Tuesday, 14 October 2014

Syria and Iran - Some background

Syria and Iran
(Some background)

     Throughout the First World War, assuming the eventual defeat of the Ottoman Empire, the allies planned the carving up of the Middle East. France was planning to claim control over Syria (a claim they dated back to the crusades), leaving 'Palestine' and 'Mesopotamia' (now Iraq) to the British. At the post-war peace conference at Versailles, the Syrian Arabs were given (at the urging or TE Lawrence and others) some autonomy as a reward for their military involvement; by popular acclaim they chose their war hero Faisal I to be their king. However, within months, Faisal's regime ran into money troubles, the French declared they would rule Syria. King Faisal was expelled and went to live in England. The following year (1921), the British decided to foist King Faisal on their mandate in Mesopotamia, creating the kingdom of Iraq with Faisal as king. Faisal (supple, enlightened, and popular) ruled quite successfully until 1933, though his dependence on Britain placed an intolerable burden on him, for his people strongly resented Western interference. He died of a heart attack (or poison) in 1933. His son Ghazi, and his grandson Faisal II, both fared worse. Ghazi was killed in a car 'accident' in 1939, while Faisal II was shot with all his family in 1958, victims of the rising tide of Arab nationalism. Since then Iraq has been a republic. In Syria, the French mandate ended in 1946. Syria became a parliamentary republic but subject to incessant coups d'├ętat until the Ba'ath party took control of the country in 1966. In 1970 the Assad family took control of the Ba'ath party, on behalf of the 'military'. 
     The Ba'ath party was founded in Syria in 1947 jointly by two teachers, an orthodox Christian (Aflaq) and a Suni Muslim (al-Bitar), both Arab, both educated in Paris in the late nineteen twenties where they absorbed ideas on nationalism and Marxism. Its motto became "Unity, Liberty, Socialism", the unity referring to Pan-Arabism. Under this influence, Syria fused with Egypt to form the United Arab Republic (UAR) in 1958, a union which lasted till 1961. Party branches existed in most Arab countries from the Maghreb to the Gulf, but Iraq was the only country besides Syria and Egypt where the Ba'ath were in power. In each national branch there was a political wing and a military wing. Though initially the Iraqi branch contained a majority of Shia Muslims, Pan-Arabism is more a Suni concept and the branch became predominantly Suni. In February 1962 the Iraq branch staged a coup d'├ętat, but in November of the same year were driven underground by a reactionary coup. During their hidden period (1963 – 68) the Iraqi Ba'athists purged Nasserite and socialist concepts, and developed a secret security apparatus (answering to Saddam Hussein) to counter the power of the military wing.
     The story of oil exploitation is a strange mixture of commerce and Realpolitik, of respect for commercial contract law, and the blatant flouting of it. USA found oil in Texas in 1901. The British found oil in Iran in 1908 and created the Anglo-Persian Oil Company (APOC) to exploit it. In 1913, just before the outbreak of the First World War, Churchill switched the British Navy from coal to oil so the British war effort was totally dependent on oil. The British government acquired a controlling share in APOC, and this enormous injection of capital allowed it to acquire rights and access to outlets all over the world. BP (British Petroleum) started life as a exporting branch of a German company operating in Britain. Their assets were acquired by Britain during the war. Exploitation of Iraqi oil began in 1912 with APOC capital and the drive of an Armenian Turk called Gulbenkian, born in Constantinople but who fled with his family after the Armenian massacres of 1896, eventually becoming as a British citizen. The Iraqi oil deposits turned out (October 1926) to be large and a composite company was formed by a number of major European and American oil companies, registered in London and designed to make no profit (and pay no tax!), but to sell its oil at cost price to the component companies. Iraq received royalties. The British suggested that the Iraqi government be allowed to buy shares, but other parties seem to have successfully prevented that. After the Second World War, nationalist movements in Iran and Iraq were pressing for ownership of their own oil. British oil interests in Iraq were nationalized by the Ba'athist Iraqi government in June 1972. 
     (The assets of the Anglo-Iranian Oil Company were nationalized in 1951. Britain appealed to the International court for restoration, but the case was dismissed, whereupon MI6 with CIA help engineered a putsch that ousted the nationalist prime minister (Mossadeq) and strengthened the westward-leaning Shah, who survived until the revolution of 1979.  From 1953 till 1979 BP extracted and marketed the oil on behalf of the National Iranian Oil Company sharing 50% of the profit, but did not let Iran see the accounts! In 1979 all foreign oil assets in Iran were confiscated by the revolutionary government.)
     The Ottomans were not popular 'overlords' in the middle east because no one likes to be a subject people. But at least they were Islamic. And in fact they were peculiarly successful at governing countries of mixed ethnicity and religion; Jews, Muslims (Shia, Suni), Christians (Orthodox, Roman, Nestorian), lived together in peaceful co-existence equally in Turkey,  Arabia, and the Balkans, Constantinople, Damascus, and Sarajevo.) The history of British, French and American intervention has not proved so successful.   

Saturday, 11 October 2014

Ebola Screening

Ebola Screening
(The need for education)

The World Health Organization (WHO) data show that the Ebola epidemic is spreading exponentially in West Africa. Using WHO data (reported in Wikipedia) it can be seen that the total number of cases shows a doubling time of 29 days (tx2 of deaths is 30 days).

Containment and education

This rate has remained depressingly steady from 1st May till the last week in September, showing that essentially nothing was learnt about containment (protection, how to handle the cases, and the corpses) between May and 25th Sept. If the present doubling time remains steady it means the 7,492 cases on 1st Oct would become 14,984 by 29th Oct (the 3439 deaths would become 6878 deaths by 30th Oct). And that would imply that we have still learnt nothing about containment.
Education must be speeded up. New methods of handling infected material must be evolved (e.g. perhaps remote handling machinery would be more effective than rubber gloves which are presumably removed at mealtimes). New social and religious practices regarding disposal must be worked out and inculcated.
Please tell us all, in simple words in large letters on a A5 poster, how to avoid infection; and what to do with suspected cases. Everyone in Sierra Leone should know these instructions by now.

Screening and tracking

The small amount of anecdotal evidence available in the press suggests that the delay between irreversible infection and overt symptom of fever (the incubation period) is well over 2 weeks and may be 3 weeks. This means that screening at point of boarding and leaving a plane will do very (very) little to prevent the spread of the disease from West Africa. However, as it is very easy to do, it might as well be done. (We did this with SARS in Taiwan in 2003; on entering any public building or aeroplane we filed past a remote thermosensor.)
However, what seems absolutely vital is that the whereabouts of every person leaving an infected area be known and tracked for 28 days. It is essentially pointless to take the temperature on entry into Britain if we then lose the traveller into the population.

Sunday, 5 October 2014

Lost warriors of the 'Islamic State'

Lost warriors of the 'Islamic State'
The young warriors who have gathered in the desert to proclaim an
Islamic State, a Caliphate, seem to have got lost. They seem to have
turned away from Allah and the teachings of Muhammad.
Is not Allah Merciful? [Al-Qur'an 4:25; "And Allah is Oft-Forgiving,
Most Merciful."][Al-Qur'an 5:74; "..And Allah is Forgiving and
Is not Allah Just? [Al-Qur'an 4:40; "Allah is never unjust in the
least degree".]
It therefore seems that the warriors of the so-called Islamic state
have turned away from Islam towards injustice and brutality.
If they die they will not die as martyrs. It does seem that their
victims are nearer to heaven than they.
If any warrior wishes to experience the Mercy of Allah it would be
well for him to seek out an Imam and beg him to teach them the way.
Cawstein, Morpeth

Saturday, 27 September 2014

"Islamic State" and the present bombing spree

Hear here!
Major General Jonathan Shaw, the only sane voice that I have heard on
IS and the present bombing spree.
Listen 6min 20 sec into the following link.

This is "a battle for the soul of Islam", and it should be left to
them. The involvement of the West is a distraction, a distortion, and
is counter productive.
(Is not democracy a "government of the people by the people for the
people"? )

Some people think of the middle east as an 'oil-rich' area, the source
of much of OUR oil. They forget that it is the homeland of millions of
people who have opted for a way of life and a religion that is
different from ours. Some think our 'homeland security' requires us to
invade their homeland. Golly!
Ian West
12 Longhirst Village,
Tel: 01670 791880

Tuesday, 5 August 2014

Index to Economy Posts

Annotated Index to Blog Postings


[21]  Monetarism 2— Keynesianism probably does cause Stagflation; but its purpose is to stabilize the labour market, not to stabilize the currency 
[20]  Monetarism 1— I read with sympathy the efforts of the Austrian/Chicago school of economics to preserve the inexorable logic and simplicity of their discipline, and to defend its relevance. But I cannot help them.
[19]  Keynes2 — With delight I spot the problem of having rich people living amongst us, or one extra problem; they sequester too much of the global money so that is does not circulate properly.
[18] Keynes1 — Keynes's 'General Theory' is an exciting but frustrating read. This seems generally conceded. I focus on the concept of the 'involuntarily unemployed'.
[17] Interest Rates — trying to follow Gerardo Coco on the Cobden Centre website. Is the essence of his point that no one interest rate will meet all the needs of this 'indicator'. Which is (presumably) why there are lots of interest rates.
[16] How bad is debt? — Bad for some, good for others. Do we therefore monitor or regulate?
[15] Payday Loans — Here I revive an old idea; that high rates of interest may be justified to cover risk, but once the principal is paid, the risk vanishes, and the entire period of the debt reverts to minimal rate of interest. Usury. Shylock. Contracts made under duress.
[14] The Big Six Power Companies — Power companies make a lot of money. On the continent they pay big dividends, in the UK tiny dividends, but they grow!
[13] Winter Fuel Payments — voluntary taxes are a bad idea. Anyway, the better-off do pay for their own fuel and for that of the less well off as well. Silly!
[12] Alcohol Duty and Minimum Price — Our government seem to have bodged that issue (reccommended by experts). Tax rates are a tangle. Seems to me the Scandinavians have the edge on us (again).
[11] The Money Masters & Positive Money — The "Money Masters" is a polemic against bankers. 'Positive Money' is a pressure group against bankers.
[10] Positive Money 2 — 'Positive Money' advocates a real Ring fence; but their suggestions seem to me to be unrealistic. Danish banks score better than ours in regard to clarity; and Danish pensions yield 50% more per 1£ invested. Connection?
[9] Interest and Usuary — First statement of my modification of the way interest is calculated. Is it essentially "Islamic Banking"?
[8] Centrica's Profit — The shareholders seem to think their dividends will go up with a rise in the cost of feedstock. That is funny! Are customers being taken for a ride?
[7] Pre-distribution — This sees 'worker participation' or 'Mitbestimmung' as in Germany and Sweden as the way to reconcile capital and labour.
[6] CPI or RPI — There are two 'cost of living' indices. Why do they differ, and which is better?    
[5] Deficit Spending 2  — I try to decide whether we should clamour for more government spending to tackle the recession. Not convinced at this stage (mid 2012).
[4] Taxation of the Wealthy  — What exactly is bad (for the country) about having wealthy people, and why must they be heavily taxed? 

Monetarism 2

Monetarism 2: Keynesianism and Stagflation

John Butler's recent post on the Cobden Centre website [1]  cogently argues that "Stagflation is, always and everywhere, a Keynesian phenomenon", but to some extent his piece follows in the vein of Punch and Judy argy-bargy between Keynesians and Monetarists that has yanked the truth back and forth across the stage these last 4 or more decades. 
Of course politicians were happy to blame OPEC for the fourfold rise in the dollar price of oil in 1973 following the OPEC oil-embargo. John Butler calls this a "blatant reversal of cause and effect" because in the same year the USA abandoned the Bretton Woods/Smithsonian price of gold at 38$ per ounce and let the dollar float down by a factor of 2 (albeit to float down further by the end of the decade). In my view there were two causes of the oil-price rise in 1973: OPEC power and dollar weakness. One is no more "blatant" than the other.
It seems to me that John Butler is largely right that "Stagflation is, always and everywhere, a Keynesian phenomenon", but this misses the point somewhat. Keynesianism is not a method for stabilizing the value of the currency; it is a method of stabilizing the labour market. Of course the injection of money into the system will devalue the currency (unless it is subsequently withdrawn). And of course soaring unemployment of 10, 20 or 50% will bring down labour costs (unless there is a foolproof benefit system).
It all depends on what sort of country you want to live in.

Sunday, 6 July 2014

Monetarism 1


The changed brief of the central banks makes monetarism obsolete?


In 1923, hyperinflation in Weimar Germany [1] was caused by the central government printing money to pay for its obligations to employees and millions of striking workers in the Ruhr. The absurdity of this was (surely) obvious to all. The so-called Austrian School of economics [2] arose based on the apparently inexorable link between an increase in the quantity of money and the decrease in its value.  At that level it was satisfyingly faultless, irrefragable, unassailable, for it was a priori [3].

But what is money? In the twenties and thirties the definition was relatively simple: it meant notes-and-coin. That is to say, the unlimited production of notes-and-coin soon swamped everything else. Over the subsequent decades innovations in banking have made the definition fuzzy and obscure. But obscure because fuzzy. It has become hard to define what should count as money in the context of the monetarist formula because different assets can have different roles depending on time-scales, and personal psychology. Is the money in my current account mine or the bank's? What about in my deposit account, or my 90-day account? Is an asset like a house to be included? No? But what if I sell the house and spend the proceeds? What if I merely think I could sell the house? What if I can sell the house but think I cannot?  Quantitative Easing in the USA and Europe since 2008 has seen a dramatic increase in the  Monetary Base (which on existing theories should have caused an even more dramatic increase in commercial activity), but there has been no sign of concomitant inflation, and surprisingly little effect on employment.

The Austrian School is in trouble. People now spend days and weeks researching and writing papers to define money in such as way that the Austrian School's formula can be shown to be valid. (This problem is thoroughly aired in reference [4].)  Gone is the certainty of the a priori. A fuzzy definition brings in judgments, and fuzzy answers. If money is in short supply, it is not spent; but the reverse is not equally true; money does not have to be spent simply because it is there. Humans are as much emotional as logical.

The Austrian School is in trouble, but worse is to come. It is the duty of Central Banks to maintain: [a] maximum employment, [b] stable prices (including prevention of either inflation or deflation), and [c] moderate long-term interest rates (insofar as it is possible to reconcile those three different aims) [5]. They are not required to maintain a constant supply of money as such. Many years ago it became clear that it was necessary to release more money in mid-December when it is needed, and withdraw it again in mid-January when it is idle. Money is now created when it is needed. If you want to predict inflation, do not look at the money supply, look at inflation; for that is what the Bank of England is doing (or should be doing***). If money supply (however calculated, M0, M2, M4, MA, MAex, etc), is not a leading but a lagging indicator, there is no point in monitoring it. Nothing will be learned from it that could not be learned earlier by looking at the triple target of the Central Banks, viz employment, prices and interest rates. (The only gain will be for the 'Austrians' themselves if they finally find the right measure of the Money Supply; they will then be able to say they were right all along.)

(*** Of course people make mistakes. House prices in South East England are inflating steeply. So let us build lots more houses, in North East England where there is unemployment and plenty spare land. "Oh! Sorry! Now you tell me that house prices are falling in the North East. Wish you had told me earlier!")

Cawstein, Morpeth, U.K.


[1] http://www.historylearningsite.co.uk/hyperinflation_weimar_germany.htm

[2] http://en.wikipedia.org/wiki/Austrian_School

[3] http://detlevschlichter.com/2014/05/the-a-priori-method-in-economics-in-defence-of-ludwig-von-mises-essay/

[4] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2446812

[5] http://en.wikipedia.org/wiki/Federal_Reserve_System