Esquire’s Daniel Voll has a very good piece on Omar, an Iraqi counterterrorism officer that’s worked with American forces since 2004 to arrest or kill some of the worst terrorists in Iraq:

Amira, an electrical engineer, had done some work for the Americans in the Green Zone when she started getting threats. She was living with her parents, and her family took the threats seriously because her sister, who was also working with the Americans, had already been shot in the chest three times by militants at a roadblock. Army doctors worked fifteen hours and saved her life.

“Friends in the FBI asked me to check up on Amira,” Omar says. “So I went to see her…”

He gave Amira his cell number — and told her to call anytime, day or night.

“I’m on night shift when she calls,” Omar says. “She’s terrified, whispering that men with guns are in her house looking for her.”

Amira had locked herself in the bathroom. The gunmen were ransacking the house and yelling, Which one works for the Americans?

Omar grabbed a vest and an AK-47 and raced to the house in his SUV, lights flashing. There were two cars parked at her front gate, and an armed lookout. Omar crashed straight into the first car.

Incredible story about a guy putting his life at risk to try to make his country a better place.

Tim Ricchuiti takes exception with my characterization of Greece, Italy and Spain’s problem as being too much debt:

Not quite. It’s not the heavy weight of debt (as Krugman has posted about at length the past week, most notably in this column) that’s causing European nations to struggle. What’s causing those nations to struggle is their inability (until recently) to finance that debt at any sort of tenable rate (7% or under). The reason those governments couldn’t finance their debt is that investors don’t want to purchase debt that might not be paid back. The reason the debt might not be paid back is that, unlike the case of the United States, Great Britain, Finland, and various developing nations, European countries like Spain, Italy, and yes, Greece, can’t print their own money (their own money being Euros). Therefore, they’re at risk of not being able to pay back their Euro-denominated debt. The United States, on the other hand, will never be unable to print dollars, and will always be able to pay back its dollar-denominated debt.

Greece and Italy used substantial amounts of debt to sustain their welfare states, and while their economies are doing reasonably well, there’s no problem—they can roll over their debt before it comes due at similar interest rates and everything works out fine. The problem they now face is their economies are not doing well at all, tax revenue has decreased, and thus their deficits have shot up as they continue to fund their expensive government programs.

As their deficits have continued to grow, and their debt has continued to grow as a percentage of GDP, investors became afraid that they would not be able to pay their debt. Which is why, as Tim says, investors would not purchase their new debt at a sustainable rate: because their debt burden is too high.

Tim argues that this is only a problem because Greece and Italy are on the euro—rather than their own currency—they cannot “print” more money, that is, devalue their currency so the past debts are worth less now than they were then and are thus more affordable to pay.¹ Tim further argues that the U.S. will never have this problem, because since we do control our own currency, and our debt is denominated in our currency, we can inflate our currency to reduce the magnitude of our debts.

That’s perfectly accurate, but that does not happen in a vacuum. Everything else is not held equal. Investors will factor the risk of intentional inflation into their investments, and expect higher interest rates for future debts, too. Perhaps Greece and Italy (and the U.S., if we don’t right our ship in the interim) will leave the euro, re-denominate their debt, and pay their existing debt of a smaller magnitude. But what happens when Greece and Italy go back to those same investors, who just received substantially less than they were supposed to from their debt, and ask them to purchase their new debt? It’s going to be expensive, and unless Greece’s and Italy’s economies begin growing strongly, they’ll have the same problem all over again.

I never intended “…the heavy weight of their debt” to be a conclusive summation of Italy and Greece’s problems. Their problem is a confluence of a very poor economy, low tax revenues as a result, and debt used to finance an expensive welfare state. It’s but a piece. A very large, very heavy, piece.

1. Let’s set aside normative criticisms of this, which are substantial—”inflating” your currency for the purpose of making past debts more affordable is essentially stealing from creditors, because in real terms, they receive less than they were supposed to. [↩]

One Al Qaeda supporter says funding they enjoyed from Arab states is now going toward Arab Spring movements:

New recruits have stopped coming, Hanif says. “When new people came they brought new blood, enthusiasm, and money. All that has been lost.” The money may be a bigger problem than the manpower, he says. Al Qaeda used to receive millions of dollars a year from Arabian Gulf contributors, but Hanif’s uncle says his contacts tell him the donations have dried up. Instead, he believes, the money is going to the more productive and generally nonviolent Arab Spring movements in North Africa, Syria, and Yemen. “I think Arab people now think the fight should be political at home and not terrorism aimed at the West,” says the uncle. “The peaceful struggle on Arab streets has accomplished more than bin Laden and Zawahiri ever have.”

If so, that’s a huge shift in the Arab world. Before, after living under dictatorship for decades, Arabs were largely cynical and did not believe they could change their political system at home. That’s changed, and regardless of whether each country ends up a liberal democracy, channeling their frustration and energy into political discussion and reform is much, much more productive. Having a discussion about what kind of government they want, and what role religion plays in it, is an incredible step forward.

Of course, the Arab world is entering a period of instability. A better outcome is not guaranteed when regimes controlled societies for decades and weakened or destroyed political processes and culture in the process are suddenly gone. But peoples which suffered under dictatorship with no hope for a better future now do have that hope, and there’s no reason to have mixed feelings when that’s the case.

(Via Chris Martucci.)

Walmart has made significant steps to make themselves, and their operations in China specifically, more environmentally-sustainable:

Acknowledging that Walmart customers “need low prices,” he said he also believed that “more and more, they will be looking at the entire life cycle of a product: How is it made, how is it sold, how is it used, and how is it reused? To meet these customer expectations, we need to ask ourselves: Is a product made in a factory that is a responsible steward of the environment and our natural resources?”

Interesting report by Orville Schell for The Atlantic. His point that Walmart and the Chinese Communist Party are made of similar, if not the same, cloth is a bit vapid, but it’s worth reading for discussion about how Walmart is exerting pressure on its manufacturers in China to become more environmentally-friendly.

As you’ve heard, Kim Jong-il died this weekend, and there’s nothing wrong with being happy that the world is without one less tyrannical dictator who’s set his country back decades. Nothing wrong at all.

His death doesn’t mean, however, that North Korea’s condition will improve, or that their relations with the rest of the world will improve, either. There’s no reason to think their economy will suddenly be able to feed their people, or their government will dismantle their nuclear program and end hostilities with South Korea and stop threatening Japan.

In fact, there’s more risk now than there’s been since 1994, when Kim Jong-il’s father, Kim Il-sung, passed away. North Korea’s government is not only a totalitarian state, but it is a dictatorship with no defined process for transferring power from one leader to the next. Both Kim Il-sung and Kim Jong-il created a cult of personality for themselves to maintain their power, and so when they die, the country inherently becomes less stable. The government is very brittle in that way—one crack can demolish the entire structure.

This is compounded by North Korea’s constant feeling that South Korea, Japan, and the U.S. view them as inferior, and thus they have to prove how powerful they are both as a sense of pride and for their survival. This is dangerous enough when North Korea’s power structure is stable, and manifests itself as missile and nuclear tests and acts of aggression against South Korea, but it’s even more dangerous now. North Korea’s next leader, or the military, may find it necessary to show their strength by conducting more tests or threatening the South.

Worse, too, is Kim Jong-il’s son and apparent designated successor, Kim Jong-un, is a twenty-something year old four-star general with no military experience. Tension is almost guaranteed, between Kim Jong-un and the military, and possibly his family as well. In the worst case, a power struggle could ensue, and North Korea’s government could collapse.

There’s no telling what that would lead to, and that’s why this is so dangerous: there’s so many things that could go wrong. The world may be better off with Kim Jong-il gone, but in the short-term, it’s also a more dangerous world.

Austan Goolsbee:

Certainly the countries of Southern Europe must rein in excess. In the long run, however, even the deepest of cuts won’t suffice. Southern Europe needs to grow or it will never control its debt levels. But with the euro zone keeping Southern Europe uncompetitive, the region’s growth prospects will remain dismal.

Northern Europe has fueled its growth through exports. It has run huge trade imbalances, the most extreme of which with these same Southern European countries now in peril. Productivity rose dramatically compared to the South, but the currency did not.

Europe’s problem isn’t just debt. The problem is Northern and Southern European nations are very different economically. Germany’s workers are highly productive and their economy relies on exports as a result, while Southern nations are not productive and thus cannot use exports to grow their economy. If they were not a part of the euro, they could devalue their currency to make their exports less expensive (and more competitive), but they aren’t, so they can’t. Their only way is to increase productivity.

Jeffrey Goldberg:

It will be extremely difficult for any number of reasons for Israel to leave the West Bank, but it will be impossible for Israel to survive over the long-term if it remains an occupier of a group of people who don’t want to be occupied. I understand the security consequences of an Israeli departure from most of the West Bank, but I also understand that there is ultimately no choice. I don’t believe a one-state solution is any sort of solution at all; Israel/Palestine will devolve quickly into civil war. The only solution is a two-state solution.

Europe and the U.S. aren’t the only ones facing economic decline:

The Indian economy which gained 6.9% in the second quarter, is expected to grow 7.5% this year, according to Indian finance minister Pranab Mukherjee, against previous estimates of 9% growth. And the Indian Rupee is off 13.14% year-to-date (YTD) against the U.S. dollar, and 13.72% against the euro. The currency has been declining as inflation remains consistently high, driven up by food costs.

Ouch. Moreover, China will be/is hurt by Europe’s struggles, too, because the EU is a huge export partner for them. Unless something significant changes, I think we’re heading toward a global recession.

(Via Tyler Cowen.)

Tim Duy:

Bottom Line: Don’t take US resilience for granted this time around – Europe is getting ugly, and it is far too late to prevent severe recession. The best policymakers can hope for at this point is too avoid a depression.

Click through and look at his chart showing the correlation between new orders from European manufactures and U.S. manufacturers, and then consider that European industrial orders dropped 6.4 percent in September. Europe is going to suffer a serious decline, and we will, too.

(Via Brad Plumer.)

Kevin Drum:

In other words, the European segment of the shadow banking system was indirectly providing about $5 trillion in credit to U.S. borrowers. This was about as much as U.S. banks provided directly.

The Euro crisis is our crisis.

Cuba provides a nice glimpse into unintended consequences of government regulation:

But the tight grip on imports means cars will remain scarce and command eye-popping prices, whatever their condition, economists and car brokers say.

“A car that in another country you’d pay to destroy, you can sell here for $14,000,” said Paul Gómez Valladares, a mechanic who was fixing the bushings on a 1996 Lada Combi in a workshop shaded by mango trees.

The only Cubans allowed to purchase new cars are ones who earn foreign currency—doctors, artists musicians, and members of airline flight crews.

Chris Bowler reviews coffee from the Ethical Coffee Chain:

All right, sermon over. How does the Gus’s coffee taste? I must admit, there was a slight worry that I would be supporting a good cause, but drinking sub par coffee. After the first pound, I’m happy to say this is not the case. These beans are on par with what I would buy from Starbucks or Kicking Horse Coffee.

For context, I’ve tasted this coffee in an Aeropress, a French Press and a run-of-the-mill drip brewer. A clean, bold cup is the result in each. I sadly still use a cheap blade grinder, so getting a great cup of coffee with this setup speaks to how good the beans are.

It’s a really great idea started by some really great people, and Chris says the coffee is good—so what’s not to like?

Anwar al-Aulaqi, a U.S. citizen who lead Al Qaeda in the Arabian Peninsula, was killed in a U.S. drone strike in Yemen.

He deserves no sympathy. He took up arms against his country and he died in the process.

Nevertheless, though, he was a U.S. citizen, and he was killed in a country where we are not at war. If this becomes a precedent, it would be deeply troubling.

Seth Godin argues we’re at a juncture in economic history, just like the rise of mass production in the twentieth century:

The industrial age, the one that started with the industrial revolution, is fading away. It is no longer the growth engine of the economy and it seems absurd to imagine that great pay for replaceable work is on the horizon.

This represents a significant discontinuity, a life-changing disappointment for hard-working people who are hoping for stability but are unlikely to get it. It’s a recession, the recession of a hundred years of the growth of the industrial complex.

Mass production of standardized goods—underpinned by workers doing very tightly defined jobs that can, with relatively minimal training, be done by anyone—provided incredible value. This was because up until then, goods were largely made individually with poorly defined standards and processes, so they were expensive and time consuming to make. Mass production made goods cheap and plentiful because the processes for making them were standardized so that anyone could do it. The twentieth century was almost entirely about turning people into cogs in a machine in order to squeeze as much efficiency out of each one as possible.

Because there were so many gains to be made by using mass production for goods, it helped create an explosion of economic growth and development and, along with it, jobs. We needed cogs for those production processes. This was very beneficial for workers; because there was so much value created by mass production, companies could afford to pay very respectable wages and salaries and provide long-term benefits, all while the worker was responsible for very little more than following a series of steps.

But those gains have now been used up. There’s no more potential for growth in mass production, except in countries where labor costs are lower than others, and that will be used up in time, too. In manufacturing, it’s a race toward eliminating cost as much as possible, and that inevitably means eliminating people altogether.

What Godin argues is that the idea of long-term, stable jobs where individuals are responsible for very little besides doing their very specific job—an idea we grew up believing to be true because that’s what we saw in the twentieth century—is a myth created by the temporary explosion of economic productivity unleashed by mass production. It isn’t something we can always have or something we will soon get back to after this recession is over. It no longer exists.

This means suffering for many people, as we are seeing. Our society has been built on the assumption that, if only we do well in school, there’ll be a stable and respectable job waiting for us. That is no longer the case, and now people will have to adjust to it. A high school diploma and a college degree is no longer a ticket to a comfortable future. Rather than simply put in the time and work to be comfortable, we must now find insights into the world that will make us all better off. That’s the new frontier.

The Age of Insight

The nineteenth century was the age of the industrial revolution, the twentieth the age of mass production, and the twenty-first will be a new age, too, of the same scale.

Godin continues:

When everyone has a laptop and connection to the world, then everyone owns a factory. Instead of coming together physically, we have the ability to come together virtually, to earn attention, to connect labor and resources, to deliver value.

Stressful? Of course it is. No one is trained in how to do this, in how to initiate, to visualize, to solve interesting problems and then deliver. Some see the new work as a hodgepodge of little projects, a pale imitation of a ‘real’ job. Others realize that this is a platform for a kind of art, a far more level playing field in which owning a factory isn’t a birthright for a tiny minority but something that hundreds of millions of people have the chance to do.

Whereas the last century was about making goods—food, clothing, cars, toys—cheap and plentiful, the twenty-first century will be about making insights into what will truly make us better off.

It was easy to make huge gains in quality of life in the early twentieth century: providing any kind of affordable clothing, food and car was a giant leap forward. We can’t make those same gains now. That trick only works once.

Now, we have to be smarter. Now, we have to figure out what’s a better use of resources. We have to figure out what kind of car will both be more environmentally efficient and delight its owners. We have to think about completely disparate fields—say, manufacturing, software development, design, and psychology—and combine them to make products that conform themselves to humans, rather than making humans contort themselves to the product in order to use it. We must think about big ideas—ideas that will change society and how people interact—and the little ideas that merely improve people’s lives just a little.

We have to think. This is an age where all of our gains will come from insights into what make products, services, processes, and structures fundamentally better for us. Whereas the twentieth century was about standardization and following a series of steps in a well-defined process, in this new century, there are no defined processes. Everything is to be questioned, re-thought, re-made, or even thrown out altogether.

This century is about having a vision for the way things should be, and the audacity to make it so. Just a decade or two ago, it took immense amounts of capital to launch an idea that could change the world. Now, it takes a few people with an idea, a computer, and the willingness to learn how to build it.

The only thing holding us back now is ourselves.¹ We are all artists, designers, manufacturers, managers, musicians, writers, creators—if we choose to be. And that is the fundamental difficulty of this new age: we all are responsible for our own success.

The twentieth century had a well-trodden path for people to follow: you graduate from high school, go to college, you’ll get a respectable and stable job, and you’ll live in comfort. Our responsibility did not extend beyond following that path.

That will no longer work. We will all have to take responsibility for ourselves, our future, and our ideas. We have to learn to think this way—to think critically of the things we see, of how they could be better and how we could make it so, and thus to see opportunities for ourselves.

We have to change how we think to be successful in this century, and we have to re-design our schools to prepare people for it. I have some ideas for how to do that, but what’s obvious is we aren’t ready for it yet. Not even close. We’re still preparing kids for the last century.

This is a new age, and we better start thinking about it that way.

1. This is not, unfortunately, true for everyone. Poverty and lack of opportunity takes on a new meaning in this century. Rather than hold people back from an education and access to well-paying jobs, it now means holding people back from education that gives them the opportunity to discover a passion from something and discover a way to make something better and, therefore, make a living for themselves, because they are too busy simply trying to survive. This creates two very different classes in society, and is a fundamental threat to it. This, I think, will be one of the great challenges for our century: how do we not only revamp our educational system for a new economic age, but how do we truly make education available to everyone so everyone can participate? [↩]

Ross Douthat points us to something Edmund Burke wrote about the French revolution, which is as meaningful today as it was in 1790:

Flattery corrupts both the receiver and the giver; and adulation is not of more service to the people than to kings. I should therefore suspend my congratulations on the new liberty of France, until I was informed how it had been combined with government; with public force; with the discipline and obedience of armies; with the collection of an effective and well-distributed revenue; with the solidity for property; with peace in order; with civil and social manners. All these (in their way) are good things to; and, without them, liberty is not a benefit while it lasts, and is not likely to continue long. The effect of liberty to individuals is, that they may do what they please: we ought to see what it will please them to do, before we risk congratulations, which may soon be turned into complaints.