When Andrew Sullivan announced last week that he was taking his uber-blog, The Dish, independent and relying solely on reader subscriptions to fund the operation, the first thing I thought of was...

Beer.

Not because the announcement made me yearn for a nice IPA, but because it made me wonder whether what is happening to the media environment is in some ways analogous to the extraordinary improvements in brewmaking over the past couple of decades, especially here in North America.

Back in my youth, beer in America was a consistently bland and homogeneous product. Watery lagers predominated, because the big brewing companies all sought to appeal to the median drinker. There just wasn't much difference between Bud, Miller, Schlitz, etc., which is why beer like Coors -- which had even less flavor but was hard to get in much of the country -- could become a fad for awhile. Beer snobs sometimes drank imports like Beck's or Guinness, but the major U.S. brands were boring, conventional, and competing to be more-or-less like each other. Kinda like Detroit's Big Three automakers or the three major TV networks.

Enter the microbrewery revolution. Beginning in the 1980s, enterprising Americans in search of good beer began drawing on artisanal brewing traditions and techniques from Europe, leading to an explosion of small craft breweries whose main selling point was creativity and diversity. Not to mention taste. Instead of trying to be like everyone else, microbrews thrived by presenting unique and interesting products that could actually hold a beer fan's interest.  Instead of putting out a cheap product to be swilled in front of the TV or at a football game, microbrewers sought to produce something you could savor, discuss, and get seriously passionate about. No wonder I haven't sipped a Bud in years. Even the Obama White House has caught the bug, producing its own Honey ale in recent years. 

So too with blogs. As Sullivan has realized, you don't have to be connected to some big media giant like the New York Times or the Economist  in order to have a significant readership. It helps to be part of a well-known brand, of course but it's not essential, especially if you're more interested in appealing to a smaller group of engaged readers than in grabbing as much market share and advertising revenue as you can.

Furthermore, as the diverse set of writers that Sullivan often features on his blog illustrate, those who work primarily in the blogosphere are usually more interesting, provocative, willing to experiment, and well-informed than the mainstream commentators and pundits writing for the big media outlets. There are exceptions, of course, but I'm constantly impressed by how many smart people and good writers now inhabit the internet, and I frequently find myself in awe of how well so many of them use language and how much genuine pleasure one can get from reading them. By contrast, outstanding writing is becoming harder to find in a lot of mainstream media platforms, and its almost an endangered species in the hallowed halls of academe. It's not that they are bad writers, it's just that they are mostly so cautious, predictable, and bland. You know: like PBR.

Given the effectiveness of modern search engines, interested citizens can get lots of information from the web if they're willing do a little bit of dedicated trolling, which in turn makes it harder for governments, interest groups, or big media conglomerates to control discourse anymore. And that's why authoritarian governments in countries like China or Iran have worked so hard to slap restrictions on this free-wheeling environment, lest their own actions and legitimacy get undermined by the unconstrained flow of ideas.

None of this is big news by now, and Sullivan isn't the first blogger to rely solely on reader support. He's just the most visible and prominent, and his experiment reminds us that the information revolution that we are all living through is still in its early stages. But I hope Sullivan's venture succeeds and that others follow his lead. I don't know what the information industries will look like a decade or two into the future, but it's certain to be different than it is today and a lot different than it was when I was a kid. I'm already reconciled to the fact that I'll eventually have to give up my cherished morning newspapers and get almost everything in digitized form. I'll heave a nostalgic sigh when that happens, but in the end I think it will be for the best. Why? Because I also believe that the open exchange of information and ideas eventually leads to greater collective wisdom and better public policies. For this reason, the break-up of big media oligopolies and the proliferation of independent voices is a good thing.

And on that happy note, I think I'll have a beer.

We are often told that Gulf states like Saudi Arabia and Kuwait are deeply worried about Iran, and eager for the United States to take care of the problem. This is usually framed as a reflection of the Sunni-Shiite divide, and linked to concerns about Iranian subversion, the role of Hezbollah, and of course the omnipresent fretting about Iran's nuclear energy program. 

I have heard senior Saudi officials voice such worries on more than one occasion, and I don't doubt that their fears are sincere. But there may be another motive at work here, and Americans would do well to keep that possibility in mind.

That motive is the Gulf states' interest in keeping oil prices high enough to balance their own budgets, in a period where heightened social spending and other measures are being used to insulate these regimes from the impact of the Arab Spring. According to the IMF, these states need crude prices to remain upwards of $80 a barrel in order to keep their fiscal house in order. 

Which in turn means that Saudi Arabia et al also have an interest in keeping Iran in the doghouse, so that Iran can't attract foreign companies to refurbish and expand its oil and gas fields and so that it has even more trouble marketing its petroleum on global markets. If UN and other sanctions were lifted and energy companies could operate freely in Iran, its oil and gas production would boom, overall supplies would increase, and the global price would drop.

Not only might this new wealth make Iran a more formidable power in the Gulf region--as it was under the Shah -- but lower oil and gas prices would make it much harder for Saudi Arabia and other Gulf states to stave off demands for political reform through social spending. Saudi Arabia could cut production to try to keep prices up, but that would still mean lower overall revenues and a budget shortfall.

So when you hear people telling you how worried the Gulf states are about Iran, and how they support our efforts to keep tightening the screws, remember that it's not just about geopolitics, or the historical divide between Sunnis and Shiites or between Arabs and Persians. It's also about enabling certain ruling families to keep writing checks. Keep that in mind the next time you fill your gas tank or pay your home heating bill, or the next time somebody tells you the United States ought to think seriously about a preemptive war.

A frequent topic here has been America's position in the world and its future prospects. Today, my colleague Ali Wyne weighs in with his own upbeat take on why Americans should be fairly optimistic heading into 2013:

Ali Wyne writes:

With just over a month to go before New Year’s Day, Americans are divided. Following President Obama’s reelection on November 6^th, USA Today explained that a “changing U.S. electorate split in two Tuesday -- not only along lines of political party and ideology but also by race and ethnicity, gender and marital status, region and religion, education and age. The divisions are even sharper than they were four years ago.” A Gallup poll taken shortly after the election found that while 94 percent of Democrats think that the United States will be better off four years from now (vs. just 4 percent who think that it will be worse off), only 11 percent of Republicans think so (86 percent think that it will be worse off). Some who belong to the 86 percent appear to be not just dispirited, but appalled: notable reactions include “America died,” “[w]hat happened on Nov. 6^th was suicide by voter,” and “on November 6, 2012, America elected to end modern civilization.”  

But leaving aside the partisan divides that are inevitably highlighted in the run-up to and aftermath of an election, Americans on the whole appear to be more pessimistic than usual about their country’s domestic condition and global role. According to a mid-2012 poll by the Atlantic and the Aspen Institute, for example, 66 percent think that the U.S. economy is on the wrong track, and 63 percent think that the United States is heading in the wrong direction. Furthermore, several polls indicate that Americans regard the United States as a declining power. I cited some of them in an article for Zócalo Public Square this April, and corroborating ones have been conducted since then. According to a mid-2012 poll by the Chicago Council on Global Affairs, for example, only 24 percent of Americans think that the United States “plays a more important and powerful role” “as a world leader” today than it did ten years ago; 43 percent think that its role is “less important and powerful.” In 2002, those figures were, respectively, 55 percent and 17 percent. Furthermore, whereas Americans judged the United States to be considerably more influential than China a decade earlier (9.1 vs. 6.8 on a ten-point scale), they predict that the two countries’ influence will essentially be equal ten years hence (8.1 vs. 7.8).

Despite feeling the blues, Americans of all stripes can still find reasons to give thanks as they celebrate the holidays and look forward to 2013.

First, the United States has endured far more trying times, dating back to its inception. As historians including David McCullough and John Ferling have documented, America’s victory in its war of independence was far from certain; in fact, in his farewell address to the Continental army in 1783, George Washington himself called it “little short of a standing miracle.” Furthermore, the United States bounced back -- indeed, emerged stronger -- after many events that may well have been judged fatal to its prospects for global leadership by the standards of some contemporary declinists: the Civil War, World War I, and the Great Depression come to mind readily.

Second, America’s economic picture is not entirely bleak. True, four years after Lehman Brothers’ collapse, unemployment continues to hover around 8 percent, and growth continues to sputter along at less than 1.5 percent per year.  More alarming, the debt is over $16 trillion and growing rapidly. On the other side of the ledger, however, U.S. gross domestic product (GDP) -- at $14.83 trillion -- accounted for a little over one-fifth of gross world product (GWP) last year. As of the second quarter of this year, 62 percent of the world’s allocated foreign-exchange reserves were dollar-denominated. According to QS, 31 of the world’s top 100 universities are in the United States; furthermore, the Institute for International Education found that there were a record 764,495 international students at U.S. colleges and universities in the 2011-12 academic year, marking the sixth consecutive year that that figure has increased. 

Looking forward, there are reasons to be upbeat, even bullish, about the U.S. economy. Its demographic outlook, for example, continues to be favorable; thus, it is expected to remain the world’s third most populous country in 2050, after India and China. Furthermore, rapidly growing indigenous supplies of tight oil and shale gas could enable the United States to reduce its dependence on foreign energy and potentially even create new bases of employment in its energy sector; according to the International Energy Agency, it could become “all but [energy] self-sufficient in net terms by 2035” and become “a net oil exporter by around 2030.” Further down the pike, breakthroughs in a host of fields -- ranging from digital fabrication to “big data” -- could inject new dynamism into the U.S. economy; citing its recent strides in telecommunications and energy, John Gapper observes that despite its “economic problems” and “worries about its comparative decline,” the United States is using its “amazing, enduring capacity to reinvent itself through technology.” The existence of such opportunities -- in demographics, energy, and innovation -- does not, of course, entail the promise of their realization; it does, however, suggest that the current unemployment-growth-debt triad need not become a “new normal.”

Third, America’s relative decline is not as concerning as it might appear at first glance. It largely stems, after all, from actions that it has taken (many of which it can avoid repeating, such as conducting another large-scale ground war), actions that it has not taken (many of which it can still take, such as reaching a budget deal along the lines of what the Simpson-Bowles commission and numerous other task forces have proposed), and the growth of other countries (a phenomenon that benefits the United States, as Europe and Asia’s postwar recoveries benefited it over a half century earlier). Relative decline, furthermore, does not nullify its mixture of hard and soft assets. The United States remains the only country that can project military power globally. Less discussed, it continues to underpin -- albeit under growing duress -- a liberal international order. While the rules and arrangements that form that system are evolving, the system itself does not yet face a coherent alternative -- in part because many countries that bristle at its reach nonetheless continue to benefit from it. China, America’s putative superpower replacement, is perhaps the most compelling example. It welcomes U.S. decline, but wants that phenomenon to occur gradually, not rapidly. In the interim, in fact, as its dependence on Middle Eastern oil grows, it will likely become more dependent on stable and open global commons, which U.S. military power plays an important role in preserving.

If one believes that the United States was once able to dominate the course of international affairs, and evaluates its role in the world according to its ability to continue doing so, then it has indeed been declining -- absolutely and precipitously. In reality, while shocks (such as the global financial crisis) and surprises (such as the “Arab Spring”) may play a growing role in determining U.S. foreign policy, the United States has never been able to exercise hegemony. Even after World War II, despite accounting for over a third of GWP and having “an overwhelming preponderance in nuclear weapons,” Joseph Nye observes that it “was unable to prevent the ‘loss’ of China, ‘roll back’ communism in Eastern Europe, prevent stalemate in the Korean War, defeat Vietnam’s National Liberation Front, or dislodge the Castro regime in Cuba.”

There is no question that the Obama administration will confront a daunting foreign-policy inbox come January 20, 2013, arguably one of unprecedented complexity: a partial inventory of its imperatives would include stabilizing America’s relationship with China, whose GDP is likely to be the world’s largest within the decade, and whose defense spending could conceivably be the world’s largest before the middle of the century; helping the European Union stay afloat; responding to the changing strategic contours of the Middle East and North Africa; and reinforcing the nuclear nonproliferation regime. It would be simplistic, however, to adduce difficulty in dealing with a challenging world as evidence that the United States is a declining, even impotent, actor.  As Stephen Walt argues,

[i]f all we were trying to do was defend Americans against major threats and foster continued economic advancement, running U.S. foreign policy would in fact be relatively easy….[Americans should] be grateful for the country’s good fortune….most of our foreign policy problems are voluntary…That’s another sign of U.S. power: we have the luxury of choosing how much or how little to do.

 

If overestimating one’s influence and minimizing the urgency of one’s challenges can sow hubris, underestimating the former and minimizing one’s ability to respond to the latter can produce distress. Rather than fretting over the prospect of decline, Americans should strategize about how their country can adjust to the power shifts that are afoot -- and be thankful that the United States is better equipped than most to do so. 

Ali Wyne is a researcher at the Harvard Kennedy School’s Belfer Center for Science and International Affairs and a contributing analyst at Wikistrat. Follow him on Big Think, Twitter, and Facebook.

It's hot and sticky here in Boston, and I feel a rant coming on. Just consider the following items from today's headlines, around the web, and my inbox:

Item #1: An independent report on the fiscal condition of America's state governments (chaired by Paul Volcker and Richard Ravitch) presented a gloomy prognosis about their budgetary prospects. State and local governments face exploding health care costs, declining revenues, lots of deferred expenditures, and anticipated cuts in federal support. Even if the U.S. economy grows more vigorously, the states are going to be in trouble for quite awhile. And that means we will all be living less well, because all the good things that governments provide (roads, bridges, schools, public safety, parks, museums, etc.) will be in shorter supply.

Item #2: Along the same lines, here's a report by Lisa Margonelli (hat tip: Andrew Sullivan) on the increasingly fragile condition of America's electrical power grid. As she points out, not only have we under-invested in this critical national resource, but we've done so at a time when weather is becoming more extreme (due to climate change) and the grid is thus under greater strain. If you want to keep reading this blog, maybe it's time to install that portable generator (or a lot of spare batteries), but that won't help you if your ISP link goes down too.

 Item #3: Dylan Matthews of the Washington Post offers a quick and easy guide to the latest budget battle between Republicans and Democrats over which elements of our current fiscal policy (i.e. taxes, credits, expenditures, etc.) we are going to preserve after December 2012. As Matthews' projections suggest, the obvious thing to do is to let the high income Bush tax cuts expire and keep some of the other measures. This approach would reassure the markets and stabilize our long-term fiscal situation, yet reduce the risk of a fiscal contraction that would tip the economy back into recession. But don't expect the GOP to go along with anything sensible like that.

Item #4: A new report by the Project for Defense Alternatives, reminding readers of the following basic facts:

a) the U.S. and its allies spend four times more on defense than our potential adversaries do. I like a margin of safety as much as anyone, but this is ridiculous.

b) Key U.S. allies perennially free ride on Uncle Sucker. The United States spends 4.8 percent of GDP on defense while our NATO allies in Europe spend an average of 1.7 percent, Japan spends 1 percent of GDP and South Korea spends only 2.8 percent. 

c) China, our supposed emerging "peer competitor," a rising China, devotes only about 2 percent of GDP to defense.

Either we have our strategic priorities all mixed up, or the DoD is doing something very wrong. I would note in passing that Mitt Romney thinks we aren't spending enough, that we ought to cut taxes even more and that we also need to balance the federal budget.  Needless to say, this combination makes no sense, and Romney (who seems to know a lot about clever accounting when his own fortune is involved) is being disingenuous or simply lying.

Is there a direct connection between these various items? No, because economies are complicated and cutting U.S. defense spending wouldn't automatically translate into more money for other items (include state and local governments). But there is clearly a connection between the amount the U.S. spends (trying to) provide global security in lots of far-flung places and our ability to pay for desirable things here at home, including things like education and infrastructure that are essential to our long-term well-being and strength as a nation.

Unfortunately, over the past forty years so-called conservatives in the United States have done a great job of convincing Americans that it is foolish, counter-productive, and even unpatriotic to pay taxes for the benefit of other Americans, while at the same time declaring that it is one's patriotic duty to pay taxes so that we can occupy other countries, build military facilities on every continent, and make it easier for Europeans, Asians, and others to live better under the umbrella of our protection. Unless, of course, you are really, really rich, and can hide a lot of your income in some nice offshore tax shelter. It's been a brilliant piece of salesmanship, but the results are exactly what one would predict: a gradual hollowing-out of the features that once made America the envy of the world, and a bunch of allies who aren't even all that grateful for the sacrifices made on their behalf.

I'm inclined to think that this phenomenon also reflects the rampant individualism that now permeates U.S. culture. If you're doing really well, what does it matter if the broader society is doing worse? Just put your kids in private school, live in a gated community, and let other poor schmucks depend on an eroding set of public goods. If you're a politician, forget about telling the truth or trying to do right by the voters you're supposed to represent, and just do or say whatever will keep your major donors happy and help you get reelected (and land a cushy lobbying job after you retire). If you're a tenured academic, spend your time writing articles that nobody reads and avoid topics that might be controversial, because being relevant or provocative won't help your career. If you're a pundit or a policy wonk, don't worry if you're repeatedly wrong or if your advice leads the country into costly quagmires, so long as you don't pay any price for past errors and you still get invited on all the talk shows. 

I also think the roots of this problem can be traced in part to America's remarkably favorable overall position. Because the United States found itself was in such a blessed position after the Cold War-wealthy, powerful, with no serious rivals, etc. -- we could afford to be lazy and irresponsible in the conduct of public affairs. We could take on a lot of foolish projects overseas, allow our national discourse to be polluted by special interests, and let various rent-seeking groups within society pilfer the public purse for their own pet projects. So when al Qaeda showed up and seemed to be a more serious challenge (albeit one we exaggerated), we went off on an ill-conceived crusade that we weren't even willing to pay for. And absent a serious rival to focus the national mind and impose a bit more discipline on our discourse, I doubt this is going to change any time soon.

I have no idea if Dartmouth president (and public health expert) Jim Yong Kim is a good choice to head the World Bank or not. I'm not an expert on economic development, and I've heard both good and bad things about him from a number of friends and colleagues since his nomination was announced. But I am pretty sure that the Obama administration blew an opportunity to score some diplomatic points when they decided to push him for the job.

Here's the key issue: Because voting shares in the World Bank are determined by each member nation's contributions, the United States has a de facto veto over who gets to be Bank president. It's the old Golden Rule of International Organization: Those with the gold make the rules. By long-standing custom, the president of the World Bank has always been an American, while a European gets to lead the International Monetary Fund.

Surprise, surprise: Other countries find this situation objectionable. And especially when the U.S. uses its prerogative to foist candidates with dubious qualifications on the institution, such as former Secretary of Defense Robert McNamara (who helped lead the U.S. to disaster in Vietnam) or former Deputy Defense Secretary Paul Wolfowitz (who did the same for us in Iraq).

Of course, realists expect powerful states to use international institutions to advance their own interests, which is why they want to make sure that the people in charge are reliable. If I were president, I would want the World Bank to be led by a highly competent individual who wasn't about to harm U.S. interests. But a smart realist would also recognize that imposing the U.S. choice on others every single time is bound to trigger resentment, and encourage rising powers like China, Brazil, India, and others to redouble efforts to break Washington's stranglehold. And every time the United States has to twist arms or use its privileged position to get its way, other states quietly seethe and anti-American forces are handed another nice talking point to use to undermine the U.S. image around the world.

Which is why I think the Obama administration missed a golden opportunity when it failed to embrace the nomination of Ngozi Okonjo-Iweala, the Nigerian Minister of Finance minister and former World Bank Managing Director. I can't speak with authority about her qualifications, although she does have a B.A. from Harvard (magna cum laude) and a Ph.D. in regional economic development from MIT. I'm also struck by the endorsement she received from renowned trade economist Jagdish Bhagwati in a letter to the Financial Times, where he said that his own personal experience had convinced him that "she can outwit and outsmart almost any policy economist I know."

To be clear, I'm not arguing that Okonjo-Iweala is axiomatically a better choice than Kim, although she certainly appears to be equally (and maybe better) qualified. My point is about the diplomatic repercussions of this decision and the broader approach that the United States ought to be taking in world affairs. Given how powerful the United States still is, a primary goal of U.S. foreign policy should be to make America's privileged position as palatable to others as possible. One way to do that is to make symbolic concessions on minor issues on occasion, in order to build good will and to convey a certain regard for others's sensitivities. You know: a "decent respect for the opinions of mankind." So when Washington gets lucky and the African Union endorses a Nigerian economist with a B.A. from Harvard and a Ph.D. from MIT, who also has ample experience at the World Bank, and who is a woman of color to boot, the smart thing to do is get behind it immediately. This course is such an obvious no-brainer that I'm amazed the Obama administration didn't leap at the opportunity.

And by the way, having a non-American as president of the World Bank wouldn't set an unfortunate precedent. The United States would still have the voting rules in its favor, and it could still veto future candidates that it deemed unacceptable. But in this case the United States missed an opportunity to build some good will at little or no cost, and it's going to come back to haunt us down the road. And woe unto us if Kim gets the job and turns out to be a dud.

On the eve of the EU Summit, Mark Sheetz offers the following commentary, which differs in some respects from mine. 

In several recent blogs on the euro crisis, Stephen Walt has expressed exasperation with European leaders and pessimism on the fate of the eurozone. His reaction is understandable and consistent with virtually all journalists and economists who study the issue. They are frustrated at the slow pace of European decision-making and the fact that a solution seems obvious. In recent days, demand for action has become nearly hysterical, with analysts, columnists, and editorial writers for the New York Times suggesting that time for a solution is "running short," that "the endgame is fast approaching," that the eurozone is facing a "meltdown," and that a collapse is "perhaps inevitable."

So, what is the solution? Conventional economic wisdom insists that either Germany acquiesce to some sort of bailout or the eurozone is finished. Germany must consent either (a) to the issuance of joint and severally liable Eurobonds or (b) to a policy of monetary easing by the European Central Bank (ECB). The problem is being treated as a technocratic economic matter.  Hence, technocrats have come to power in Greece and Italy. But the matter is essentially political and the crisis turns on central problems of international relations theory, like anarchy, sovereignty, and power.   

Economists believe that the basic problem of the eurozone is economic: that national economic imbalances can no longer be restored through the traditional method of currency devaluation.  But the problems of the eurozone are fundamentally political: (a) it expanded too fast, wider won out over deeper, (b) there is no commitment to common budgetary policies, and (c) there is no mechanism to enforce agreements.

The debate is congealing around two poles, a pessimistic pole predicting the breaking apart of the eurozone versus an optimistic pole of closer integration. The solution includes both. On the one hand, wide economic disparity among members of the eurozone will force weaker members to leave. Greece, as well as those countries that use the euro but cannot afford it (PIGS), will be cast off from the eurozone by a mounting centrifugal force.

On the other hand, the remaining members will converge on tighter economic policy along the German model. As a corollary to more restricted membership, those countries remaining in the eurozone will harmonize their policies regarding deficits and government pensions and achieve some sort of convergence in the major items affecting budget deficits. This will have the effect of bringing Europe closer together, or at least those countries that can achieve convergence. It may also create a more politically coherent Europe, with those remaining in the eurozone leading the European Union economically and politically. Such a situation might even give a common foreign policy the chance to develop and cohere around a small group of stronger European countries.

Some believe that a Greek expulsion from the eurozone will be catastrophic. They assume that a Greek default within the eurozone is manageable, while a Greek exit would make contagion worse. My own feeling is that contagion -- and the accompanying collapse of the European project -- would be the result of Greece staying in the euro, not the result of Greece getting out.  The recent evidence of market contagion to Italy and Spain appears to support this claim. A referendum in Greece would have cleared the air. It would have restored a stark reality that European leaders would not be able to evade. If Greeks had voted "no" on the referendum, Greece would have had little choice but to return to the drachma. That would have been a lesson to others. They would have recognized that they have only two choices: (a) converge fiscal and monetary policies or (b) press the "eject" button. The problem now is that European leaders may still think they can muddle through by patching up a country here and there. That will destroy the clarity exposed by a Greek default.

The divide, as usual, is between France and Germany over monetary policy. The French, along with their southern European allies in Greece, Italy, Spain, and Portugal, favor easy money, while the Germans, along with northern Europeans in the Netherlands, Austria, and Finland, insist on a tight money policy. Any hint of German capitulation to French demands of easier money will be the end of the euro. The first sign of wavering, the first inkling that a compromise is afoot, will signal to the markets that the floodgates for a river of euros are open, that fiscal and monetary discipline are history, that inflation will be rampant, and that the euro will be worthless.

Germans will not pay for the profligacy of their neighbors. Otherwise, where would it stop? Any concession towards easy money will only reinforce the "moral hazard" of further risk-accepting behavior. It is a story as old as Aesop: the ant and the grasshopper. Germany entered into the euro under assurances that all members would conduct their economic affairs responsibly. If this is no longer the case, then Germany will reserve the right to withdraw. A former British chancellor of the exchequer agrees, insisting that Germany would sooner withdraw from the euro than see its integrity compromised. Another (not insignificant) factor is the survival of Angela Merkel as chancellor. Any suggestion of Merkel wavering at the prospect of easy money is tantamount to political suicide. So all the speculation that the ECB or the EFSF will "stabilize" (rescue) the euro is so much folderol.

The power calculus, then, favors Germany. France will be dragged along kicking and screaming, but two points suggest eventual French capitulation. One is that Germany will otherwise threaten to secede from the euro, which would put France in a nasty competitive economic position. And the second is that, without the unity embodied in a common currency, French hopes of ever again exerting influence on the world scene will have evaporated. Europeans understand that they cannot meet global challenges as individual nations because they are no longer great powers. As President Sarkozy conceded, "If Europe does not change quickly enough, global history will be written without Europe."

The original path to the common currency was through a convergence of economic policies. Nations would have budget deficits of no more than 3 percent of GDP, and total debt of no more than 60 percent of GDP. If euro members had stuck to these criteria, they would be in dandy shape now. So a return to that mechanism, with additional penalties for non-compliance, might work. The problem is to create binding agreements.

On the question of enforcement, one possibility mentioned is an automatic increase in taxes to offset a budget deficit beyond acceptable limits. Other devices to ensure compliance with EU oversight of national budgets are available for the same purpose. These sanctions would be imposed by a central authority that can override national budget decisions. The European Court of Justice and the European Commission have been suggested as ultimate arbiters, but such supranational enforcement has its limits in a union of sovereign states.

Sovereign governments may oppose such measures for domestic political reasons. As long as sovereignty remains, national governments may negate previous agreements. Even within national governments, as in the U.S. Congress, existing legislatures may negate the agreements of previous legislatures. Therefore, a more severe penalty is required. 

The ultimate penalty for non-compliance is, of course, expulsion. The eurozone could expel any country that fails -- after a suitable time period -- to adhere to budgetary guidelines set forth in a new agreement. The ultima ratio of economic union is expulsion, just as the ultima ratio of politics is war. It lurks behind every decision as the final alternative.

So the demise of the euro, as a proxy for the EU itself, is not on. Neither is a consolidation on the German federal model. A big push for more Europe is not in the cards now. The loss of that much national sovereignty is unrealistic, given the immature development of a European identity. That is why convergence of fiscal and economic policies is the most likely outcome, not complete structural reform.

But convergence will not save the euro if member states refuse to comply with agreed guidelines. Both France and Germany violated the guidelines in 2003, breaking through the barriers of 3 percent budget deficits and 60 percent debt for more than a year. If the founding members of the eurozone fail to comply or to remedy violations within prescribed time periods, then the euro will well and truly collapse. In a union of sovereign powers, political will is the ultimate arbiter.

Mark S. Sheetz is an Associate in the International Security Program at the John F. Kennedy School of Government of Harvard University. He is currently writing a book on France, Germany, and the Transformation of Europe.  

The struggle to save the euro is beginning to look like a chase scene from an Indiana Jones movie. First, our hero dodges the landslide, then runs from the spear-wielding aborigines, then is surprised by a snake ("I hate snakes!"), then is pursued by well-armed Germans and has to escape on horseback, only to plunge over a waterfall, only to be captured by ... you get the idea.

So this week we had 48 hours of excitement after Greek Prime Minister George Papandreou announced he was going to hold a referendum on Greece's acceptance of the European bailout. Consternation reigned, and markets tumbled. And then he said, in the best tradition of Emily Litella: "Never mind." Markets rebounded, and the bus lurched on toward the next crisis.

As I've emphasized before, I'm no macroeconomist (although my respect for some of them has been dropping steadily since 2007). From my decidedly non-expert perspective, here's what I've concluded.

The real issue with respect to Greece and Italy (and thus, the euro) is whether genuine economic growth can be restored to these economies. All the bailouts and austerity and haircuts (i.e., voluntary reductions in debt) in the world won't help these states (and especially not Italy) if they can't generate enough economic growth to pay back what they owe. (Strict austerity is a problem here, by the way, because it reduces growth in the short term). If they don't grow they can't pay, which will place a lot of European banks at risk of major losses and maybe bankruptcies. And because this whole arrangement depends on confidence -- a debt is an asset if you think it will be repaid, but it's a loss if you believe it won't -- you'll get a credit event if the markets ever conclude that growth won't happen and the debts won't get repaid, and the euro is probably finished (at least in its present form). End of story.

So the fact that things have calmed down a bit (just as they do at the end of a good chase scene), doesn't tell us much about the future. All these diplomatic machinations to arrange rescue packages, etc., can buy time, but they won't solve the problem if economic growth does not return. And the big difference between this thriller and a Spielberg movie is that the script is being written as we go along and we have no guarantee of a happy ending.

Perhaps the single most remarkable development in 2011 is the wave of political protests that have occurred in widely-varying political contexts. In addition to the various upheavals that constitute the "Arab Spring," we've also seen tent cities in Israel, the "Occupy Wall Street" movement and its clones here in the United States, and various imitators in both Europe and Asia. This wave of political contagion is more widespread than the "velvet revolutions" of 1989 (though not yet as significant), and perhaps the nearest analogue would be wave of youth-revolutions and upheavals that occurred back in 1968.

What is going on here? Is there a common set of causes at work, or at least a common thread to otherwise diverse phenomena? I think so, because I see these upheavals as fueled by three important global developments.  

The first factor is economic globalization, which has made many states both sensitive and vulnerable to events in far-away places, and led to rising inequality both between and within countries. Yet most governments have failed to enact remedial measures to soften the consequences of economic change and to restore a more level distribution of income, thereby ensuring some degree of economic pain and political discontent.

The second development is the globalization of information, which allows events and ideas to spread much more quickly. As a result, demonstrators in Cairo can watch what's happening in Tunis and imitate it, and then other people in other countries get the idea that protest can be effective, even if their particular grievances are somewhat different. And so it spreads, as the radical idea of ordinary people taking action against the seemingly impregnable becomes increasingly contagious. Plus, each group can learn from each other and feed off the sense of being part of a larger process, instead of feeling like isolated and powerless individuals with scant hope of success. This sort of thing has happened before in world history (e.g., in 1789, 1848, 1919, 1989, etc.), but never in so many far-flung and widely different contexts.

The third reason is the increasingly-evident incompetence and/or corruption of governing elites in many countries, and the tendency of governments to do too much to protect wealthy and powerful interests and not enough to help ordinary people. In Egypt, it was the overt corruption of the Mubarak regime, whether in the form of privileged deals for military officers or for Mubarak's son. In the United States, it was the taxpayer-funded rescue of "too big to fail" financial institutions as well as the "too-well connected to fail" recycling of some of the same people who helped create the whole mess in the first place. And then there's the continued recycling of policy ideas that had been discredited by events but never discarded. People may be disappointed by Obama, but real disenchantment comes from the growing realization that replacing him wouldn't make much difference and might make things much worse. You know the line: "Meet the New Boss....Same as the Old Boss." (Turns out Pete Townshend was a prophet when he wrote "Won't Get Fooled Again," which would be a nice anthem for many of these movements.)

There is, of course, a deeper taproot to all this. As my colleague Jenny Mansbridge reminded me in a superb talk I attended last week, (and which will be published next month in PS), the present combination of economic inequality and political gridlock is fatal to the proper functioning of democratic orders.  In a capitalist democracy, corporate interests tend to be wealthier than the rest of society, and the state is the only actor powerful enough to intervene to prevent corporate interests from going too far and exploiting their position. This is what happened in the Gilded Age and again in the Roaring 20s, which eventually led to the Progressive Era and later the New Deal.

But if the political system is gridlocked, then the state cannot act quickly or decisively to retard corporate power. Even worse, as corporate interests grow stronger they tend to acquire greater political power (and especially when a tame Supreme Court helps them, as it did in the Citizens United decision).  Instead of just hamstringing the state, corporate interests can get it to enact laws that favor them even more. The result will be rising economic inequality and precisely the sort of irresponsible and unregulated behavior that led to the Great Recession of 2007.

Put these three things together, and you have a recipe for global protests in very different countries. Despite the many differences between conditions in the United States, in Greece, in Egypt, in Syria, in Israel, or elsewhere, what unites the 2011 wave of global protest is the shared belief that the People in Charge do not know what they are doing, care more about their own wealth and well-being than they do about the common weal, or are simply too spineless and shallow to do what at least a few of them secretly know to be right.

Ask yourself: how many contemporary political leaders do you genuinely admire? How many of them would rate a paragraph, let alone a whole chapter, in a revised edition of Profiles in Courage? How many of them seem capable of giving you a straight answer to a hard question, as opposed to offering you a lot of happy double-talk? How many of them are better at making a powerful speech than they are at taking a principled stand and sticking to it? How many of them have really got your back, as opposed to pandering to the endless parade of well-heeled lobbyists and special interest groups? Is there political leader in your country who is not for sale?

If you've been paying attention, and you can't find such leaders in your country, and you having been watching the obscenely wealthy get richer and more powerful, so that they can rig the game to make themselves richer still, then you'd probably think about painting a sign and getting out in the streets. And if I didn't already have this blog for my soap-box, maybe I would too.

Back in 2009, right after Barack Obama took office, I published the following prediction in the Australian journal American Age:

To be blunt, anyone who expects Obama to produce a dramatic transformation in America's global position is going to be disappointed. There are three reasons why major foreign policy achievements are unlikely. First, the big issue is still the economy, and Obama is going to focus most of his time and political capital there. Success in this area is critical to the rest of his agenda and to his prospects for re-election in 2012. Second, Obama is a pragmatic centrist and his foreign policy team is made up of mainstream liberal internationalists who believe active US leadership is essential to solving most international problems. Although they will undoubtedly try to reverse the excesses of the Bush administration, this group is unlikely to undertake a fundamental rethinking of the US's global role. Third, and most important, there are no easy problems on Obama's foreign policy "to-do" list. Even if he was able to devote his full attention to these issues, it would be difficult to resolve any of them quickly.

I thought of that article and those predictions after two conversations with friends who are both experts in American politics. One is a political scientist and entrepreneur who leans toward the GOP these days, and the other is a political scientist with considerable experience in the Democratic Party establishment. My businessman friend told me bluntly: "Obama is toast. The Republicans could run a scarecrow against him and win." Interestingly, my Democratic party friend was even more outspoken in condemning the president and his advisors, and bluntly called them "a disaster." (As for my own forecasts, I think I was basically right, although Obama did not focus as much on economic matters as I expected and put too much time and capital into the health-care fight. And that is why he's in big trouble now.)

It's still early in the election season, of course, and the GOP field looks none too strong. But there's a lot of solid political science research showing that incumbent presidents have a very tough time when the economy is in the doldrums, and it's hard for me to see how Obama can get things moving again, especially when the GOP leadership has every incentive to thwart his efforts, even if it means keeping Americans out of work for another year or so.

The prospect of a one-term Obama presidency is bound to have important effects on foreign policy too. I'll bet other countries are already starting to think about the possibility, and starting to factor that into their calculations. The obvious implication is that any governments who have serious differences with the Obama administration are going to dig in their heels even more and hope for better after 2012.  It's possible that some governments who fear a more hard-line U.S. response under the GOP might be tempted to cut deals while they can, but I don't think that's very likely because they would also have to wonder if a lame-duck administration could deliver on any deal it made. The absurd length of the U.S. presidential campaign season will compound all these problems, by burning up even more of the president's time and attention over the next year or so.

This is obviously speculative and should not be overstated. But now, as in 1992, "It's the economy, stupid." And the bottom line: Expect even less from U.S. foreign policy in the year ahead. Like I said back in 2009: If you thought this administration would produce a major change in our overall global position, get used to disappointment.

If you're like me, your attention this week has been focused on the gyrating stock market. That's not my area of expertise -- though my gut tells me that the wild swings of the past few days are mostly a reflection of uncertainty -- and I won't try to tell you what it means or how you can profit from all this turmoil. (If I had the answer for that, I'd have taken my wife's advice and moved our retirement funds into cash or Treasuries a couple of weeks ago. Oh well.) 

Overall, I remain a long-term optimist about America's global position, because the United States still has lots of innate advantages and most of our current problems stem from self-inflicted wounds (stupid wars, threat inflation, a warped tax code, too much money corrupting politics, etc.). Compared with a lot of other countries, however, the United States remains geopolitically secure, wealthy, and technologically advanced. It has excellent higher education and a relatively young and growing population (especially when compared to most of Europe, Russia, or Japan). If we can just get our politics and our strategy right we'll be fine, though I admit that this is a big if.

So instead of brooding about my portfolio, I've been thinking about the Big Uncertainties that are going to shape events in the years to come. It's a subject I've visited before (see my "Five Big Questions" from July 2010), so you can consider this a partial update.

Here are my Five Big Uncertainties for 2011.

1. The World Economy: Meltdown or Malaise? Obviously, a major driver of the near-to-medium term environment will be whether we get another major economic slump. See FP colleague Dan Drezner for the nightmare scenario here, and especially bear in mind the danger that a serious slide would almost certainly lead to even more poisonous politics in lots of different places. (Like any good economist, Dan presents the optimistic scenario here, which tells you why President Kennedy used to complain that he wanted to meet a one-handed economist). The alternative that I foresee, alas, is not a scenario of rapid economic recovery. Instead, the best we can hope for is at least a couple more years of very modest economic growth. But at this point I'd take that in a heartbeat.

Read on

One of my occasional hobbyhorses on this blog has been the desirability of greater transparency on where research and advocacy organizations (and intellectuals) get their money. It's the old question: cui bono? You can read what I've said in the past here and here. I frankly would welcome a system where think tanks had to publicly disclose all of their sources of support, so that consumers of their work could see exactly who they were beholden to. Lest you think I'm being hypocritical about this, I think university professors ought to do the same with any outside income that they earn.** The reason in both cases is simple: when anyone participates in public discourse on vital issues, outsiders should be aware of potential conflicts of interest and should know exactly who might be paying for it. 

Eli Clifton at the Center for American Progress has a revealing post up on the various backers of the neo-conservative Foundation for Defense of Democracies. This organization has been in the vanguard of the campaign for war with Iran, reflexively supportive of the Israeli right, and a fertile source of fear-mongering Islamophobia. It will therefore surprise no one that its primary financial backers are also hard-core Zionists, and that the democracy it seems most committed to defending is located far from Washington D.C. 

This situation underscores a point that John Mearsheimer and I emphasized in our book: the Israel lobby is not confined to formal "lobbying" organizations like AIPAC. It also includes well-funded think tanks and advocacy organizations that actively work to shape political debate and public discourse in ways intended to reinforce the U.S.-Israel "special relationship" and to persuade policymakers to support policies that these organizations believe (in my view incorrectly) will be beneficial for Israel and the United States.

It bears repeating that there's nothing illegal, conspiratorial, or unethical about what these donors are doing; individuals and foundations in the United States are entitled to fund whatever advocacy organizations they wish. But Clifton's data helps you understand why discourse inside-the-Beltway is so heavily skewed in one direction.

**Postscript: In my own case, in 2010 I received a consulting fee from the S Rajaratnam School in Singapore and speakers' fees from eight other universities (for public lectures). I also received honoraria for presentations at several events sponsored by the Department of Defense and for participating in a colloquium sponsored by the State Department. I was also paid to speak at an Economist magazine conference in Athens and for doing some research work for the New America Foundation. Foreign Policy pays me a modest amount to write this blog, and Cornell University Press pays me to co-edit a book series.  And in case some of you are wondering, I didn't receive any money from any individuals, groups, countries, or corporations connected with Middle East politics.

About 13 months ago, I returned from a visit to Greece and said I was increasingly pessimistic about prospects for a successful turnaround there. Money quotation (emphasis added):

In order to stave off default, Greece needs to trim its budget drastically (which means throwing people out of work or reducing their incomes), while at the same time stimulating economic growth. The problem is that it's hard to do both at the same time, because cutting the budget (or collecting taxes more efficiently) reduces domestic demand and thus chokes off economic growth. And because Greece is part of the Eurozone, it can't stimulate export-led growth by the normal expedient of devaluing its currency. (The sinking Euro helps globally, but not within the Eurozone itself.) Greece's prospects for economic growth are further handicapped by conditions elsewhere in Europe: It will be hard for Greece to grow if the rest of Europe is stagnant. If the government's efforts at restructuring lead to widespread political unrest, then chances of robust growth are even slimmer. And once the financial markets begin to realize all this, bond spreads will increase again and we will be back in the same soup we were in a few weeks ago.

All of which leads me to conclude that Europe as a whole is going to be in difficult shape for quite some time, unless EU officials figure out a way to do a lot more than they have done so far. And a double-dip European recession could trigger a double-dip recession here in the United States, which would have profound economic and political consequences (e.g., goodbye to Barack's second term?)."

Back then, I was surprised that anybody thought differently (i.e., that anyone believed the initial bailout would work). It didn't, of course, and Greece, the bankers, and the EU are now back in the soup.  As the New York Times reports (my emphasis):

"Analysts and Socialist Party insiders said that Mr. Papandreou seems likely to succeed in passing the austerity package, having secured more support within the party. But economists are nearly unanimous in predicting the loans will only buy time, but do nothing to pull the country out of its economic morass and potential default.

Or as Ken Rogoff, co-author of a terrific study of financial crises ("This Time Is Different: Eight Centuries of Financial Folly), points out: "There is every possibility that at the end of this Greece is going to default anyway."

If that's true (and it sounds right to me) then Greece may have no alternative but to abandon the Euro and leave its creditors (and the Eurozone countries) to their fates. I'm no expert on these matters, but most of what I've read so far tells me that this would be very bad news for the European economy, and for us. But you can relax, because at least things are going well in Libya and Afghanistan and Pakistan and the Mideast and Japan and ...

There's a terrific piece in the National Journal today, adding up the costs of the "war on terror" and pointing out that unlike some other costly wars in American history, this one has produced almost no economic benefits. That is, unless you think people standing in TSA lines are using those idle minutes (hours?) to dream up lots of innovative new ideas that will fire up the U.S. economy. I rather doubt it.

If we had a rational discourse on this subject, it ought to provoke two questions.  First, how did we get into this mess in the first place? Specifically, what were the U.S. policies that contributed to the rise of groups like Al Qaeda, and made it difficult-to-impossible to head them off before they hit us? (You'd think the 9/11 Commission would have tackled this question head on, but of course that proved too controversial for them). This subject hasn't been wholly neglected since 9/11 (i.e., there was some discussion of the familiar "why do they hate us?" question), but even raising the question could get you accused of being someone who "blamed America first." So hardly anybody asked if maybe 9/11 was also a wake-up call, and that there were some aspects of U.S. foreign policy that needed to be rethought. Of course, raising the question doesn't necessarily mean that the policies that contributed to Al Qaeda's rise (e.g., stationing troops in Saudi Arabia, unconditional support for Israel, propping up the Mubarak regime in Egypt, etc.) were necessarily wrong, but it does suggest that these policies were more expensive than we previously believed.

The second question would be: which responses to 9/11 have worked well, and which policies have proven to be costly failures?  Ideally, the United States ought to conduct a ruthless assessment of the post-9/11 response, in order to determine -- to the extent possible -- which of the post 9/11 policy changes were effective and which were not. The purpose here isn't a witch-hunt directed at former government officials, as I assume that even the neocons who led us blindly into Iraq believed that this decision was in the best interests of the country. But now, nearly ten years later, we ought to be mature enough to recognize that some of the actions we took after 9/11 weren't that smart, while some other responses turned out to be quite effective. And both ends of the political spectrum should be open to revising their views: some policies abhorred by liberals (such as electronic eavesdropping) may actually have been a net positive, while some actions favored by hardline conservatives (such as waterboarding and other forms of torture) should be seen as misguided failures.

That is how a mature great power would deal with the vast and costly response that began on 9/11: it would try to learn the right lessons from the past decade so that it did better the next time it faced an unexpected challenge. But in the polarized, partisan, and fact-free world of contemporary policy discourse, how likely is that?

My previous post on the future of the Euro has attracted some critical comments from various parts of the IR/IPE community, see here and here. My critics make some interesting points (though I found them a bit hard to follow), but their central argument is that these broad paradigms don't make sharply differing predictions about this issue. In other words, what happens to the Euro (or the EU itself) would be consistent with any of these paradigms, and so my original question was misplaced.

What's perhaps most interesting about the comments is that none of respondents seem to have gone and looked at the realist work that is most germane to this issue, and to which I alluded in one of my links.  I refer to the work of Sebastian Rosato of the University of Notre Dame, who has recently published an important book entitled Europe United: Power Politics and the Making of the European Community. (Full disclosure: Rosato took a course from me at the University of Chicago over a decade ago, but I left Chicago before he wrote his thesis. His book was published in the book series that I co-edit, but I wasn't the editor who handled his manuscript)  

In any case, Europe United is a decidedly realist account of the EU's formation and evolution.  Rosato is also a pessimist about the fate of the Euro, on both purely economic but also what might be termed "power-political" grounds. Critics of my original post are correct that I don't have a "realist" theory on this issue, but Rosato does. (He also has a forthcoming article in International Security that lays out his arguments regarding the euro in more detail).

Without presuming to speak for him, I'd just make two points. First, as I made clear in my original post, I don't think the evolution of the euro or the EU will decide the validity of rival theoretical approaches to international relations. Despite my realist proclivities, I actually see some virtue in most approaches to international relations, and the trick is determining what weight to give each one and how to adjust the weights in different circumstances. In short, I stand by the views I expressed here.

Second, I still believe these rival perspectives do lead to different expectations about Europe's future course. Realism, liberalism, and constructivism all agree that states will cooperate in some circumstances, but realists are more skeptical about the scope and extent of cooperation and tend to see underlying power distributions and security concerns as central to the process, especially between major powers. Accordingly, a realist account of the EU would stress that these states agreed to constrain their own autonomy and sovereignty largely in response to an unusual power configuration (i.e., the Cold War), and as much for security reasons as for purely economic ones. The end of the Cold War removed that power configuration, and we have seen the EU both expand and fray ever since. Germany's unwillingness to keep subsidizing profligate countries and European concerns about the implications of Germany's increasingly dominant role (as highlighted in this NYT article) are consistent with that view.

By contrast, liberal accounts of the EU emphasize the role of economic interdependence and welfare concerns as the main driving factor.  In this view, so long as high interdependence obtains, the EU has little choice but to find a way to stagger forward. Constructivist approaches offer a third alternative: the EU will survive because it has led to the emergence of a nascent "European" identity that is gradually trumping national loyalties, and so distributions of power and other traditional realist concerns aren't really relevant anymore.  

So we do have three contrasting views-one of them generally pessimistic about the EU and the euro, and two of them generally optimistic-and we can now wait for the passage of time to reveal which prediction is correct.

Bottom line: I don't think my original question was silly, but I am glad to have stimulated a bit of discussion.