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Iraq Army Attacks Peshmerga Near Kirkuk

2017 October 16
by Ian Welsh

Peshmerga Flag

As seemed likely last week, the fighting has started. Kirkuk controls over half Iraq’s oil, and Iraq was unlikely to let them keep the oil. Both sides do need the revenue it represents.

Iraq claims to be attempting to take control of military positions around Kirkuk without entering the city proper. Whether that’s a viable strategy, we will see, but it makes sense: If this moves to city fighting, there will be a lot of civilian casualties and various atrocities will occur, making the rift (aka: hatred) between Iraq and the Kurds even more severe.

Understand that this rift exists on both sides: Many Iraqis feel that the Kurds betrayed them in the Iraq war, cooperating with the invaders, and want revenge. Kurds feel that Iraq has occupied them and committed atrocities against them. There is no love lost on either side.

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Update: I see that Iraq’s PM wants more than just control of Kirkuk, he’s now stating that he wants control of the Peshmerga. I can’t see the Kurds doing that unless they’re 100 percent sure they’ll lose an all-out war, and maybe not even then. Granted some could stand down and become effectively militia on-call, so all would not be lost, but a great deal would be.

Update 2: It looks like a some of the Peshmerga have withdrawn, rather than fight. Remarkable. Without Kirkuk, Kurdistan is not viable. Period. Looks like this may be turning into a non-battle, and the unwillingness to fight has emboldened Iraq to demand control of the Peshmerga.

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Corbyn Wants to Destroy the Current Economic System

2017 October 15
by Ian Welsh

Take it right to them:

Responding to Hammond’s warning in his speech at this month’s Conservative conference, Corbyn will say the chancellor is “absolutely right” to say that Labour is threatening to destroy the current economic model, adding that the current system “allows homelessness to double, 4 million children to live in poverty and over a million older people not getting the care they need”.

Picture of Jeremy Corbyn

Jeremy Corbyn

The reason the establishment hates him is that he threatens them. He will re-nationalize power and railways, institute rent controls and ownership limits on multiple homes and overseas owners, and build new council housing.

And there’s this:

Corbyn will say Labour is not opposed to technological advancement, but digital giants such as Uber and Deliveroo have built their success not on their technological advantage, but by “establishing a monopoly in their marketplaces and using that to drive wages and conditions down.”

“Imagine an Uber run co-operatively by their drivers, collectively controlling their futures, agreeing their own pay and conditions, with profits shared or re-invested,” he will say.

“The biggest obstacle to this is not technological, but a rigged economic system that favours wealth extractors, not wealth creators.”

This, by the way, is basic economic theory. Markets work for the benefit of most when they are competitive, and bounded by safety nets and regulations. They do not work for the benefit of all when they form monopolies or oligopolies. The latter have to be regulated to the max, broken up, or turned into public utilities.

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Or, perhaps, to change who owns them.

The current economic system is not good capitalism: It is not competitive or regulated or bounded by proper safety nets and guaranteed minimums, let alone proper high-end taxation.

To make capitalism, or rather, markets, work, requires strong government intervention and always has. Thatcher and Reagan were just wrong, and it shows up in virtually all the numbers.

Corbyn is the actual realist here, not those who celebrate the current mode of “capitalism.”

And this is going to be fun to watch.

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Four Laws for Protecting Capitalism from Itself

2017 October 14
by Ian Welsh

Right. So, boosters of free trade like to use Singapore as an example.

It’s a bad exemplar of the policies such people actually want for a pile of reasons, but it does contain lessons for how to do trade and capitalism right (other than “be a city state”, which isn’t usually an option).

About 90 percent of the land in Singapore is state owned, and 85 percent of the housing is.

The point here is that trade is important to Singapore BUT the population is largely insulated from the effects of free money flows. Their living costs are stable because the state ensures that stabilty.

Likewise, Hong Kong, renowned for free trade back in the day, had a huge amount of the real estate owned by its government.

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Free trade is not free financial flow, and real-estate markets should not be subject to foreign money flows or the vagaries of an economy run through trade. You make trade work by sharply limiting what it affects, not by letting it affect everything.

This means stable costs for the native population and workforce and stable costs for people doing business in the country, which means that trade can do its work without destroying its own foundation.

This is true of capitalism in general. Capitalism, due to its inherent flaws, destroys itself in a number of ways. For capitalism to work, policies need to be in place for it to actively avoid these pitfalls:

  1. It must not be allowed to form unregulated monopolies and oligopolies
  2. It must not be allowed to run bubbles; it must not be allowed to engage in mass fraud
  3. The money gained from it must not be allowed to turn into power which controls government
  4. Money must not, generally speaking be allowed to buy anything that matters; from health care to a good education.

Capitalism, as the standard saying runs, is a good servant, and a terrible master. Only fools let capitalists actually control anything in their society that truly matters.

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Is There Going to be an Iraqi-Kurdish War?

2017 October 13
by Ian Welsh

Peshmerga Flag

Iraqi Kurds voted in a referendum for independence from Iraq. Iraqi forces are now poised near Kirkuk, in position to attack, though the Iraqi PM claims they will not do so.

Kirkuk oil field was seized by the Kurds in 2014, and it produces more than half of Iraq’s oil.

Neither Iran nor Turkey want an independent Kurdish state. (This is a violent understatement, especially with regards to Turkey.)

Since Kurdistan has no sea border, Iraq and Turkey control its access to world markets, and the Iraqi government has been closing its exports, restricting its sales of oil.

And the Kurds have just moved another 6,000 Peshmerga to Kirkuk.

The Kurds were treated very badly under Saddam, and haven’t been happy with the Iraqi government since then either. They have also been firm American allies, and they have quite a bit of support in Congress and the US military as a result.

Is this going to blow?

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I don’t know, but I do know that Iraq is not going to let Kurdistan go independent and take over half the oil with it, and I know that Kurdistan would need that oil to be viable. Kurdistan also needs to be able to get that oil to market, and has few friends in the region.

I don’t see how Kurdish independence works, and I say that as someone who has sympathy for their aspirations. If they weren’t landlocked…but they are. To remedy the landlocked situation, they could take land from Syria, Turkey, or both, something that is unlikely at best, because Turkey just isn’t going to allow it and has a large enough military to have a veto.

Not sure where this goes, or where it ends, but the bottom line is Iraq won’t voluntarily let Kurdistan leave with all that oil, and Kurdistan won’t voluntarily leave without it, and if Kurdistan insists on leaving, the issue will probably have to be settled violently.

That doesn’t seem to be a war that ends well for the Kurds, but perhaps I’m missing something. (Lord help them if they are counting on serious American support to even the odds.)

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Gas Companies Manipulated Pipeline Capacity to Rook New England Customers 3.6 Billion

2017 October 12
by Ian Welsh

Shades of Enron:

The systematic withholding of pipeline capacity, particularly on the coldest days, has cost New England electricity consumers $3.6 billion…

On the worst days, including during the Polar Vortex of 2013-2014, up to seven percent of Algonquin’s capacity could be artificially constrained.

“When you relate that back to gas-fired generators, that’s about 28 percent of the gas that would be demanded,” Zaragoza-Watkins said.

This “capacity withholding,” researchers wrote, “increased average gas and electricity prices by 38 percent and 20 percent, respectively, over the three year period we study.”

These sorts of manipulations are always ongoing in any sphere where they can be done with a reasonable chance of success. This is similar to Enron’s price manipulation in the California market, yes, but it is typical of any industry where a few people can finangle prices. The LIBOR (London Interbank Rates) scandal was similiar: A few people could manipulate the rate and cost ordinary people billions of dollars.

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There are always key points in the economy where a few people have disproportionate power. Anything that people must have, that someone else controls, is a leverage point which can be used to extract disproportionate profits.

People must have heating during the polar vortex. People must have loans and credit (and money). People must have houses (during the housing bubble and, indeed, various housing bubbles happening right now.)

If people must, and there is a resource bottleneck, that bottleneck can be squeezed. A pipeline is an obvious bottleneck, but that only some people can create money out of thin air is also a bottleneck. That some people set effective interest rates and profit from them is a bottleneck, and so on.

Careful construction of an economic system limits resource bottlenecks, and assures that those who control the remaining resources can’t profit from squeezing them, if possible, and regulates and inspects the hell out of those bottlenecks that remain profitable to squeeze.

We do not live in such an economy. Rather, our economy has mostly been constructed to encourage such squeezing. Cases where it is genuinely punished are rare (as with virtually all the financial executives getting off in the financial crisis).

This pipeline squeeze looks like it might be the rare exception. But only maybe. Remember, if the executives come out clean, and richer than they would have been otherwise, any fines or punishments will not stop it happening again.

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The Growing Puerto Rico Disaster

2017 October 11
by Ian Welsh

The number of people without power on the Island is increasing, not decreasing, up 6% from yesterday, to 90%. A third of the island doesn’t have running water. Half the people don’t have cell phone coverage.

Aid has been slow and largely ineffective. There is reason to be worried about disease outbreaks, and medical care is severely handicapped.

Meanwhile, Puerto Rico has a massive debt overhang, and is crippled by it.Trump has suggested a 4.9 billion dollar bridging loan to help them over. The people who actually hold Puerto Rico’s debts, of course, have not been forgiving. They weren’t forgiving to Argentina, or to the Congo, and they aren’t going to be forgiving to Puerto Rico.

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The disaster relief has been bungled. It shouldn’t primarily be a matter of money in any case; the island should be flooded by work crews from all over the US with the materials they need to do the repairs, and the necessary heavy equipment to clear blockages, while large airlift is used to get to areas that are more remote.

This is a logistical exercise, the US has the capacity, and the US has chosen not to use the capacity. It is that simple.

As for the debt, most of it should simply be forgiven. The US government has the ability to do that.

We have a weird idea that debt is sacrosanct in our society, an idea which is totally out of whack with what makes good societies or good economies.

Good economies are based on easy debt forgiveness. People who lend money have a responsibility to not over-lend, and if they do, they deserve to lose their money. If you lend money to deadbeat Uncle Bob, you don’t expect to get it back. If you lend money to someone already in hock to three other loan sharks, well, you’re probably not getting that money back.

Excessive debt cripples people and economies, making them unproductive. Easy bankruptcy removes the debt so they can move on, and it also removes lending ability from people who have proven they have bad judgment about to whom they should lend.

Easy bankruptcy doesn’t mean “keep everything,” but it does mean keep everything necessary for economic and personal viability. In personal terms, tools a primary residence, a car, and so on. In government terms, all the lands, buildings, equipment, and so on required for the government to do its job.

Puerto Rico is an economic cripple. It doesn’t have the resources to fix itself, DC refuses to send sufficient help, and more debt isn’t going to fix its problems–any more than more debt has helped Greece.


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Fundraiser Update: C. 6K Raised, 1st Goal Reached

2017 October 10
by Ian Welsh

This year’s fundraiser has raised $5,995. Call it 6K.

In general, I’ll write more the more I raise, it tells me how much I should prioritize writing, since I must eat and so on.

But this year it’s also about putting together a collection of the old, good, fundamental articles (which is why I’ve featured some of them over the last two weeks), with prefaces (why I wrote them) and closing remarks (how they hold up, how they relate to other articles.)

Six thousand puts us at the first threshold.

Goal thresholds are as follows:

  • $6,000—12 articles with commentary, an introduction and concluding remarks.
  • $7,000—2 more articles.
  • $8,000—2 more articles.
  • $9,000—A new article on how to design a stable, fair, kind & prosperous government
  • $10,000 – A new article on how to evaluate personal risk in the events to come.

If you value my writing and can give without hardship, I hope you will. If, on the other hand, rent, food or medical expenses are pressing you, please don’t give.

It’s been lovely writing for you all these years, and there’s still important articles to write, along with the occasional commentary on current affairs.


Note: bitcoin, litecoin, and ethereum wallets are listed at the bottom of the donation page.

France Ends Freedom

2017 October 9
by Ian Welsh

The terrorists don’t hate us for our freedom, but if they did, well, they’d stop attacking France.

Fifty seven percent of the French approve, according to a poll.

It takes so very little to get people to give up their freedom. Find an enemy, have a few atrocities, and they’ll squeal for you to take it from them. Shades of Goerring’s comment on how easy it is to get citizens to line up behind wars.

“Why, of course, the people don’t want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece. Naturally, the common people don’t want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship…

Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.”

Such laws as France has passed, will be used against others. The anti-terrorism laws in the US have been used vigorously against environmental protestors, including entirely peaceful ones.

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Centuries ago Machiavelli observed that some peoples lacked sufficient virtue for freedom. They could only be ruled by despots. Increasingly, the West has shown that they have fallen into this class.

While the young are quite good on issues of economic fairness (out of self interest), they are not particularly good on most civil liberties, so we cannot be sure that the tide moving through the Anglo-West, towards more equal economic arrangements and less corporate control will necessarily push back on civil liberties abuses.

Humans didn’t evolve to live in large societies. We are terrible at it, and our decision-making heuristics are not capable of handling it. We cannot evaluate threats properly, our enlarged senses of identity (like nationalism and ethnic identification) are easily hijacked and usually we are unable to change our minds about anything important once we become an adult unless there is a catastrophe which personally devastates us, and when there is, we simply pick up (as Friedman noted) whatever ideas are around, rather than think critically.

And so, so much for Liberte.

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