face when purchasing a plan in the new health insurance marketplaces — assuming Healthcare.gov will remedy the basic functionality issues that have dogged it in the weeks since launch.

Beginning January 1, 2014, everyone will be required by law to have health insurance; the marketplaces will help consumers find and purchase new plans. But what happens then? Are there easily available doctor appointments covered by these plans, or will patients come up empty-handed when seeking care? Is an insurer’s online directory up-to-date or wildly inaccurate? Which plans have better customer service and which have none?

Can Obama ever close Guantanamo?

Twelve years ago this month, President George W. Bush issued an order authorizing the U.S. military to detain non-U.S. citizen “international terrorists” indefinitely, and try some of them in military commissions. Within two months, those seized in the “war on terror” following the U.S.-led invasion of Afghanistan were being sent to Guantanamo Bay.

A dozen years later, the United States is preparing to withdraw its troops from Afghanistan, ending “the longest war in American history,” as President Barack Obama observed on Veteran’s Day. Yet the Guantanamo prison — now notorious as the site of torture and other abuses — remains open.

Obama pledged to close Guantanamo as one of his first official acts in office. Yet nearly six years into his presidency, the prison continues to hold 164 foreign captives. Only three have been convicted of a crime.

Broaden the German-U.S. dialogue about snooping

Germans are not naive: They know that states spy, and that attempts to listen in to Chancellor Angela Merkel’s conversations were to be expected. But they didn’t expect that the United States would do this, for a decade.

Trust needs to be rebuilt. We must go beyond an exchange of accusations and counter-accusations over this issue. As allies and democracies, the United States and Germany can do this, with some imagination and effort, and the relationship can be improved as a result.

From a U.S. perspective, the specific alleged offense — listening to Merkel’s cell phone conversations — has been remedied. President Barack Obama says the U.S. government is not doing this and will not do this.

The overselling of behavioral economics

It’s rare for an Ivory Tower discipline to dazzle Washington, Silicon Valley and Madison Avenue. But behavioral economics has been hailed as a policy cure-all in the U.S., the UK and beyond.

At stake are complex regulatory ailments, from consumer credit and fuel economy to poverty and public health. Remarkably, the marriage between economics and psychology that explores how behavior influences financial decisions also has become a go-to theory for gamification, targeted mobile ads and other tools to attract eyeballs. Even The Colbert Report has weighed in, calling BE’s well-known nudging apparatus “Big Mother.”

Yet BE’s power as a problem-solving miracle might be oversold. A forthcoming paper in the Harvard Law Review by NYU Law School professors Rick Pildes and Ryan Bubb claims that the discipline has led to some ineffectual or harmful policies. Its shortfalls take several forms. One is that BE creates a new set of failures stemming from an individual’s inability to optimize decision-making. Another is that BE can be so bogged down in the appearance of preserving choice that choice is stifled. And BE’s emphasis on disclosure as a means of influencing behavior contradicts its own findings about irrational actors in the markets, including the work that led to Yale economist Robert Shiller’s recent Nobel Prize.

Broaden the peace process with Iran

 

High-level Geneva talks with Iran adjourned November 11 without reaching an agreement. Lower-level talks are to scheduled to reconvene Wednesday. The Western objective is a pause in Iran’s nuclear program — stopping the clock and allowing more time to reach a permanent agreement.

Is stopping the clock a good idea? It was done once before. In 2004-5, Iran stopped enrichment temporarily. President Hassan Rouhani was then secretary of the Iranian National Security Council and negotiated the pause. A permanent agreement proved impossible at that time. So Iran started enrichment again and has now expanded its capacity.

That could happen again. But a pause that provides time for negotiation of a more permanent agreement is necessary. If Tehran goes much farther in enlarging its enrichment capacity and beginning production of plutonium, it will be a very short step from obtaining all the material it needs for nuclear weapons.

How Blackwater fought two wars — and State Department red tape

This is an excerpt from Civilian Warriors: The Inside Story of Blackwater and the Unsung Heroes of the War on Terror, by Erik Prince, published this month by Portfolio.

On March 27, 2009, President Obama stood at a podium in Room 450 of the Dwight D. Eisenhower Executive Office Building in Washington. Over his right shoulder was Secretary of State Hillary Clinton; over his left, Defense Secretary Robert Gates. “Today, I am announcing a comprehensive new strategy for Afghanistan and Pakistan,” the president said.

In the eight years since the United States had invaded Afghanistan, stability there had moved at a glacial pace, to the extent it moved forward at all. Taliban suicide bombings continued seemingly at will in the fledgling democracy. Insurgent aggression had prevented enough voter registration that the country’s landmark presidential elections, scheduled for May 2009, had to be pushed back three months. The United States had just come off its deadliest year of the war there, with 155 service members killed in 2008. In 2009, it only got worse.

JFK: Of Camelot and conspiracy

Within an hour after President John F. Kennedy was shot on November 22, 1963, Washington became a ghost town.

It was still early on a Friday afternoon but, except in hidden security centers, no one in this power-centric, workaholic town had any idea what to do. The phones overloaded and stopped working periodically. Almost all government stopped working, too.

I was a 26-year-old rookie reporter from Seattle. Two of the country’s most powerful senators came from my state, including Senator Henry M. Jackson, who had been Robert F. Kennedy’s choice over Lyndon B. Johnson to be his brother’s running mate in 1960.

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