Call me crazy, but I don't see why everyone is talking as if the Montgomery County shooter is some kind of crack paramilitary marksman. The guy drives around in a white van looking for targets. He picks people who, from what the news is saying, are standing still -- pumping gas, sitting at a bus, etc. Crack shot? He sounds to me like the newbie hunter who has to sprinkle salt on the ground because he can't hit a moving target. He gets to lie in a relaxed, prone position, aim at his leisure, probably with a scope (although the human head is a lot larger than the targets I used to hit with my not-terribly-well-sighted bolt actions at camp). Given that he's shooting for the head in all but one case (the lawnmower guy, who was moving, and where he apparently aimed for the heart), and probably from a distance, if he misses, he's likely to miss entirely. Meaning the bullet would more likely plow harmlessly into a building wall or the car upholstery, than wound. For all we know, there are bullet holes in buildings all over Montgomery County where he overshot his target, who never heard a thing, and moved on.
Of course, the police are saying he must be some sort of superpredator, but then the police like to make everyone out as a superpredator -- no one wants to admit they're being outwitted by Barney Fife. But this sounds to me as if its the randomness of the crimes, rather than the skill of the shooter, that's making him hard to catch.
Okay, I'm not going to defend Ann Coulter's politics or her style. But when people start dissing on tall, skinny pundit chicks for being, well, tall and skinny, I feel that I have to step in and say. . . um. . . stop dissing on tall, skinny pundit chicks. We have feelings too, you know.
Volokh is arguing that one could view Moses as a terrorist, given that he was the henchman delivering extortionate threats of slaying firstborn children, etc. But I don't think that that's the right way to look at it. We have a special category in the law for "Acts of God", which is, after all, what these things were. So Moses was less a henchman delivering threats than the farsighted scientist in the science fiction movie, trying to tell the intransigent government officials how they could avoid the otherwise inevitable catastrophe. Or so I mote.
Andrew Sullivan says his Mac is hosed, so he took it to the Apple Store. Now, I don't want to enter, once again, on the Mac wars. . . . but 10 days to replace a hard drive? What are they doing, smelting the alloys for the hard drive case themselves? For the price of a Fedex, PC manufacturers will get you a new hard drive overnight. You pop out the old one, pop in the new, and whe-hee! Up and running again. Some companies Fedex you a whole new machine.
This interests me because it comes immediately after the death of the Mac at one of my clients, followed by the discovery that, during a recent move, they'd lost all the software CD's that came with it. Now, when this happens with a PC, you call the manufacturer, and even if it's out of warranty, they send you a neat little bootable recovery CD, which restores all the software and drivers the computer came with. When you call Apple after this has happened, they say "Gee, that's really too bad" and advise you to buy the software again. Which we did. For the PC, a Pentium III that's running Photoshop and Quark beautifully.
I don't doubt that Macs have many advantages; it's just that most of my work was in the financial sector, where they're not even a possibility. But their tech support seems to be weak in some critical spots. Come a year, when things start breaking down, people who followed the "Why I switched" campaign may be descending on Apple in an angry mob, demanding to know why they can't have things fixed now, like Dell did.
Looks like the shooter at the UN said it had something to do with human rights in North Korea. And Instapundit's asking why no one's talking terrorism. . .
Okay, so the New Jersey Supreme Court ruling is appalling. I mean, really appalling. Nonetheless, it's time for the Republicans to move on. Not merely because it isn't helping anyone to make this another nasty, hate-filled drama, but also because going to the Supreme Court isn't going to help; it's just going to piss voters off, and mobilize the Democratic base. Far better to take the high road "more in sorrow than in anger" and -- let Forrester resign in favor of Tom Kean.
No, I'm kidding. Run Forrester. Lautenberg barely won last time, when no one had ever heard of his opponent. Now Forrester's got some free publicity, and a nasty charge to hurl at the Democrats -- that they'll do anything to keep power, even abrogate the law. Now, I'm sure the Republicans have polled this to death, but I really think they could get a hell of a boost by refusing to take it to court. On the other hand, no one's asking me to run their campaign, either.
Fox News is reporting that the New Jersey State Supreme Court is going to rule in favor of the Democrats.
I'm listening to the arguments and they're outrageous. The Democrats aren't even trying to pretend that what they're doing is legal; they're asking the court to override the law by fiat. And the court seems to be complying.
I still don't understand how they're overcoming the equal protection violation, since apparently the military ballots can't be replaced quickly enough, and others supposedly have already come back.
The biggest question in all of this is why Torricelli won't just resign. If he resigns on Friday, the Governor can appoint a replacement who goes straight onto the ballot, avoiding the messy court battle that we look set to embark upon. So why isn't he?
The answer appears to be that he hates Frank Lautenburg so much that he will cost his party the election to spite him. That's why the Democrats tried to grab several popular congressmen, until Gephardt told Daschle to back off. Now they're stuck with Lautenburg, and apparently Torricelli is refusing to play ball.
Now it looks like the Democrats are going to prevail in state court -- sorry, Horatio! -- which means that the Republicans will be petitioning the Supreme Court to take the case. The lesson, as one correspondant notes, is that if you are a state supreme court, it behooves you to tread carefully in national elections. But all is not lost -- it is, after all, less "national" than the presidency, the election hasn't gone off yet, and the opening day of the Supreme Court's calendar is Monday, which means delay. Delay is the Republicans' friend -- at some point, it becomes too late to reprint the ballots.
Oh, there's nothing like a knotty election controversy to arouse the sleeping pundit in me.
The latest buzz is in from Live From the WTC's secret sources:
With the hearing set for next Wednesday, the Democrats are revving up to put Lautenburg in his place. But secret sources with an eye on New Jersey politics point out that two can play at this game. While everyone who knows what they're talking about seems to be highly doubtful that a) the New Jersey Court will willfully abrogate their election law and b) the Supreme Court will permit this to pass, it's not entirely out of the question. The New Jersey court is dominated by Democrats, and the Supreme Court doesn't particularly want to get its hands dirty again, although this time it does have a rock solid violation, in the matter of the absentee ballots, to hang it on.
So what if it passes? Wily observers note that what is good for the goose is good for the gander. . . if the Democrats succeed in their plea, money is on Tom Kean, former governor of New Jersey, to step into Forrester's place. Forrester can be bought off by the party leadership, since he's highly unlikely to win re-election if he crosses them. . . and Tom Kean beats Lautenburg, who barely squeaked by in his last election, hands down. Kean initially refused to run because he didn't want the bother of raising money, but with the race handed to him like this, it would be hard to pass up.
If nothing else, it would provide hours of fun for the entire family watching the Democrats try to explain why their guy should be allowed to drop out, but the Republican candidate shouldn't -- without mentioning that they nominated a crook.
This excellent, chilling interview shows that Nazi Germany wasn't a nation of monsters; it was a nation that became monstrous, baby step by baby step.
We all know the term "final solution" to the Jewish problem, and we think, usually without thinking, that the final solution was there from the beginning. If you look closely at the history of Nazi policy and practice with regard to the Jews, one sees that the Nazis developed their solutions until ultimately they came to the final solution -- the annihilation of all the Jews in Nazi-occupied regions. The Nazis never wanted the Jews; they always wanted to get rid of the Jews. The question is: What does "get rid of" mean?
Initially, it meant sending them off, enforced emigration. Then, when the Germans conquered larger and larger tracts of Europe, millions more Jews came under their control. The original solution was no longer working. So they devised other solutions that took care of larger numbers of people and that are workable during wartime. The next solution is some kind of reservation. Such a reservation was created in the Lublin district [in Poland]. Then the Germans got this idea that they would send the Jews off to Madagascar. They really believed that might happen; it was on the drawing board. . .
The Nisko reservation in the Lublin district was a disaster; even the Nazis recognized that. The Madagascar option never materialized because Britain did not fall so the Germans never controlled Madagascar. They turned to other solutions. But the practice of killing Jews came before the policy decision to murder the Jews of Europe.
So the word on everyone's lips today is "Torricelli" and I wish I knew how to spell it, and/or wasn't too lazy to look it up. No matter; that's the kind of devil-may-care, damn-the-torpedos, details-what-details? commentary that draws people to my blog. Or so I devoutly hope.
Anyway, I've had a change of heart: now I'm on the fence.
I have some natural sympathy for the Republicans. I'm a firm believer in the sanctity of electoral law, in the sense that I think it is disastrous to start changing the rules after the players have taken the field. Not because the rules themselves may be very good, but because once you know who is likely to benefit from a given change, it is nearly impossible for mortal humans to separate their personal electoral desires from the issue of whether or not the change should be made. Take Florida. Now, I don't want you to email me with your opinion on how the [Democrats/Republicans] were just trying to [break the plain-as-the-nose-on-your-face rules/excercise abusive power just because they happened to hold certain offices] in order to get [Gore/Bush] elected. As I found when I wrote on it, the subject of the 2000 election has taken on something of a religious nature. The partisans refuse to admit that there is anything at all suspicious in the way their position on Florida's electoral law neatly served to bolster their candidate, much less consider that those on the other side might feel exactly the same way about their position, rather than plotting madly to overturn the [clear rules/legislative intent] and thereby unfairly seize power. Just work with me for the nonce, and agree that whether or not your position on the 2000 Florida election happens to be the legally correct one, it is very, very hard to separate your opinion on the law from your opinion on the candidates. You can see this, because all those stupid fools you are friends with who voted for the other guy seem to genuinely believe that the court should have voted in their party's favor. It is therefore, on principle, a bad idea to let people alter or reinterpret the statutes when they know how those alterations are likely to affect the outcome of the race.
But I have more sympathy to this argument when it happens after an election has taken place. It's not immediately obvious what is really hurt by substituting candidates with a month to go to the election.
On the other hand, I find it very hard to be sympathetic to the Democrats, because their argument is, in its entirety: give us power.
Let's dispense right now with the idea that there is a "right" to competitive elections. If that's the case, the Republicans in my state have a hell of a court case ahead of them, because for many, many offices Democrats run unopposed. This is an argument of convenience, not of principle, and I don't want to hear anyone bring it up to me because it's idiotic on its face. A majority of national offices are not competitive, and its possible that a majority of local ones aren't either, if New York is anything to go by. So nail the coffin shut on that one.
The other argument I hear from Democrats is, basically, that it's not fair. You jest. Your party protected him. Your party let him run again. Your party voted for him in the primary. And now you want to call a do-over because everyone else is disgusted by what your party did?
The Democrats proffering this argument are pretending that this is some sort of act of God, as though they woke up Tuesday morning and found, to their utter shock and horror, that unbeknownst to them the man that the Democratic-controlled Senate had just admonished for taking bribes had somehow become their party's nominee for the New Jersey Senate seat. We are all supposed to imagine their relief at finding that Torricelli was willing to rectify this inexplicable mishap by stepping down immediately, so that the correct candidate could be inserted on the ballot -- and their bewilderment and sorrow when they found that venal Republicans were trying to block their efforts to make sure that New Jersey voters had a real choice. In fact, while they won't say it, many people have noted that it is probable that the Republicans staged this entire scandal simply to gain electoral advantage.
Call me when the shuttle lands. The Democratic leadership, who were entirely willing to put up with Torricelli's bribe-taking until he made the mistake of becoming unelectable, descended on the Torch like an angry mob. The locals wanted him out because it will depress their turnout, and boost the GOP's, while the nationals just woke up to the fact that he's probably going to cost them the senate. The only new facts here are his abysmal poll numbers. These are the sort of facts that the election law is designed to prevent people from acting upon. If they'd wanted to substitute someone, they should have put the full court press on earlier. They rolled the dice and lost.
Both parties are whining like little children because they thought they had the Senate in their hands and now the court is threatening to take their pretty toy away. For this I have no patience at all. Neither party has a right to the Senate. And I am thoroughly, thoroughly apalled by the people on both sides I've heard say that it's more important to get control of the Senate than to have clean elections. If you would trade liberty for power, you will get, and deserve, neither, unless it is secured by better men than you.
I see several large principles. The first is that people should have more choice, if possible. It's not a right, but we should try to secure it where we can.
The second is that we shouldn't have people in the Senate who take bribes. That's why I wouldn't mind if the Republicans let this pass -- let's do what it takes to get the Torch out, 'kay?
The third is that rules shouldn't change midstream. If we allow this, we encourage parties to push the envelope on electoral law, trying to get their people in a position to change the result post facto. This is a bad thing, and I think we should draw exceptions narrowly. It is instructive, I think, at this point, to consider why the legislature sets things up as they are. Why are primaries so far in advance? Why the 51 day limit? I don't have access to the floor debate on the sections of the law in question, but I think it's reasonable to assume that they did it in order to give people time to learn about the candidates. Will they have enough time to consider Lautenburg? Maybe. Maybe not. There's also the issue of giving one campaign an unfair advantage. Most of Torricelli's campaign, especially the adjunct "issue ads", will transfer straight to Lautenburg. Forrester, on the other hand, has to start again from scratch. It gives the Democrats an unfair advantage, I'd argue.
And now that I've said all that, I'll tell you that I think it's moot. Mercer County has already started to get absentee ballots back. I think it's highly unlikely that a New Jersey Court is going to invalidate those ballots. And if they do, I think there's a fair-to-middling chance that it will go to the Supreme Court, where it will be overturned.
I'm actually very interested in the Democratic legal strategy. Why now? Poll numbers aside. The buzz around here is that the dossier on Torricelli is starting to leak, and if it gets out, he's doomed. But what are they hoping for? Unless he resigns by Friday, the governor can't appoint a replacement -- so why are they waiting? Do they want to test the idea that the governor can cancel the election? Or (my guess) do they want to throw up their hands, keep him on the ballot, and have the governor promise to appoint Lautenburg in his place as soon as he resigns? Everyone seems to agree that that's legal. And if it works. . .
Well, I look forward to seeing how the Dems justify their opposition when the Republicans try it.
In this article on the cost of the war by Robert Shapiro, which is fairly good, though I disagree that the war would have any noticeable stimulative effects on the economy, one paragraph jumped out:
But an actual interruption in crude from the Gulf would still send world oil prices sky-high. If the conflict wears on or, worse, spreads, the economic consequences become very serious. Late last year, George Perry at the Brookings Institution ran some simulations and found that after taking into account a reasonable use of oil reserves, a cut in world oil production of just 6.5 percent a year would send the United States and the world into recession. The price of a barrel of oil would rise to $75, a gallon of gas would cost $2.78, inflation would jump 5 points, and U.S. growth would fall nearly 3 percent. A 10 percent net cut in the world's supply of oil for a year would be very nasty: Crude would sell for as much as $160 a barrel, gasoline would cost nearly $5 a gallon, 15 points would be added to the inflation rate, and growth would drop 4.6 percent.
That's why Saddaam waging undeterred conventional wars of territorial expansion is a bad, bad, bad, bad, bad idea. 6.5% is nothing compared to the contraction he could achieve -- profitably, for him -- with the Gulf in his pocket.
And please, before you send me your chirpy emails on the wonders of conservation: this is not 1973, thank you very much. The low hanging fruit of conservation has already been picked. Also notice that it took years for, for example, the auto fleet to turn over. Just because gas is $5 a gallon doesn't mean that people will suddenly be able to stump up 20K for a new car. Right now the only reason compacts are so cheap is that the automakers subsidize them heavily in order to achieve their CAFE numbers, which are based on the average of all cars sold. It's not because the cars cost so much less to make; labor, overhead, and marketing are by far larger expenses than the materials in the car. If demand for SUV's goes off a cliff, the price of compacts will rise a lot. Not to mention that its hell getting three kids and a dog into a Beetle.
Conservation is not going to achieve, say, a 10% reduction of demand for petroleum instantaneously.
In Part I, we discussed how MAD closes off potential areas of escalation. In Part II, we discussed the principle of overwhelming force. In Part III, we discussed the importance of presenting a credible threat. Now we'll talk about the central role of non-proliferation.
Believe it or not, you are not the first Americans to worry about the possibility of a suitcase nuke. Before MAD, this was the biggest worry Americans had about the new atomic age. The Russians did not, at the time of their first nuclear test, have the long-range delivery capacity to destroy us. What they did have was the open-ness of our society -- and issue we find ourselves facing once again.
At one point in the early years, there was actually a proposal to decentralize our entire economy in order to make it nuke proof. Ideas ranged from the mild (bury cities; move key factories out to the middle of nowhere) to the drastic (mandate a maximum population density, and forcibly disperse the populations of the cities, accepting the social and economic consequences that would follow.) We didn't do it; it was politically and economically nearly impossible. Instead we got MAD.
An important part of MAD, however, was making sure that our opponents had no incentive to put, say, a nuke in our 20 largest cities, and then deliver their demands. Or, more likely, put a nuke in our 20 largest city and blow them, effectively destroying us as a military and economic power. How did we do that? By treating such an attack the same way we would have treated any other attack on the territory of the United States, and launching our strategic nuclear arsenal.
Central to this, however, was non-proliferation. In 1951, if an atomic bomb had gone off in Cleveland -- well, we could be pretty sure it wasn't the British or the French.
In 1981, the differences in nuclear technology between the Chinese and the Russians would have likewise enabled us to identify the culprit. And we'd still be -- well, fairly sure, anyway -- that it wasn't the French.
But there were two other important reasons that non-proliferation was central to MAD. First of all, it removed the temptation to engage in proxy wars. "I gave a bomb to the Turks so that they could protect themselves from those crazy Greeks, and oops! they accidentally nuked Moscow. I've told them and told them you need to maintain an airtight maintenance schedule on those launchers."
And second, the nature of a MAD-type scenario is that while it is very stable with a small number of players, it is highly unstable as the number of players rises. And the decrease in stability with each additional player is exponential, rather than arithmetic.
Raising the number of players erodes the other pillars of deterrence we've been talking about. It reduces the credibility of your threat, because you can no longer take unilateral action. It likewise hampers overwhelming response. And instead of closing off potential avenues of escalation, it opens them, because as each player is added, there are more and more lines along which conflict can occur. At some point, the number of potential avenues begins to generate what I think of as collisions -- it is impossible to avoid one avenue of conflict without opening another.
This is why people who say we should just sigh and resign ourselves to the inevitable proliferation make me crazy. Because as far as I am aware, no one has yet designed a stable large-player system that would deter nuclear use. It isn't impossible to deter nuclear proliferation; for one thing, it would be possible for us to conquer every nation that supplies uranium and make sure none gets exported. Or conquer every country that even looked like it was trying to develop nuclear capability. It's just very, very unattractive. But then, so is the prospect of countries resolving border disputes with nuclear weapons. And since it's a lot easier to deter nuclear proliferation than it is to deter nuclear use once proliferation has occurred, I'd like to concentrate on the former rather than waiting for the latter.
Next: I wrap it all up and show you why I'm right and you're wrong. About everything. You bow down and worship me as a living god. I spend the rest of my days on earth lounging in my luxury apartment while humble disciples bring me tribute from the far corners of the earth.
Someone who argued the 2000 elections with me, who has asked to be referred to by the nom-de-bloggue of Horatio Hornswoggle, sends this in response to my post on Torricelli. I am not allowed to give too many biographical details, but I am allowed to say that he is the staunchest of Democrats, and that he and I had words -- many, many words -- on the subject of Bush v. Gore.
Dearest:
I am shocked, shocked, shocked by your essay on Torricelli. Two years ago you were arguing that it was unthinkable to re-write election law ex post facto. Now you want to let the Supreme Court waive electoral process so that the Democrats can stick someone else in at the last minute? Have we totally taken leave of our senses?
Oh, it does kill me to say this, but you were right, and I was wrong. At least about that. I am still apalled at the torturous logic of the ultimate Supreme Court resolution, and I don't like Republicans any more than I did back then. Nonetheless, we are finding ourselves with too many highly public cases in which we are bending the electoral rules in order to achieve the "just" result in elections. If we make a habit of this, we are going to lose the public faith in the electoral process that we depend on to make democracy work. Obviously, I would like to see Democrats control the Senate. I would even be willing to endure the Torch's sleazy ethics in order to maintain it. My problem is that it is the very importance of the race that makes it so important that we keep it honest. How can we sustain civil society if people think that the Democrats are willing to break the election law whenever it threatens their power? You and I know that it isn't true (or at least, any more true than it is of Republicans). But I'm afraid that we'll mow over the last hope anyone had of making our system more than a raw grab for power by whatever interest group can get a majority of judges. In 2000, I thought that the unique situation called for a unique response. Now it seems it isn't so unique.
They are my party, but --- let's be honest. This isn't an accident like 2000. This isn't an unforseeable death. The Torch had every opportunity to resign. My party had every opportunity to kick him out. They chose not to. Now, when the polls are down and there's no hope, they want to pull him out and put someone in who might win. That's a clear violation of both the intent and the letter of the law. The precedent it sets would be --- the legal term is "extremely icky".
You should have stuck to your guns. You can't re-write the rules when the game's in full swing.
(I am enjoying the Democrat lawyers *so* much though. They're all talking about the people's "right" to "a competitive election". I must have been out when we covered that one in Constitutional Law. If the court lets it stand, I am very much looking forward to the Republicans suing to axe Forrester in exchange for Colin Powell.)
As for my opinion on the law, I've got some money with my colleagues that it will be denied at the state level. The law is much clearer than it was in Florida, and the New Jersey court is more conservative. They have no interest in getting spanked by the Supremes. Plus one of the counties has already gotten some absentee ballots back, so there's all sorts of juicy legal issues. If they hadn't gotten the absentee ballots already, I could see a possibility, but I don't think it will fly. The rumor around here is that the Torch plans to resign on Saturday, when the governor is legally allowed to appoint a replacement who can serve for a full year before he faces a special election. However, with ballots already back in it's really tricky. I've got one friend who practices in New Jersey who thinks that the state court will order the resignation delayed until after the election, or order him to resign by Friday. But others don't agree. I think it's a disgusting mess, any way you look at it, and I'm mad as hell that the party leaders got us into it. Every morning I come out of the train, look across the river to New Jersey, and ask myself "What the [expletive deleted] were they thinking?"
Nuclear Deterrance, Part III In Part I, we talked about walling off potential avenues of escalation. In Part II, we covered the principle of overwhelming response. Now, we're going to talk about credible threat.
It's pretty obvious: when you're playing a game with such high stakes, you'd better make damn sure that your opponent believes you will launch. If he has any doubt at all, MAD won't work.
How do you establish credibility? Well, I've heard persuasive arguments that we didn't until the Cuban Missile crisis. That was what really convinced both sides that they didn't want to approach any of those potential avenues, because the other side was serious.
The problem is, we had to risk a nuclear war to get there. And in that case, both sides had a lot of advisors, a lot of communications, and a lot of mechanisms for restraining escalation.
The biggest weakness the Soviets feared was falling behind in the arms race. The biggest weakness we feared was that a pacifist might get into the White House and start unilaterally disarming. Those would have eroded the credibility of the threat they presented the other side. Obviously, if McGovern had been elected, he couldn't have just started dismantling our nukes. But he would have given the Soviets the -- correct -- impression that we were less likely to respond. That's why most defense policy people back then were hawks. Unilateral disarmament just didn't make sense in the context of a nuclear standoff.
Now, as to Saddaam: what threat do we want to project? Well, the Middle East. Saddaam with a nuke might hand it off to terrorists -- you don't know, and I don't know, and no combination of facile reasoning is going to divine that answer for us. More likely, however, is that he will use his nuke to invade his neighbors, with the threat of either nuking our troops if they show up, or one of our cities, or Israel. This threat will be made very publicly.
My take on this is that we would have to let him. We are not prepared to make the kind of committments that would be required to stop him.
Commit to sending troops to a theater after Saddaam had promised to turn them into radioactive dust?
Commit to blowing up Miami to save Riyadh?
Commit to the destruction of Israel (it wouldn't take many bombs for that) in order to save Kuwait? With the radiation scarred victims running night after night on every channel next to Saddaam saying he warned us?
Commit to saying that we'll use nukes on him if he uses them on us.
Well, yes, we will. But Saddaam can better afford to lose a city than we can. You're talking about committing to pound Iraq into radioactive dust.
But if we were presented with a threat to nuke us if we resisted conventional force, I think we'd back down rather than place ourselves in harm's way.
Well, that's just your opinion, say my interlocutors.
Well, yes, but you see if there is any reasonable doubt, you no longer have a credible threat. The wall around the potential avenues of escalation just came tumbling down. I don't have to prove that we wouldn't nuke Iraq if they invaded Kuwait, or nuked Israel, or if an atomic weapon went off in an American city and we could not trace its provenance; you have to prove that it is so utterly certain that we would do so as to provide credible deterrance to Saddaam. And you can't prove that. For one thing, we have elections every four years. And for another, it just isn't that likely.
I didn't say nuke Iraq if he invaded Kuwait --
You said "send conventional troops that he can only repel with his nuclear weapons, which will cause us to nuke him". In other words, enter on a potential avenue of escalation, which is exactly what nuclear deterrance is supposed to avoid. I don't think we would nuke Saddaam if he invaded Kuwait. I also don't think we would send troops in the face of a direct threat to use nukes on them. That's exactly what the architects of nuclear deterrance were trying to avoid: confronting a nuclear opponent on territory of sufficient importance that he might feel it necessary to deploy a limited nuclear response. That's why the Soviets didn't invade West Berlin.
As Den Beste said, the problem is that we are more sensitive to a nuclear risk than our opponent. He will enter onto an avenue of escalation, gambling that we will not risk meeting him there. And he's probably right.
All right, so we'd let him take Kuwait. . .
And Saudi Arabia, and the rest of the Gulf states. Do you have any idea what this means, economically?
Right now, the OPEC cartel is restrained in its price fixing because members have high incentive to cheat. The restraint is thus actually quite modest, because otherwise cheating becomes rampant, and the price drops anyway.
Saddaam with nukes and a free hand in the Middle East would be sitting on more than 50% of the world's proven oil reserves. Given the extreme inelasticity of demand for oil, a quasi-monopolist like that would have incentive to produce far, far less than he's currently pumping in order to maximize his revenue. Most of the other OPEC members are already near full production; it's the Saudis and Iraqis who are producing much less than they could. Ratchet back the rest of the Middle East oil and the price jump would make the 70's look like Bargain Hunter Day at the oil mart. The effect on the world economy -- well if you think it's bad now, wait 'til productivity plummets because oil's too expensive.
Could he hold the Middle East? You'd better hope so, because now if he falls we have no way of controlling what whackos get hold of his nukes. Those who have been arguing he's "rational" have no such guarantees for his successor.
In short, we are unable to mount a credible threat that we will respond with overwhelmingly disproportionate force in the face of nuclear-backed aggression, or to repel territorial goals in the Middle East. A third pillar of nuclear deterrance is not available to us.
I can't stress enough how important this is. There is no such thing as deterrence if your opponent is not certain that you mean what you say. The more weasel room there is, the less believable it is.
Contrast this with MAD. At least to my knowlege, no one doubted that in the face of certain actions, we would launch on the Soviets. The hawks and the peaceniks, the left and the right, all believed that we would, indeed fight the Soviets over Western Europe, over missiles in Cuba, etc. And so, we now know, did the Soviets.
The very fact that people are arguing about whether or not we would launch on Saddaam in the face of an Iraqi incursion into Kuwait means it has already failed. There is reasonable doubt about our response. Which makes it potentially lucrative to enter an avenue of escalation. We know that Saddaam will gamble; what else could you call deciding to go up against the world's biggest and most advanced military after they'd staged a massive buildup on your border?
When nuclear weapons are involved, the last thing you want is to roll the dice.
Next: Why non-proliferation is central to deterrance.
Donald Sensing wants to bring down Saddaam by, in essence, offering the Iraqis moral support to overthrow him. He argues that even dictatorships have to govern by the will of the people.
Well, kinda. But I don't think propoganda is going to bring Saddaam down.
For one thing, revolutions rarely succeed without outside help -- real outside help, with tanks -- unless there is a power vacuum, or the military is involved. Saddaam has killed all the military leaders who might stage a coup. And a couple of Special Forces platoons are not sufficient to topple even a bad army like Saddaam's. I've heard the suggestion more than once that we just send the SEALs or the Green Berets in there to "take Saddaam out", as if the special forces were a crack team of superheroes. The special forces are very good at what they do, but they can't find a dictator when no one knows who he is, run around a rigidly controlled country looking for him with guns, and then stage a Mission:Impossible style assassination, as some people believe. Unfortunately, on this mission, they won't be able to bring all the special effects guys and stunt doubles that make this sort of thing work in the movies. Those people eat a lot, and they expect to have it catered. And we can't afford to pay union scale.
For another, there's a reason rebel groups hide in the forest. In wide open terrain, it's easy to go looking for them with tanks. They do, after all, have to live somewhere, and that somewhere shows up from the air unless there are trees in the way. As far as I know, Iraq is short on dense jungle for the rebels to fade into.
For a third, Sensing is comparing civil obedience that didn't threaten regimes, such as Danish protests against the Nazis, with a revolution. Yes, if Mothers of War Veterans are protesting on the Plaza, Saddaam's going to tell the Republican Guard to hold their fire. But if they're stormng the palace, they're going to open fire. Guys with machine guns or a couple of tanks can take on a lot of unarmed rebels -- if memory serves, one British machine gun killed 20,000 tribesmen who hurled themselves against it.
Using propaganda, but not military force, implies tha what the Iraqi people are really concerned with is who's going to mop up afterwards. I'm guessing, but I think what they're worried about is probably not the shape of a post-Saddaam state, but whether they and their families will be shot.
So it looks like the Torch is going to drop out of the New Jersey Senate race.
Democrats are getting slightly hysterical, because it's not clear that it's legal to replace him after the primary. It would be nice if they could pull a Jean Carnahan -- run Torricelli on the tacit understanding that after he is elected, he will resign and the governor will appoint a replacement -- but they can't, because the governor gets to appoint a replacement, and the governor of New Jersey is a Republican. They're in a nasty, nasty spot. If Torricelli runs, he's going to lose; if he doesn't, whoever replaces him will probably lose anyway, with only a month to campaign.
Meanwhile, Republicans seem to be talking about suing to keep him on the ballot. I can see why they want to, but they shouldn't. This is more important than control of the Senate; this is about saying that neither party supports putting a Senator in office who takes bribes. The Democrats dropped the ball on this one, to their eternal shame. Now the Republicans have an opportunity to do the right thing, and forestall any risk that a man who takes bribes might end up in our legislature.
Update Oops, governor of New Jersey is a Democrat. I was flashing back to Whitman. Hmmm. This opens up new possible strategies.
Update II A reader sends in the applicable law:
§ 19:13-20. Vacancy procedure
In the event of a vacancy, howsoever caused, among candidates nominated at primaries, which vacancy shall occur not later than the 51st day before the general election, or in the event of inability to select a candidate because of a tie vote at such primary, a candidate shall be selected in the following manner:
a. (1) In the case of an office to be filled by the voters of the entire State, the candidate shall be selected by the State committee of the political party wherein such vacancy has occurred.
(2) In the case of an office to be filled by the voters of a single and entire county, the candidate shall be selected by the county committee in such county of the political party wherein such vacancy has occurred.
(3) In the case of an office to be filled by the voters of a portion of the State comprising all or part of two or more counties, the candidate shall be selected by those members of the county committees of the party wherein the vacancy has occurred who represent those portions of the respective counties which are comprised in the district from which the candidate is to be elected.
(4) In the case of an office to be filled by the voters of a portion of a single county, the candidate shall be selected by those members of the county committee of the party wherein the vacancy has occurred who represent those portions of the county which are comprised in the district from which the candidate is to be elected.
At any meeting held for the selection of a candidate under this subsection, a majority of the persons eligible to vote thereat shall be required to be present for the conduct of any business, and no person shall be entitled to vote at that meeting who is appointed to the State committee or county committee after the seventh day preceding the date of the meeting.
In the case of a meeting held to select a candidate for other than a Statewide office, the chairman of the meeting shall be chosen by majority vote of the persons present and entitled to vote thereat. The chairman so chosen may propose rules to govern the determination of credentials and the procedures under which the meeting shall be conducted, and those rules shall be adopted upon a majority vote of the persons entitled to vote upon the selection. If a majority vote is not obtained for those rules, the delegates shall determine credentials and conduct the business of the meeting under such other rules as may be adopted by a majority vote. All contested votes taken at the selection meeting shall be by secret ballot.
b. (1) Whenever in accordance with subsection a. of this section members of two or more county committees are empowered to select a candidate to fill a vacancy, it shall be the responsibility of the chairmen of said county committees, acting jointly not later in any case than the seventh day following the occurrence of the vacancy, to give notice to each of the members of their respective committees who are so empowered of the date, time and place of the meeting at which the selection will be made, that meeting to be held at least one day following the date on which the notice is given.
(2) Whenever in accordance with the provisions of subsection a. of this section members of a county committee are empowered to select a candidate to fill a vacancy, it shall be the responsibility of the chairman of such county committee, not later in any case than the seventh day following the occurrence of the vacancy, to give notice to each of the members of the committee who are so empowered of the date, time and place of the meeting at which the selection will be made, that meeting to be held at least one day following the date on which the notice is given.
(3) A county committee chairman or chairmen who call a meeting pursuant to paragraph (1) or (2) of this subsection shall not be entitled to vote upon the selection of a candidate at such meeting unless he or they are so entitled pursuant to subsection a.
(4) Whenever in accordance with the provisions of subsection a. of this section the State committee of a political party is empowered to select a candidate to fill a vacancy, it shall be the responsibility of the chairman of that State committee to give notice to each of the members of the committee of the date, time and place of the meeting at which the selection will be made, that meeting to be held at least one day following the date on which the notice is given.
c. Whenever a selection is to be made pursuant to this section to fill a vacancy resulting from inability to select a candidate because of a tie vote at a primary election, the selection shall be made from among those who have thus received the same number of votes at the primary.
d. A selection made pursuant to this section shall be made not later than the 48th day preceding the date of the general election, and a statement of such selection shall be filed with the Secretary of State or the appropriate county clerk, as the case may be, not later than said 48th day, and in the following manner:
(1) A selection made by a State committee of political party shall be certified to the Secretary of State by the State chairman of the political party.
(2) A selection made by a county committee of a political party, or a portion of the members thereof, shall be certified to the county clerk of the county by the county chairman of such political party; except that when such selection is of a candidate for the Senate or General Assembly or the United States House of Representatives the county chairman shall certify the selection to the State chairman of such political party, who shall certify the same to the Secretary of State.
(3) A selection made by members of two or more county committees of a political party acting jointly shall be certified by the chairmen of said committees, acting jointly, to the State chairman of such political party, who shall certify the same to the Secretary of State.
e. A statement filed pursuant to subsection d. of this section shall state the residence and post office address of the person so selected, and shall certify that the person so selected is qualified under the laws of this State to be a candidate for such office, and is a member of the political party filling the vacancy. Accompanying the statement the person endorsed therein shall file a certificate stating that he is qualified under the laws of this State to be a candidate for the office mentioned in the statement, that he consents to stand as a candidate at the ensuing general election and that he is a member of the political party named in said statement, and further that he is not a member of, or identified with, any other political party or any political organization espousing the cause of candidates of any other political party, to which shall be annexed the oath of allegiance prescribed in R.S. 41:1-1 duly taken and subscribed by him before an officer authorized to take oaths in this State. The person so selected shall be the candidate of the party for such office at the ensuing general election.
HISTORY: L. 1988, c. 126, s. 1.
LexisNexis (TM) Notes:
CASE NOTES
1. Purpose of N.J. Stat. Ann. § 19:13-20(e) is to prevent a person whose party affiliations are unclear from assuming elective office under a party banner; such restriction is enforceable, assuming its constitutionality; challenge to the constitutionality of § 19:13-20(e) is merited. Mays v. Penza, 430 A.2d 1140, 1980 N.J. Super. LEXIS 791 (Oct. 28, 1980).
2. Where the county clerk rejected a candidate's petition as being defective because it had been faxed, and the candidate amended his petition and filed it personally, the candidate was entitled to have his name placed on the ballot; the amended petition was filed before the 48th day preceding the primary, within three days of his filing of the original in accordance with N.J. Stat. Ann. § 19:13-20, and before he received a notice of defect. Madden v. Hegadorn, 565 A.2d 725, 1989 N.J. Super. LEXIS 364 (May 3, 1989).
3. Where one political party and its candidate filed suit to disqualify a candidate of another party from participating in the general election for failure to comply with requirements of N. J. Stat. Ann. § 19:13-20(d), the trial court dismissed the suit as moot because the election had been held and the vote resulted in a tie; accordingly, under N. J. Stat. Ann. 40A:16-16, the office was vacant and the trial court had no authority to declare a winner. Mays v. Penza, 430 A.2d 1145, 1981 N.J. Super. LEXIS 609 (Jan. 12, 1981).
4. County clerk fulfilled her duty by accepting a candidate's certification as a candidate under N.J. Stat. Ann. § 19:13-20(e); clerk had no power to rule the candidate off the ballot due to a failure to comply with requirements of residency as that issue should have been determined by a court. Mays v. Penza, 430 A.2d 1140, 1980 N.J. Super. LEXIS 791 (Oct. 28, 1980).
5. Purpose of N.J. Stat. Ann. § 19:13-20(e) is to prevent a person whose party affiliations are unclear from assuming elective office under a party banner; such restriction is enforceable, assuming its constitutionality; challenge to the constitutionality of § 19:13-20(e) is merited. Mays v. Penza, 430 A.2d 1140, 1980 N.J. Super. LEXIS 791 (Oct. 28, 1980).
6. Pursuant to former N.J. Stat. Ann. § 19:13-20, the county committee had the power to fill a vacancy caused by the death of a candidate 36 days before the general election, so long as it made and filed its selection with the clerk 34 days or more before the general election. Kilmurray v. Gilfert, 91 A.2d 865, 1952 N.J. LEXIS 259 (Oct. 20, 1952).
7. Where a "write-in" candidate nominated in a primary election failed to file a certificate of acceptance, a vacancy of the nomination was created, and the county committee was permitted to fill the vacancy. Fiscella v. Nulton, 92 A.2d 103, 1952 N.J. Super. LEXIS 738 (Oct. 16, 1952).
8. Where nominee died 36 days before the general election and a political committee filed notice of its selection of a replacement candidate 34 days before the general election, the replacement nomination was timely, and the statute requiring 37-day (now 51 days) notice were merely directory in nature. Kilmurray v. Gilfert, 91 A.2d 859, 1952 N.J. Super. LEXIS 727 (Oct. 15, 1952).
9. N.J. Stat. Ann. § 19:13-20 unconstitutionally regulated elections so as to deny or impair the rights of electors and effectively granted a party committee the right to nominate a person to fill a vacancy and then, in turn, deprived it of the right to nominate someone who may have previously been a member of another political party. Gansz v. Johnson, 75 A.2d 831, 1950 N.J. Super. LEXIS 629 (Oct. 13, 1950).
10. Pursuant to N.J. Stat. Ann. § 19:13-20, the county committee was without authority to designate a candidate where no one had been nominated at the primary, and therefore a vacancy did not exist to give the county committee authority to make such designation. Cleveland v. Woolley, 68 A.2d 666, 1949 N.J. Super. LEXIS 725 (Oct. 11, 1949).
11. Complaint by candidate against election officials, which sought his selection as the Republican party's candidate, was properly dismissed where his rival was still eligible to stand for election in his party even though he had accepted nomination of the Democratic party; rejecting the contention that, by accepting the "write-in" Democratic nomination the candidate had identified himself with that party and would, therefore, be unable to sign the required certificate, the superior court held that the statute required that the certificate accompany the statement of the selection, but did not purport to obligate the candidate to execute the certificate until after the selection had been made. Brower v. Gray, 68 A.2d 553, 1949 N.J. Super. LEXIS 637 (Sept. 30, 1949).
12. Where one political party and its candidate filed suit to disqualify a candidate of another party from participating in the general election for failure to comply with requirements of N. J. Stat. Ann. § 19:13-20(d), the trial court dismissed the suit as moot because the election had been held and the vote resulted in a tie; accordingly, under N. J. Stat. Ann. 40A:16-16, the office was vacant and the trial court had no authority to declare a winner. Mays v. Penza, 430 A.2d 1145, 1981 N.J. Super. LEXIS 609 (Jan. 12, 1981).
13. Candidate for a party nomination for member of state legislature was not entitled to nomination where a vacancy was created in the nomination by the death of his opponent prior to the election, and the opponent still received more votes than the candidate did; the deceased candidate's nomination was not null and void but, rather, created a vacancy to have been filled in the manner pursuant to N.J. Stat. Ann. § 19:13-20. Petition of Keogh-Dwyer, 256 A.2d 314, 1969 N.J. Super. LEXIS 486 (Aug. 6, 1969).
14. N.J. Stat. Ann. § 19:13-20 unconstitutionally regulated elections so as to deny or impair the rights of electors andeffectively granted a party committee the right to nominate a person to fill a vacancy and then, in turn, deprived it of the right to nominate someone who may have previously been a member of another political party. Gansz v. Johnson, 75 A.2d 831, 1950 N.J. Super. LEXIS 629 (Oct. 13, 1950).
15. Complaint by candidate against election officials, which sought his selection as the Republican party's candidate, was properly dismissed where his rival was still eligible to stand for election in his party even though he had accepted nomination of the Democratic party; rejecting the contention that, by accepting the "write-in" Democratic nomination the candidate had identified himself with that party and would, therefore, be unable to sign the required certificate, the superior court held that the statute required that the certificate accompany the statement of the selection, but did not purport to obligate the candidate to execute the certificate until after the selection had been made. Brower v. Gray, 68 A.2d 553, 1949 N.J. Super. LEXIS 637 (Sept. 30, 1949).
Update III On Fox News, they're reporting that the statute is unambiguous: candidates can't be replaced less than 51 days before the election, which would have been September 16. Whee! More electoral fun and games! Maybe repealing the 17th Amendment isn't such a bad idea.
But the Castro-worship just fascinates me. Why? Some applaud the way he thumbs his nose at the US, which always strikes a certain crowd as the hallmark of integrity; if you wrap your derision in the big red flag you’ll always have a claque of bootlickers eager to excuse whatever you do. (The enemy of my enemy is my President for Life.) The usual gang of collectivists admire the way he organizes society from the top down to the city block, because they love power; they love force; they have a romantic attachment to anyone who uses the cudgel to hasten the arrival of heaven on earth. My favorite defense, though, is “free health care” and “literacy.”
Take the second one first. There’s no excuse for not being literate in America. Oh, we could impose literacy on the illiterate here, but it wouldn’t be pretty. We could make English proficiency a requirement for jobs, institute nationwide standards for graduation that mandated a high degree of literacy - and made the students' fulfillment of those standards a criterion for advancement in the educational establishment.
Let us pause to cogitate how well that would go over.
Health care: supposedly, it’s universal; supposedly, it’s high quality. Egalitarian. (muffled laugh.) Ask yourself this. You’re poor. You have a heart attack. Do you want to be in Havana or New York? Which phone system summons the EMTs faster? Which emergency response team is better equipped? Which hospital is better staffed with highly-paid doctors who have come from all over the world to work here?
Somehow I suspect that a heart attack in Havana at 3 AM means bundling Uncle Raul into your block captain’s ‘57 Belair and hoping it doesn’t break down before you get to the hospital.
But let’s assume that health care in Cuba is the equal of health care in America. If this is the reason to admire Cuba, then this is what some American citizens believe is more important than anything else. Free health care. They will give up elections, the free press, the freedom to travel, the freedom to dissent, the freedom to own a personal computer, for heaven’s sake - they’ve been banned for personal use. But for some, all of those freedoms are negotiable. They’ll give it all up for free health care. That’s their price.
The real scandal about the poet laureate of New Jersey's nasty poem is that it's terrible. Of course, even Shakespeare had his off days. But I wrote better poetry than that when I was in ninth grade. And I write dreadful poetry.
Nuclear Deterrance, Part II: The Principle of Overwhelming Force In Part I, we discussed the idea of walling off potential avenues of escalation. Now it's time to talk about why we chose Mutually Assured Destruction rather than, say, Mutually Assured Heavy Damage.
[Editor's Note: No, I am not a professional expert on defense policy. I'm giving you the broad principles here, not the "In 1962, the Soviet placement of an armored brigade near the Turkish border was widely seen as a signalling mechanism to convey their distrust of the protocols signed at the NATO meeting the previous month. . . ", on which I am not qualified to comment]
If you grew up in the 80's, as I did, you spent a good portion of your childhood waiting to be evaporated in a worldwide nuclear conflagration. This is especially true if your teachers were CND types who believed that MAD was the worst idea since the Barry Manilow comeback tour.
But there is a reason that the system was designed with overwhelming force, rather than limited response. It has to do with the nature of nuclear escalation. Nuclear use, especially before the advent of tactical nuclear weapons, was so shocking in its kill power, its destruction, and (importantly), its public horror, that the kind of arithmetic response (you hit me, I hit you 50% harder, and so on), was hard to sustain. I can't say this enough: deterrance is not tit for tat. I've already had five or six people email me with objections based on their analysis of nuclear deterrance as a tit for tat scenario, or comparing it to conventional military deterrance, which is not how it works. With a nuclear Iraq, the "Saddaam has been deterred" argument is meaningless, because the whole structure of deterrance changes.
Let's look at tit for tat. If you've ever seen small children playing, you've seen it at work. One child takes the other child's shovel. Outraged, the owner of the shovel pushes the thief. The thief is outraged -- he pushed me! -- and hits the shovel owner. Shovel owner is outraged -- he started it! -- and kicks his opponent. After a couple of rounds of this, the shovel is returned to its rightful owner, and the two children sit glaring at each other on either side of the sandbox.
The problem is that because of the overwhelming nature of even limited nuclear use, this pattern would be catastrophic once nukes were involved. If Russia nuked, say, Peoria, and we took out three of their cities, and then they hit New York. . . well, by the time we reached the standoff, there might not be much left to stand on.
As I pointed out in part one, the principle of overwhelming force was designed to prevent this sort of escalation. In order to do that, it had to make entering on any avenue that might lead to escalation just as unthinkable as suddenly lobbing your nuclear arsenal over the Bering Straits to see what would happen.
It also sharply reduced the incentive to gamble on borderline activities. Russia invades Canada; do we plaster them with nukes, or try to wage a conventional response? Would we use a limited nuclear response that might make it worth their while anyway? (This was, after all, the nation that killed 25,000 people to build a steel plant, 20,000,000 to collectivize the farms.) Overwhelming force didn't just make it unthinkable to risk borderline activities; it also meant that any leader who ordered such an action was guaranteed die in the resulting conflagration.
But overwhelming force truly meant overwhelming. If the Soviets, or we, had launched a single nuclear weapon, the orders were to launch a sufficient portion of our arsenal to bomb them flat. Not take out a single city for show. Literally, bomb them back to the stone age.
And there we are back to Iraq again. Not only is it unlikely that we would launch a nuclear strike on Iraq in the event of an invasion of their neighbors; it is unthinkable that we would respond with overwhelming force. Even if Saddaam did the worst and nuked Israel, would we really be willing to incinerate the entire population of Iraq in retaliation? That's what overwhelming force would mean. Yet, if you don't use overwhelming force, there is a high probability that Saddaam might survive. One of the reasons that we didn't take him out in the Gulf War was that it turned out he had two dozen or so body doubles, of which five or so were trained to impersonate him perfectly. We have no idea where he is, so we can't just nuke his headquarters.
So the first part of Cold War nuclear deterrance -- walling off potential avenues of escalation -- is unlikely in Iraq. A second important feature, overwhelming force, is also absent. Next we'll talk about credible threats.
Oh, delightful. May I assume that Al Gore jr.'s penchant for driving drunk and smoking pot will get the same amount of press?
But that's a cheap shot. The real problem with this is that Noelle doesn't make drug policy. She's a screwed up woman in her twenties, not a legislator. It's obscene to argue that she deserves to dry out in a spotlight.
It's common to say that celebrity children deserve the spotlight because they get special treatment. But there's no evidence that this is so. Cottle admits that she probably isn't treated much differently from any other rich offender, but then tries to argue that "in California, she might already be on her way to jail for life". Um, no. Not if she were rich, not if she were poor. People in treatment centers who are caught with drugs sometimes get kicked out, which might end their parole, but they don't get prosecuted for possession of crack. And it's hard to argue that her actions took place in the public spotlight, since the only reason we know about it is that another patient violated her confidentiality and called the papers. She's getting special treatment, all right.
The children of our politicians do not deserve to have their private tragedies on the front page. Unless you think it's all right for other people to publicize your mistakes based on what your parents do for a living, the decent thing to do is to keep mum.
Now, when I was recruiting for I-Banking, we were told that investment banking was pretty much a winner regardless of the market. If stocks went up, they did IPO's; if they went down, companies would be acquiring suddenly-cheaper targets, and there would be plenty of M&A work. Either way, the banks would win. What's even funnier is that the vice presidents and associates feeding us this line actually believed it.
And it sounds plausible. Unfortunately, like many plausible-sounding things, it had a hidden weakness. In this case, it was the great controversy in accounting known as Pooling of Interests Accounting. It's so controversial that they're thinking of eliminating it all together, which sparks the kind of argument that makes accounting types get red in the face and scream at each other, and aren't you glad you don't hang out with people like that?
There are two ways you can account for an acquisition on your balance sheet: pooling, or purchase. In the more conservative Purchase method, you basically take all the assets off the balance sheet of the company being bought and transfer them onto the balance sheet of the purchaser. Meanwhile, you take the money or stocks or what have you that was paid to the shareholders off the purchaser's balance sheet, and presto! you're done.
Well, not quite. Because in financial statements, most assets are recorded at their Historical Cost, otherwise known as What You Paid For Them. Thus your father's Sandy Koufax Rookie Baseball Card would be carried on the family balance sheet at 10 cents.
In these inflationary times, investment bankers have to go through all the assets of the company you're buying and figure out what they're actually worth, rather than what it says on the balance sheet. The price paid for the company will thus be higher, often much higher, than what the financial statements show, which is called the company's book value.
If the merger is accounted for as a purchase, the difference between the purchase price and the book value has to be recorded on the purchaser's balance sheet; otherwise the books don't balance. So an asset called goodwill is created. Because it is presumed to represent the value of depreciable assets, this goodwill number has to be depreciated. That is, every year, net income has to be lowered to reflect the fact that all of these assets have gotten less valuable as time goes on, through wear and tear and what have you.
[But what about the Sandy Koufax card? I hear you cry. That gets more valuable. Well, actually, I lied. Sandy Koufax cards belong to a special class of assets called "marketable securities" -- they trade on a liquid market, and thus their current value can readily be ascertained, so they are recorded on the books at their market value. I was just trying to illustrate the principal, okay?]
Companies really, really don't like having to take a goodwill charge. Which is because ignorant investors see EPS go down and run for the hills. So they try very, very hard to qualify for a different type of accounting treatment, known as Pooling of Interests Accounting.
In theory, a pooling of interests merger isn't about one company buying another; it's about two companies with a lot in common discovering that they were meant to be together. They throw all their worldly goods into one pot and call the new company McNikeSoft. In practice, this is a load of hooey; one company is buying the other. But that doesn't mean we can't all pretend, the way the friends of aging tycoons pretend that his eighteen year old bride is marrying him for his animal magnetism. So. Because it's not a purchase, all the assets simply transfer to the new combined entity just as they were on the balance sheet. No goodwill is recorded, so EPS doesn't take a hit. This is how almost all big mergers get done.
There's a kicker, though; in order to qualify for Pooling of Interest accounting, you can't just pull out a wad of cash and slap it on the counter. The deal has to be done with stock-for-stock: I'll trade you one of my AOL/Time Warners for two of your Time Warner certificates (and don't we wish we'd been an AOL shareholder in on that one!). Doing the kind of stock-for-stock deal that qualifies for Pooling treatment is extremely tax disadvantageous, in general, but the incentive to avoid lowering EPS with a goodwill charge is so high that CEO's are willing to shell out more of their hard-earned cash to the IRS, just to avoid a bookkeeping charge to EPS. No, I never said that private enterprise was perfect.
Thus, even though targets are now cheaper, it doesn't matter, because the potential purchaser's stock is also down. Whereas in the good old days, cash rich companies could go after targets in troubled times, now they have to sit on their hands until their stock price perks up again. About another decade, from the looks of the market on Friday.
So now you know about one of the hottest issues in accounting today, and why M&A hasn't picked up like everyone predicted it would, and also, how all those stupid deals in the late 90's got done. Now, if you go to the tool chest and get a hammer and tap yourself lightly on the forehead a few times, all this information will probably fall right back out and you'll be none the worse for the experience.
Update Looks like today is my day for looking like an idiot. Several readers have emailed me to point out that they've eliminated pooling-of-interest accounting, and in order to pacify the Investment bankers, have allowed the goodwill to sit on the balance sheet forever, rather than depreciating like it used to.
I could weasel out of that by saying that it doesn't effect my main point, which is that the market was heavily biased towards stock-for-stock transactions during the great M&A idiot boom of the late 90's. Which is true. And in fact, I did know that they'd eliminated pooling; the fact just somehow dropped out of my head while I wrote the post. Darren Roulstone, who teaches accounting at my alma mater, sums it up nicely in an email:
Saw your piece on purchase and pooling accounting. As usual, you describe the issue succinctly with humor and charm. . . I just want to pass on an update: they (the FASB) have actually eliminated pooling-of-interest accounting. In order to do this without angry I-bankers storming Norwalk, CT with flaming torches, they also eliminated the amortization of goodwill that made so many managers wary of purchase accounting. So, firms now use purchase accounting, but goodwill can stay on the balance sheet untouched, with only periodic evaluations for impairment. (Firms continue to amortize any excess purchase price allocated to assets and liabilities other than goodwill and indefinitely lived intangibles.)
For details check out FASB statements 141 and 142. For intelligible details, see Stickney and Weil's Financial Accounting... chapter 11 of the tenth edition. (The edition that all of my current students are reluctant to buy as they just managed to pick up a really cheap ninth edition. "Class, the first thing we're going to do is talk about why that ninth edition become so cheap just as the tenth edition was adopted by the intro financial professors.")
Anyway, the main point stands; stock-for-stock means that the countercyclical aspects of M&A that they were touting were, on their face, ridiculous.
As for the commenter who wanted to know about the rest of IB . . . well, there isn't much rest. There's securities issuance, which is in the trashcan until the equities market picks up, or cash flow gets strong enough to support more long-term debt. There's structured finance and related departments. These are the fun folks who brought you Enron's 87 zillion off-balance sheet "special purpose entities" and I don't think we need to ask why they're not doing so hot. Then there are the areas which technically are not part of Investment Banking, such as sales, trading, capital markets, brokerage, research, etc. Obviously, research is undergoing some reverses. Trading is doing fine in some spots, notso-hotso in others, but the overall revenue is simply not high enough to make up for the enormous fees that are being lost in the moribund investment banking business.
[For those of you who get their entire knowledge of how the financial firms work from the summer you took "Liar's Poker" to the beach, trading isn't as lucrative as it was when the S&L's were opening their vaults to the Solomon mortgage traders and inviting them to help themselves.]
And for the multiple emailers who have written to tell me that no one cares about goodwill, because professional investors just back it out of their valuation -- well, theoretically that's true, but in practice, managers were extremely reluctant to take the charge. Everyone I knew who actually worked on such deals told me the same thing: managers were paying hefty extra taxes in order to avoid the goodwill.
Question of the Day I think that my anti-war interlocutors can agree with me that the last round of inspections were a dismal failure. Now that the Security Council seems intent on ensuring that we don't do anything to the inspections regime which might run the risk of making the inspections effective, what should we do now?
This article by Ryan Lizza has a look at the complicated process of getting inspections going again. If we go by the UN playbook, just the preliminary negotiations are expected to take five months.
Before I start, let me say that I am not a professional historian. But I did possess a modicum of interest on the topic of nuclear armament/disarmament before 9/11 -- though it's not like I had much choice, because I have family members who enjoy debating defense policy over dinner, and have for decades. Hours of fun for the entire family, so to speak.
So I've been following the debates on deterrance with interest. And I think there are some major errors being made by people whose understanding of the theory of deterrance is somewhat rudimentary. And no, I'm not naming names, because frankly, I've gotten enough angry e-mail about the Care Bears post. Memo: it's a joke. Not everything I say is meant as a serious commentary on geopolitical affairs. Anyone who read that post, and the comments, and did not laugh out loud at the commenter who suggested leading the charge with the My Little Pony cavalry, needs to turn off the computer and get out more.
Anyway, there are some misconceptions that I think some of my emailers/commenters/other bloggers are falling into. Call me a straw man constructer if you like; thankfully, I don't get paid for this. Unless you hit the tip jar, of course, and don't you think it's really about time you gave a little something back to the blogosphere? But I digress.
First of all, nuclear deterrance is not a simple matter of overwhelming force in response to threat, as some people seem to believe. I'm seeing a lot of people who seem to view deterrance against the Soviet Union, or Iraq, as a "I'll play nice, but if you smack me, I'll smack you harder" scenario. That's a very simple game theory construction known as "Tit-For-Tat", and that is absolutely not what deterrance is based on. If it had been, we'd all be little piles of radioactive waste by now. Tit for tat is actually a very good structure for many kinds of multi-move games, but in a nuclear scenario, it's very bad, because the step-up from the preceding action to a nuclear response is likely to be geometric, rather than arithmetic. Arithmetic escalation of response is what makes tit-for-tat work; in geometric escalation, which it's hard to avoid with nukes, things go kablooie too quick to develop a sustainable equilibrium. The Soviet Union invades West Berlin; we use a nuke; they hurl all their nukes at us; we hurl all ours at them. Bad, bad, bad idea.
Instead, the architects of MAD (Mutually Assured Destruction) did something similar to what the Babylonian rabbis did in interpreting the Torah.
Did she go off her meds again? I hear you cry. No, but we are playing with the mgs until the tremors stop, thanks for asking.
No, seriously: in the interpretation of Jewish Law, there is a concept known as "building a wall around the Torah". Take, for example, the refusal to eat meat and dairy products together. The original prohibition that this is drawn from is "thou shalt not boil the kid in the milk of its mother". It's a pretty long way from there to "thou shalt not eat a cheeseburger, nay, nor even eat meat off a plate on which a slice of cheese has lain". You get there in successive steps: modern agriculture being what it is, there is a slight chance that the cream you are using in that Blanchette de Veau came from the cow that gave birth to the veal calf. Therefore, you shouldn't use it. You also shouldn't cook in a pot that has had milk in it, because some of the milk might linger in the pot, and you would be in violation of the commandment. Nor should you put cheese on a burger, because some of the milk in the cheese might get very hot and boil. . . next thing you know, you've got separate kitchens for meat and dairy. While a slapdash interpreter might have drawn the commandment very narrowly -- "It's okay as long as I don't deliberately boil the kid in the milk of its mother" -- the rabbis who defined the scope of modern Orthodoxy interpreted it very broadly, so that there was no chance of even unknowingly violating the commandment. And they ruled that you were as much in violation of the commandment if you ate a McDonalds cheeseburger as you would have been if you'd gone out and gotten milk from your cow so you could boil its calf for lunch. Thus they ensured that no one was tempted to slip.
Fascinating, you're saying, and what does this have to do with deterrance?
Well, the architects of MAD built a similar wall around nuclear use. They spelled out very clearly what actions, such as an invasion of West Berlin, would trigger overwhelming nuclear response. It was important that these actions were not themselves nuclear. Why? Because the logical response to an invasion of Berlin was not overwhelming nuclear force; it was some variation on conventional force, possibly backed up later with tactical nukes. But it was precisely that sort of escalation that the architects wanted to avoid -- inadvertently crossing a line in the sand where your opponent felt that it was necessary to make a limited nuclear response. Because once we'd had nukes used on our troops or cities in a limited fashion, the likely response, for a variety of reasons, would be all-out nuclear attack. And there goes the neighborhood.
MAD, frightening as it may seem, made nuclear use extremely unlikely, not merely because it threatened overwhelming response, but because it ensured that we never got into a pattern of escalation. It was not simply the threat, in other words; it was that any action that was likely to be the first step in an escalating conflict was itself chopped off by the threat of overwhelming force. Just as the rabbis drew the rules so widely that there was basically no possibility of getting into a situation where you were unknowingly boiling the kid in its mothers milk by saying that risking doing so was the same as actually doing so, the architects of MAD made sure that there was no possibility of getting into a situation where one side unknowingly escalated the conflict to the nuclear stage by declaring that the penalty for putting yourself at risk of doing so was the same as that for exploding a nuke. And now a light dawns, and you decide that maybe Jane isn't crazy, but just weird.
Now, what does that have to do with Iraq?
Well, this: we're not that committed to the Middle East. The equivalent to our Cold War deterrance strategy would be telling Saddaam that if he invaded his neighbors, we'd turn Iraq into glass. And that isn't true. The threat simply isn't credible. Israel might be able to credibly sustain a nuclear deterrance policy with Iraq, except that we complicate things. There are at least two nations that have the ability to tell Israel "If you nuke Iraq, we will utterly destroy you" -- us and Russia. (China may; I don't know what the range on their nuclear capability is. The other nuclear nations would not, as far as I can tell, be part of the equation). Not that we necessarily would. But it's not crystal clear that we necessarily wouldn't, either. So the combination of clear signalling, credible threat, blocked off escalation potential, and overwhelming, instant, certain response that sustained nuclear deterrance in the Soviet-American arms race cannot be re-created with a nuclear Iraq, as some people seem to believe. We almost got into a war with Russia, as it was; any scenario in which Saddaam has nukes will be much, much less stable.
