Economic Slowdown: Ideology at Work

To the Obama-haters at the Wall Street Journal, the stubborn economic slowdown reflects business’ fear of looming tax hikes. The Administration-friendly folks at the New York Times, by contrast, blame the lackluster economy on political stalemate in Washington. Meantime, over at Bloomberg Businessweek, they tell us it’s all a matter of us having our cake and eating it, too — loving both the Bush-era low taxes and Obama-era high spending and failing to choose between the two.

The inability of our economy to surge back consistently from the Great Recession has become a Rorschach test for pundits. They look at the ugly blot and discern a pattern, one that – not surprisingly – reflects their biases. Love small government and Bush-era tax cuts? Obama’s overreaching is to blame for our woes. Never met a problem that more money from Washington couldn’t solve? It’s the shortfall in such largesse that is making that blot so skinny. And if they can’t make up their minds, they blame both Bush-era “wisdom and folly” – whatever that fence-straddling phrase means.

For my money, the reality is more a matter of the Depression-era notion of pushing on a string. Our policymakers can’t find the levers that will kickstart the economy, that will ignite the animal spirits of our business leaders, and that will drive down the pathologically high unemployment rate. Nothing seems to work, though the folks at the Fed aim to keep pushing whatever buttons they can. Their newest tack, revealed on Aug. 10: buying up more Treasury debt to keep interest rates low.

In the end, the problem may be that the hole we put ourselves into in the Great Recession is just depressingly deep. It took years to dig. And it could take years, sadly, for us to find our way out. To take just one measure, U.S. employment plunged by more than six percent in the recession that began in 2007, the steepest fall of any of the 11 recessions we’ve suffered through since World War II. To take another measure, these downturns lasted from six to 16 months, and our latest slide – believed to have ended in 2009, though the National Bureau of Economic Research has yet to date it – will almost certainly prove to be longer than any of them. (For policy wonks, the Minneapolis Fed puts all these comparisons into perspective here.)

If history proves anything, however, it’s that economies do claw their way back. Sometimes, they do so with the help of Washington. Sometimes, they move on despite government meddling, however well-intentioned. Even today, economists don’t agree on whether D.C. pulled us out of the Depression or prolonged it – making that bout of global misery our first and biggest political and economic Rorschach test.

It’s no comfort to people who have been out of work for months or even years at this point. It’s also small comfort to investors or people considering whether to deploy capital, especially since they are still sussing out Washington’s new regulatory reach. And, if this downturn proves at all similar to earlier ones, whole industries will emerge reshaped as a result of it (think Detroit), not to mention companies (think GM). We will come out of this as a far different economy with areas like Internet-related industries taking a dominant place over the manufacturing icons of the past. (How is it that people still have enough money for iPads?)

Following every twist and turn in this uneven recovery is enough to generate serious palpitations. For players in the capital markets – or anyone, for that matter — it’s healthier to set aside the dire headlines of the moment and keep your eyes on the horizon, however distant it seems. Bet on a long slow ride up, with lots of dips. Keynes famously said that in the long run, we are all dead. But at the moment, the promise of the long run is the only thing we have to hang onto.

Treason? WikiLeaks and the press

Should some secrets stay secret? And is it treasonous for news operations to report on leaks of war documents when their countries are at war?

These questions arise, of course, because of the release of 92,000 documents about the Afghanistan war by WikiLeaks, in coordination with London’s Guardian, the New York Times and Der Spiegel. The ugly affair raises still further questions about what constitutes patriotism, how the Net makes high-quality journalism tougher to practice, and what governments will now do to try to bury their secrets even deeper.

First off, did the papers act properly? At first blush, it appears that at least two of the organizations — the Times and Der Spiegel — were maneuvered into this joint release. The instigator, it seems, was The Guardian, which had learned that WikiLeaks leader Julian Assange intended to release the papers unfiltered on his Swedish-based Web site. The editors at the Guardian suggested the joint release, apparently persuading Assange that he would make a bigger splash that way. This, at least, is the account given to PBS.

The papers then faced some tough choices: first, do they release the documents, along with their own independent reporting and analysis, and, second, do they share the information with the White House, giving the government a chance to react? On the first count, it seems that the papers really had no choice. After all, the documents would be out on the site no matter what the papers did, and, most likely, they would appear in print (since none of the three competing papers could trust the others to hold back). In short, WikiLeaks held the cards in this high-stakes poker game and it played the papers against one another.

Then the question was, what should the editors do with the information? The New York Times contacted the White House and got its reaction – its take that there was nothing really new in the documents. The White House also did not ask that the Times hold back on publishing the papers (probably realizing the move would be futile). Instead, it got a chance to put its spin on the news, likely hoping to quash the whole matter by offering the “nothing new” take. Certainly, the troops wouldn’t be surprised (see Ed Stein’s cartoon above).

Bill Keller, the executive editor of the Times, laid out the issue nicely in a sidenote to the stories. He noted that the paper had a month to report out the story and that it sought to eliminate any references that could endanger the lives of Allied forces or Afghan supporters. He also suggested that the WikiLeaks folks had the mainstream media over a barrel, arguing “To say that it is an independent organization is a monumental understatement. The decision to post this secret military archive on a Web site accessible to the public was WikiLeaks’, not ours. WikiLeaks was going to post the material even if The Times decided to ignore it.”

Since then, of course, split opinion has emerged on just how problematic the release has been. Former CIA Director Michael Hayden told the folks at Politico that “We’re going to get people killed because of this.” And Rep. Jane Harman, a California Democrat who chairs an intelligence subcommittee, said the documents give the Taliban a hunting list: “There are names of State Department officials, U.S. military officials, Afghans and the cities in which they live in the materials.” By posting them online, she said, “we’ve just served up a target list and an enemies list to the Taliban. … Real people die when sources and methods are revealed.”

For his part, WikiLeaks’ founder Assange said on MSNBC that about 15,000 reports were withheld because they could have revealed the identities of Afghans who have aided U.S. forces and exposed them to “the risk of retributive action” from warlords or the Taliban. For a better sense of who Assange is and what drives him, check out an interview he gave to the folks at TED, the conference organization on the West Coast.

Seems to me there’s no doubt that the leak of the papers in the first place was treasonous. If proved to be the source, Pfc. Bradley Manning will likely spend the rest of his life in jail. The Army intelligence analyst, also suspected of leaking a video a few months ago of a couple Reuters photographers being killed in Baghdad, will be lucky – in other times, he’d be shot. Now, one would guess, the Obama Administration won’t risk making Manning, an impossibly baby-faced twenty-something in his AP photo, into a martyr. Some of Manning’s friends, too, may be implicated, and one wonders whether they had a duty to inform on him before his alleged leaks.

As for WikiLeaks, the legal situation will be tricky but it seems the U.S. can do little against it. Even if Swedish authorities try to muzzle the site, some there, such as Sweden’s Pirate Party, are already offering help. Of course, Assange might never again be able to travel to the U.S. or perhaps to his Australian homeland, since he could be picked up for various violations. Australia is part of the coalition fighting in Afghanistan. Indeed, one has to wonder just where he can go in the West without being pursued.

Some folks are saluting the leaks, praising the media outlets for publicizing the documents, and ignoring or rebutting questions of treason. “I’m more concerned about the troop threat caused by our nation’s involvement in a war that lacks the backing of the Afghan people or fiscal accountability for the $330 billion we have pumped into the longest war in U.S. history,” argues a colleague at Nebraska, Assoc. Prof. Bernard McCoy. “What do we have to show for this? With corrupt Afghan political leaders and insurgents who, according to our own intelligence reports, are as strong as ever, our troops remain at great risk.”

And comparisons to the Pentagon Papers abound. That secret history of the Vietnam war, detailing a wealth of information not revealed to the public and quite embarrassing to the politicians of the day, was published first by the New York Times and then the Washington Post, both in mid-1971. The papers were an official Defense Department study of U.S. activities in Vietnam from 1945-67. A former colleague at BUSINESS WEEK, Mark Ivey, says of the current leak, “Viet Nam, relived.”

But the new documents, including raw intelligence memos, were nowhere as well-researched or vetted as the Pentagon Papers were. The Afghan War documents may be rife with errors and could prove useful in the end only to vengeful Taliban. Joshua Foust, a contributor to Current Intelligence, argues, “If I were a Taliban operative with access to a computer — and lots of them have access to computers — I’d start searching the WikiLeaks data for incident reports near my area of operation to see if I recognized anyone. And then I’d kill whomever I could identify. Those deaths would be directly attributable to WikiLeaks.”

For my part, it seems clear that the leaks could not be stopped once insiders in the military or elsewhere in the intelligence establishment made up their minds to release the papers. If it hadn’t been for WikiLeaks, someone else in the anything-goes Net universe would likely have found a way to help them surface. At that point, the news organizations acted well in doing what savvy reporters do – they put the documents into context and fleshed them out.

Yes, the newspapers were played by Assange. But they gave the public a far richer and more useful account than he would have by releasing the documents alone. In the case of the New York Times at least, the U.S. government also had a chance to frame the discussion and attempt to minimize the damage.

Will anything change now? It seems some Afghans will be in danger. Pakistan’s intelligence service is likely embarrassed and angry. And the U.S. intelligence agencies will now seek stronger means to keep secrets under lock and key. But, unlike the Pentagon Papers, revelations seem few and there’s little in the papers even to strengthen the case of the antiwar folks.

President Obama’s war in Afghanistan has been messy from the start. Too few forces to begin with. A publicly revealed deadline for drawdown. A military leadership that was anything but politic. Unless his plans for military victory start paying off soon – with real gains against the Taliban and Al Qaeda — the WikiLeaks affair will go down as another troubling turn — probably a small one — in a painful, prolonged and maybe doomed battle against Islamist terrorism. This ethical contretemps pales before that ugly reality.