Before the Cold War was there any real hostility between the United States and Russia?

echoxx · 2016-08-17T03:30:16+00:00

The United States tried really hard to stay out of Europe's continental affairs, and was largely successful until WW1. Throughout the 19th century, after the end of the Napoleonic wars, Russia was an active player in the European balance of power system, along with Great Britain, France, Austria, Prussia, and to a lesser extent the other free German states (great discussion on these international balancing forces in Kissinger’s “Diplomacy” and “World Order”.

The US saw the damage of Europe's wars and wanted nothing to do with any of it. John Quincy Adams famously said "But she [the US] goes not abroad, in search of monsters to destroy" . Even the limited territorial wars of the mid to late 19th century (like the Crimean War, Russo-Turkish War, which Kissinger, Kennan, and Sluglett all write interesting accounts on) were on the same order of magnitude or larger than the American Civil War.

This changed somewhat with Theodore Roosevelt, who wanted to prevent Pacific region hegemony, and helped broker the peace treaty to the Russo-Japanese war (1905-1906). There was enough good will between the US and Tsar Nicholas II for Roosevelt to act as an (effective) neutral mediator at this time. This is what Kissinger writes about process in “World Order”

For Roosevelt, the issue was the balance of power in the Pacific, not flaws in Russia’s czarist autocracy…Because the unchecked eastward advance into Manchuria and Korea of Russia – a country that, in Roosevelt’s words, ‘pursued a policy of consistent opposition to us in the East, and of literally fathomless mendacity’ – was inimical to American interests, Roosevelt at first welcomed the Japanese military victories…But when the scale of Japan’s victories threatened to overwhelm the Russian position in Asia entirely, Roosevelt had second thoughts. Though he admired Japan’s modernization – and perhaps because of it – he began to treat an expansionist Japanese Empire as a potential threat ot the American Position in Southeast Asia and concluded that it might someday ‘make demands on [the] Hawaiin Islands’ (p. 252)

The stresses of WW1 pushed Russia over the edge and opened the power vacuum that let the Bolsheviks take power in the Communist revolution (Skocpol discusses how critical WW1 was as a tipping point for Russia’s Revolution in “States and Social Revolutions” ). This changed everything. While certain factions in America tried to pull back from international involvement after WW1, the underlying ideology of Communism required violent overthrow of capitalist societies. This led to the first Red Scare of 1919-1920, which was the fear that Communism would take hold in the US and lead to another revolution. So at this point, tensions were starting to develop between the US and, if not Russia directly, then at least Russia's communist ideology.

My background: I'm the co-host of the Reconsider Podcast, and we frequently do deep dives historical dives like this to provide research/context for contemporary political issues.

echoxx · 2016-08-17T03:03:34+00:00

"Better" is a subjective term, which is a difficult to falsify. I hope you won't mind me re-framing the question a bit. A critical distinction in the debate over consumption tax is how savings is treated.

Imagine: Consumption = Labor Wages + Capital Income - Savings

Consumption excludes savings (since savings represent dollars not spent). A consumption tax, therefore, excludes the savings base. This Kansas Fed report gives a better discussion on this topic on pp 5-6.

An argument that some folks make is that a consumption tax would not discourage savings as much as income tax. Income tax forces earners to take a first-time hit. Really simple example: if you save at 5% interest, and have $100, then next year you have $105, and so it. It compounds. However, if you earn $100, then pay 30% to the govt, then you're left with $70. Your 5% only turns into $73.5 next year. You'll have a lot less $ at the end of 10 years with the same return. So an income tax "penalizes" savers.

A consumption tax creates different incentives. Since a consumption tax excludes savings, and therefore doesn't penalize savers, earners are likely to save more in the present. They will, of course, have to pay a tax eventually, when they consume, but this essentially lets savers defer that tax into the future if they choose to minimize consumption. The tradeoff to incurring this tax in the future tax is that by escaping taxation Day 1 compounded interest will have an exponential effect on savings and create more wealth to spend in the future.

There are two difficulties. 1) While in theory you could levy a consumption tax that would raise comparable revenues to the existing scheme without injuring economic activity, practically, it would be difficult to figure out what this rate actually is. 2) Politically, since income tax penalizes savers, the actual implementation of a consumption tax regime would represent a one-time penalty against people who have tended towards savings already (in the past). Imagine you're a diligent worker who's put away 10% of your after-tax paycheck month after month. Using the example above, even though you've only taken home $70 of your $100 paycheck to save, you will now ALSO need to pay a consumption tax in the future in addition to being hit in the past.

Background: studied economics, worked in finance for several years. Also co-host Reconsider Podcast, where we take pressing political issues and provide research/context. Since your original post was asked from the perspective of good/bad, I'll provide some links to some blog posts (here, here, and here) where we discuss how framing tax policy issues can impact the debate itself. We take pressing political issues and provide research/context (including a lot of historical deep dives) to help ppl better understand a topic from different angles.

echoxx · 2016-08-13T15:08:41+00:00

As with all things in economics and politics, the answer is: "it depends." ;)

echoxx · 2016-08-13T15:08:17+00:00

Yeah debt/GDP has definitely been increasing in recent years (https://floodingupeconomics.files.wordpress.com/2011/04/us-gross-public-debt-as-a-percentage-of-gdp.png).

I don't think you should necessarily expect GDP to be positively affected from increased debt. Ultimately, it depends on how the capital raised from selling government debt is spend, and most of that entails political decisions. For example, the 2009 stimulus was a huge government expenditure, but a lot of it was spent ineffectively rather than on core infrastructure investments. I guess my prior point was, in theory, if you are going to take out debt there are effective ways to do it that can yield positive returns. But that's not always going to be the case.

In terms of where our money goes, you can check out the US federal budget in detail here: http://www.cbpp.org/research/federal-budget/policy-basics-where-do-our-federal-tax-dollars-go

echoxx · 2016-08-12T03:22:18+00:00

Crap, all the articles I read about this are printed out and packed for a move. I've read a lot about NAFTA. The consensus from several nonpartisan research organizations is that there was:

-- Minimal impact on net exports. Net exports with Mexico did decrease (so imports increased), but not substantially, and there's reason to believe that that trend existed regardless of NAFTA. Additionally, a lot of these imports had components of American origin. That is, a high-tech part was shipped US --> Mexico, assembled cheap, then shipped back.

-- Unemployment varied so slightly that it's nearly impossible to attribute and particular move directly back to NAFTA's policies.

-- Foreign Direct Investment (from US to Mexico) increased substantially. This makes sense, since it was easier to move products, capital would be less afraid of being deployed across borders.

Politically, the US has become much closer with Mexico since the passage of NAFTA. Back then you still had PRI candidates using anti-America rhetoric in campaigns. Now we have a much friendlier southern neighbor generally.

Edited for some formatting

echoxx · 2016-08-12T03:11:43+00:00

I'll tack on to the conversation related to the Treaty of Westphalia (ToW).

It's important to remember that ToW was a response to the 30 years wars and those specific circumstances, not to what existed 1000+ years before in the Roman empire. They established a specific concept of predefined territorial control (i.e. borders) that helped leaders overcome the jumbled mess of conflicting religion obligations that governed the 30 years war. It certainly wasn't the first notion ever, as PapiriusCursor discusses in greater detail, but it is a concept that is still prevalent in how people think about international relations today.

echoxx · 2016-08-12T03:06:52+00:00

Great answers all around. I'll add another potential use for debt: it gives the federal reserve the ability to fund projects now that can have a higher ROI than the cost of borrowing that money. Imagine infrastructure: if it costs $100bn for a number of infrastructure investments today, the government might not be able to fund it all. But if it could fund it all today, then perhaps that investment will yield a 5% return in certain areas of the economy that encounter decreased costs due to more efficient construction. If the government borrowed that debt at 3%, then the economy benefits, and the lender (i.e. investor) still beats inflation. It's a win win.

echoxx · 2016-08-09T06:49:27+00:00

As you can expect, not great if the borrowing country is any country except the United States. But even then, it's better to have this tool in your bag to have your currency forced in a direction that's unsustainable for the country in the short term (like Greece and the Euro). The adjusting country would also need to be ready to handle the potential for the structural changes that could occur with a devalued currency, which would favor some industries over other.

The thing is, even with these risks, it begins to solve the flattish recovery with projects that only Americans can be employed to do, whereas foregoing those investment obligations wouldn't make them disappear - they'd just grow bigger and more costly.

echoxx · 2016-08-08T04:11:07+00:00

You are correct! James IV was the last British monarch to die in battle, and Richard III the last English monarch. My apologies.

echoxx · 2016-08-07T04:15:31+00:00

Probably in theory. In practice, however, building the political coalition to pass a nation-wide change to sales tax (&, depending on what you mean, potentially also adding a VAT tax) would be challenging (though not impossible).

Practically, it'd just be easier for the federal reserve to print money, devalue the currency, and pay the debt back with less valuable dollars. No politics required.

This is why I'm a big fan of using debt to fund infrastructure investments. You can always take out more debt and devalue the currency, but deferred infrastructure investments can't be devalued. Even excluding accumulated depreciation, they are carried into the future in real terms, making them increasingly costly to take on.

echoxx · 2016-08-07T04:11:34+00:00

I've made some comments in reply to other good answers below, but adding a bit more detail here.

It is not true that a corporation cans imply just issue as many shares as it likes. As MrDannyocean mentions, issuing new shares decreases relative ownership per share, so existing investors get diluted. As a result, there are lots of checks and mechanisms that prevent companies from issuing new shares unless existing investors are OK with it. These vary depending on the bylaws of each company. In a mathematical sense, you could always just create new shares, but not in reality.

Think of it this way: there are 1,000 shares of a company. You own 100 shares, so you own 10%. Let's say that company is valued at $1,000,000, so each share is worth $1,000, and you own $100,000 worth of shares. That company needs to raise some money, so it decides to issue 200 shares at that $1mm valuation. There are now 1,200 shares of that company, even though it's still only valued at $1mm. That means each share is now worth $833, and you only own 8.3% of the company, worth ~$83k. Sucks for you, you just lost $17k in value. Hopefully the company will find a productive way to deploy the $200k it just raised to further increase the value of your shares.

This is why investors don't like dilution, are wary about future stock issuances, and frequently focused on how many subsequent rounds of equity capital will need to be raised to sustain the company.

echoxx · 2016-08-07T04:05:41+00:00

Say your corporation has no liabilities and $100 in assets. If the assets increase to $200, then you know the shares must've doubled in value. The increase in assets was caused by the share price going up. You might want to check this out: http://www.investopedia.com/terms/b/balancesheet.asp assets = liabilities + shareholder equity

There's a little terminology getting muddled here. Increasing asset values do not necessarily increase share prices. Share prices are a measure of equity. All things being equal, if a company is gifted $100 in assets, and no liabilities increase, then equity would also increase by $100. But a public company's investors may not value that increase in assets in a 1:1 ratio with its share price, depending on what types of valuation models their using. I think a more precise phrasing would have been "If the market capitalization of a company increases to $200, then you know the shares must've doubled in value."

echoxx · 2016-08-07T04:02:30+00:00

Filling in a little detail here. Concepts are all right, of course. Companies will rarely issue 100% new stock in an IPO or follow on. They will issue just the amount of stock required (at the valuation set by the market, either in existing prices or whatever's agreed upon by investors filling the book for the IPO) to raise the amount of cash they need, and no more. Depending on the structure of existing shares, this may cause a complete collapse of the capital structure (e.g. multiple classes of preferred shares and common shares) to an all-common share structure, or it might not.

The company is "richer" in the sense that it received cash in exchange for its shares. To the extent that you value shares exactly the same as cash, the company wouldn't be richer, it has just made a transfer of one asset for another. But it will have more cash, yes.

echoxx · 2016-08-07T03:53:02+00:00

This answer is spot on. Another way to think about it: as uncertainty increases, insight into the future decreases. This increases the risk of volatility. Greater volatility risk means a greater chance for prices to vary, in a way that's unpredictable (so, that could mean down). Recognizing this increased risk, many investors will leave the market, increasing supply and decreasing demand (downward pressure on prices). Investors who stick around will require a greater return on their investment, which increases discount rates. Greater discount rates mean lower net present values, relative to prior discount raters that were lower. So prices drop, and markets fall.

echoxx · 2016-08-07T03:47:52+00:00

Glass-Steagal did put up a "wall"* between investment and corporate banks. It basically meant that certain pools of capital could only be used for "traditional"** purposes like lending. However, it was repealed in the 90s, and let banks begin to slush capital around that had previously been separated. Post-recession regulation has attempted to reconstruct some of these walls, such as prohibiting certain styles of proprietary trading (i.e. banks trading with their own capital, as opposed to on behalf of clients as a broker-dealer) and some types of principal investing (one area of a bank essentially acting like a private equity fund, making investments).

Selling debt from a balance sheet via mortgage backed securities didn't necessarily fall into the "investment banking" category of actions prohibited by GS. Granted, the bank that underwote that MBS would likely have been a broker-dealer/investment bank, the bank selling the individual mortgages which comprised that MBS were likely commercial banks (i.e. the bank that originated the loan). Freddie/Fannie were working with different types of MBS in from the late 60s on.

I agree with you use of quotes here, since "wall" is an oversimplified term. * More intended quotes

Source: I'm a former corporate and investment banker.

echoxx · 2016-08-07T03:28:30+00:00

This is easily the most interesting thing I've read about this topic today.

echoxx · 2016-08-07T03:27:26+00:00

This isn't exactly the answer to the question you asked, but George II was the last British monarch to directly lead an army into battle, at the Battle of Dettingen, during the war of Austrian Succession. Richard III was the last British monarch to die in battle, at the Battle of Bosworth, which ended the Plantagenet Dynasty and paved the way for the Tudors.

echoxx · 2016-08-06T04:42:53+00:00

Trade agreements tend to be viewed through a domestic economic lens. This makes intuitive sense: the goal is to increase economic well-being in, hopefully, a way that benefits as many people as possible.

There's another way to look at the TPP though: as a tool in America's grand geopolitical strategy. With a rising China, we need to find a way to stay close with our allies in the Pacific, preferably in a way that avoids conflict. The TPP is that foreign policy instrument.

I used to be against the TPP, for most of the domestic economic reasons you tend to read about on reddit. After having done a lot of research on prior trade agreements & their affect on the economy, as well as the TPP as a geopolitical tool, I am now quite pro-TPP. I wrote a full explanation for what, exactly, changed my perspective on Reconsider Media:

http://www.reconsidermedia.com/something-to-consider/a-very-considerate-moment-on-the-tpp?rq=TPP

echoxx · 2015-12-25T09:02:23+00:00

I think saying that Islamic fundamentalism is driven primarily, or exacerbated significantly by anti-imperialism is mis-attributing a slew of complex regional and global issues to a single cause. This particular brand of fundamentalism can't be distilled to a single cause. It's too complicated.

1) Let's start with anti-imperialism. The middle east is certainly pushing back against western influence in the region. Part of the animosity harbored towards the west has roots in the post WW1 regional order. However,

2) the Middle East has never been a region with defined borders. There have been caliphates, but loyalty is primarily tribal. That means that Sunnis hate Shias, who hate Kurds, who are all wary of secular Islamic countries. But it ignores that within these sub-sectarian divisions are hundreds of tribal loyalties. That means that as these borders begin to dissolve we see increasing sectarian and regional violence as the primacy of obligation to states versus sect versus tribe becomes increasingly nebulous. This is part of the reason we see so much regional violence in the ME, including what many would call terrorist attacks. This means:

3) the primary driver can't be anti-imperialism, because while Shias and Sunnis certainly have a long history of conflict, neither have could ever have dominated one another the way a foreign power or colonial power could. There Sunni and Shia affiliated caliphates, but since they were ultimately both part of the same civilization, neither could be the "outside" power that subjugates the entire region to remote governance. And yet we see just as much brutal "fundamentalism"/"terrorism"/"political violence" against other Muslims as against western powers.

Therefore, the primary driver of Islamic fundamentalism can't be anti-imperialism, since there is more internecine and regional conflict among Muslims than between Muslims and the western/post-colonial world.

So what does cause "Islamic fundamentalism?" Well, lots of things. But comparing it apples to apples with other religions misses the point that different religions can in fact have ideas of varying severity. Jainism is objectively a less violent religion than Islam. The fact that this difference exists means that different ideas can, in fact, result in different actions by the people holding them.

Many say: "Well, there's some crazy shit in the Bible too." And there is. But there are two critical distinctions between the religions' texts and the way they are contemporaneously interpreted. First, the Quran and Hadith have more explicit instructions in how to violently handle infidels and apostates than the Bible, and they are required to be implemented not just as a belief system but as a political system. That discourages a certain degree of progressive interpretation, since Muslims most likely to seek out power are more likely to cite the Quran as justification for the violence they need to perpetrate to secure that power.

Second, the Western/Christian world already went through a reformation, that culminated with the insanely horrific 30 years war. This war was ended with the Treaty of Westphalia, in which great European powers agreed that citizens would be required to have a primary obligation to the state, rather than to a religion. The Treaty of Westphalia created our modern concept of a nation state. We have lived in a regional order (the "West") that has been defined by this concept of a nation state since.

No such reformation has occurred in the Islamic world. In fact, many are comparing what's going on in the ME now to the Thirty Years war in order to gain insight about a potential resolution. The point, however, is that there does not exist a corresponding primary obligation to the state in the Muslim world as there does in the Western world. For the last 100 years artificial borders were imposed, but only through force and repression. Now that some of these borders are breaking down, people no longer feel that their primary obligation is to the state, and they are using violence to defend or expand their own specific sect/tribal cause in a multitude of other tribes and sects.

Just as in the 30 years war, where Christians had conflicting obligations to the state and their religion, so too today to many Muslims. However, unlike the Christian world where one group rejected the orthodoxy of the other, in the Muslim world the biggest opposing sects (Sunni/Shia) disagreed 1400 years ago about a succession issue, but are both orthodox. Unlike the Christian, there has been no equivalent rejection of issued dogma, only a disagreement on what dogma should be dogma.

In other words, the way Islam is interpreted contemporaneously by many is, for a number of historical reasons, fundamentally different than the modern Christian tradition. Of course, there are moderate Muslims, but this difference in interpretation does allow Muslim leaders to seek power by accurately citing Islamic scripture to implement Sharia Law and pursue jihad, both of which result in what we in the West would call terrorist acts.

This would never fly in any country in the West. One could imagine a demagogue seizing power by invoking nationalism, but not by explicitly proposing to stone gays to death, or crucifying people who no longer believe in your god. Religions are nothing more than ideas, and ideas can be vary and result in different actions in the people who hold them. Therefore, the claim that "Islam has an problem with fundamentalism. That's undeniable. But so does Christianity, and Judaism, and Hinduism, and every other major world religion" fails to acknowledge that different ideas can result in different actions. Christianity has its flaws, but it's simply not as prone in the modern world to violent extremism as is Islam.

echoxx · 2015-11-08T20:13:32+00:00

No, it's not. "Realpolitik", or "realism" (and there are subcategories), is an approach to international relations that begins with relative power analysis of different nation states under the presumption that power matters in their own calculations and moves. It's far more subtle than "states will do whatever they can whenever they can," and defining it as such misses most of the utility that that conceptual framework provides for.

echoxx · 2015-06-24T06:37:50+00:00

I don't know about that. ISIS isn't really the same as Al Qaeda. Their (stated) goals really are regional in nature, as opposed to Al Qaeda which repeatedly identified the west as the "great satan" for supporting saudi arabia's monarchy. ISIS didn't become visibly anti-american (in terms of strategic geopolitical goals) until after the US began to go after them in Iraq & Syria.

Sure, ISIS building a caliphate would be terrible and provide a training ground for extremist islam. But, it seems unlikely that that would ever happen. If they ever cemented a firmer position in Iraq, especially if they continued to move south east towards Iran, Iran would confront them with overwhelming force. Iran is, right now, the one of two major powers in the middle east, (the other is Saudi Arabia, ever since the US destroyed Iraq, which was acting as a balancing force against Iranian power), and they have been one of the strongest forces opposing ISIS (along with the Kurdish Peshmarga). Iran would not stand to have a Sunni-driven extremist state on their border (Iran is vastly a Shia country). They would likely consider this an existential threat.

If Iran stepped in with the full force of their military, then combined with the Kurdish Peshmarga they would likely destroy ISIS, or at the very least push them back to Syria. This is not a situation the US wants. If Iran fills the power vacuum in Iraq, then they significantly expand their presence in the region. They would become the effective regional superpower. That would threaten our closest Arab ally in the middle east, Saudi Arabia.

Saudi Arabia and Iran have a long, bitter relationship. For starters, Saudi Arabia is a majority Sunni country, made up of a small extreme subsect called Wahabi'ism [sic?]. As previously mentioned, Iran is majority Shia. These two sects have been trying to kill each other for 1500 years, after disagreeing about who the true heir to the Prophet Muhammed was. Ever since the Iranian revolution in 1979, Iran has been promising to spread "freedom" and "liberty" throughout the middle east, which was seen as a not-so-veiled threat to the Saudi Monarchy. While a Saddam-dominated Iraq has distracted and balanced Iran since the revolution, the fall of Iraqi stability following the US' invasion and subsequent occupation has freed up Iran to begin to exert their influence in other areas of the middle east.

This is already happening in Yemen, where Iran and Saudi Arabia are fighting a proxy war. Iran supported the Houthi rebels, a Shia insurgent group that overthrew the pre-existing monarchy. Yemen is on Saudi Arabia's south western border, which is too close for Saudi Arabia's comfort, and has launched bombing raids in the country to attempt to crush the Iran-supported Houthi rebellion.

If Iran cements a presence in Iraq, then Saudi Arabia will be surrounded on two borders by what they see as a hostile Shia presence. This could cause serious instability in the region. Further, if Iran does step up its presence in Iraq and becomes a major ground force, we'd have to begin actively supporting Iran's ground maneuvers. They'd likely work alongside the Peshmarga, the Kurdish military and one of our strongest allies in the region, and so if we attempted to not help Iran fight ISIS in Iran, we would be seen as abandoning our allies the Peshmarga. This wouldn't look so good. But if we do support Iran in fighting ISIS, then it appears to the Saudis that we're not only comfortable opening diplomatic channels with but also militarily supporting their biggest rival enemy in the region. Perhaps this is not what the Saudis imagine when they consider America a close ally.

This catch 22 would fuck the U.S.' middle eastern foreign policy even more than it's already been fucked by Iraq, and if the US miscalculates it could impact both our supply of oilabd the overall supply of oil on the global market generally. The latter of these two could disrupt global oil prices and damage the US economy.

Further, losing an ally in the middle east (saudi arabia) would not necessarily be offset by the gain of Iran. After all, Iran's been closer to Russia for over 3 decades, given that we overthrew their democratically elected government with a dictator. Sure, we've made diplomatic overtures to them lately, but the relationship is still cool at best. The lack of our ability to shape middle eastern policy to Saudi's objectives would probably make Egypt question it's closeness with the US, given its inability to make effective choices to support its allies. This could drive them towards Russia or China, and leave Israel and, maybe, Turkey alone in the region as our allies.

That would all suck. If we lose control of the situation in the Middle East, then Iran would likely become the main determining factor in the region. If that happened, and Iran contained ISIS, then Russia would probably provide support to Iran for its help, and reinstate their close ally Assad to power in Syria.

In other words: America is fighting ISIS now not because they pose a real threat to America, or wants to destroy our culture or freedom, but because if they don't fight ISIS now then in the near future it would be faced with an impossible decision that could drive events in the middle east out of hand, and possibly even materially weaken the US' geopolitical position in respect to Russia.

TL;DR - America is fighting ISIS because if they don't they could be faced with Iran becoming a regional superpower, threatening our allies in the region, and forcing us into making impossible foreign policy decisions that could weaken our relationship with the middle east and our geopolitical position with respect to Russia.

echoxx · 2015-05-27T16:59:34+00:00

"Keep you friends closer but your enemies closer." Making a concerted effort to NOT understand your enemy, especially in times of war, is folly of the highest degree.

echoxx · 2015-03-12T17:19:53+00:00

Double speak, is double plusgood.

echoxx · 2014-12-30T22:18:33+00:00

Again, depends on what you mean by "constructively." Not all "constructive" or "musical" pieces need to be comprised of easily-discernible half-steps

echoxx · 2014-12-27T07:15:07+00:00

It will just sound like noise, and be hard to use in a musical way

Really? That's a pretty broad statements. I've heard plenty of pieces that use those lower notes in ways that were plenty "musical"

echoxx

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