Russia did not want this crisis. The Russian leadership is in a strong enough position domestically; it did not need a little victorious war. Russia was dragged into the fray by the recklessness of the Georgian president, Mikheil Saakashvili. He would not have dared to attack without outside support. Once he did, Russia could not afford inaction.
Well, I’ve been finding ownership puzzles in a host of disparate places, like waiting around in airports and wondering why we don’t build more runways. Just 25 new runways at our busiest airports would solve most air travel delays. Why don’t we build them? In Europe, for instance, I started thinking about why cell phones work so much better there than here. The answer, in part, is that over 90 percent of our prime spectrum is dead air. Talking to research scientists I asked why we have so many pharmaceutical patents today but so few new drugs that actually help people. My students clued me in to another puzzle: why has African-American farm ownership dropped 98 percent in the last century? And why are so many old television shows, like China Beach and WKRP in Cincinnati, still not available on DVD? Turns out, all of these problems are really the same problem. Private ownership usually creates wealth. But too much ownership has the opposite effect – it creates gridlock. Once people see this free market paradox, once we have a shared language for gridlock, we can begin to talk about it and then to fix it...
A drug company executive tells me he may have a better Alzheimer’s treatment. But to get FDA approval and bring it to market, he has to license dozens and dozens of patents relevant to testing for safety and side effects. So negotiations fail and the Alzheimer’s drug sits on a shelf, even though my informant is confident it could save countless lives and earn billions of dollars.
Very few people or organizations are speaking out against this – against the underuse of property rights. Whom do you lobby for drugs that don’t yet exist or for cures that people can’t yet see? Gridlock, that is, resource underuse, is invisible in comparison with overuse – everyone can see the dramatic results of fisheries being depleted or air being polluted. But with wasteful underuse, the effects are almost always hidden. So when drugs, wireless services, DVDs, and runways go missing, we don’t really have champions ready to set it right. The flip side of gridlock is that it’s one of the great entrepreneurial and political opportunities of our era....
Moments after President Bush appeared at the Rose Garden to say that the Pentagon would begin a humanitarian aid mission to support Georgia, Mr. Saakashvili was on the phone with a Western reporter, talking fast. “This is a turning point,” he said. Soon he appeared on national television, his tousled hair combed back flat and wearing a freshly pressed suit, assuring his country that the worst had passed.
No matter that Russian troops were 30 miles away, milling on the road outside the capital, meeting no resistance. Mr. Saakashvili was in cocky form in an interview later in the evening with reporters, expounding on Nazi propaganda, Orwell and the film “Dr. Strangelove.”
“Russians should see that this is not a demoralized, you know, nervous panicking capital that is just scared,” he said. “Shops are open. There are no lines for gas stations. Prices are not up.”
He added, “We will fight to the end, until the last Russian soldier leaves Georgian soil and this country is not going to be brought to the knees anymore. We are not surrendering, no matter what.”
Mr. Saakashvili’s latest show of bravado came only a day after Secretary of State Condoleezza Rice said that she and a special State Department envoy had explicitly and repeatedly warned him not to take any military action against Georgian separatists that might provoke Russia, cautioning that the United States was not prepared to back him militarily if he did. He also appeared to exaggerate the Pentagon’s planned relief operation, making it seem larger and further developed than it was.
“We already saw U.S. Air Force landing in Georgia despite Russians controlling the airspace,” he said, after a C-17 had touched down. “And we will see U.S. military ships entering Georgian ports despite Russians blocking it. That we will see.” He added, “These will be serious military ships.”
Which brings me to a fifth point, and perhaps a more proximate causal factor contributing to this explosion of misfortune in Georgia, namely, that of stupidity, or at least, severe miscalculation. Saakashvili, an apparently quite idealistic 40 year-old former NY lawyer, seems to have erred too much in thinking that giddy summitry with Western big-wigs might pay dividends (or too his far too excited involvement in the Iraq adventure which, incidentally, looks to be coming to a quite precipitous end) but unfortunately, insufficiently appreciated the disastrous waning in U.S. power these past years, despite his constant hankering for NATO membership (which a resurgent Russia will never accept regardless of Kosovo or whatever else, best I can tell), and thus has fallen short with regard to better appreciating a variable which would have been more apropos, namely, a harsh dose of realpolitik. And this despite Putin having warned Saakashvili rather pointedly: "On April 21, Mr. Saakashvili called the Russian leader to demand that he reverse the decision [possible Russian recognition of Abkhazia and South Ossetia]. He reminded Mr. Putin that the West had taken Georgia’s side in the dispute. And Mr. Putin, according to several of Mr. Saakashvili’s associates, shot back with a suggestion about where they could put their statements. Mr. Saakashvili, prudent for once, shied from uttering the exact wording, but said that Mr. Putin had used “extremely offensive language,” and had repeated the expression several times." Permit me to be less prudent than Mr. Saakashvili, who appears perhaps to be a poor prioritizer of where to be prudent and where not. Mr. Putin told him that he could (and excuse the crudity) stick American and Western European assurances regarding the territorial disputes in question up his rear end, I suspect, and I'm afraid that's not a too inaccurate assessment, if a bit biting and brusque (save if McCain trumps Obama and decides to ride the NATO cavalry up from Kabul to Tbilisi a few months hence--perhaps on the back of some more WaPo interventionist rhapsodizing--devoid of the merest smidgen of appreciation for historical context and subtlety, leading to another toweringly idiotic 'Washington consensus' of some sort).
The new mandate will allow further reforms. Mr Saakashvili vows to increase Georgia's GDP from $10 billion to $30 billion and use the new wealth to help the poorest third of the population.
American officials and a military officer who have dealt with Georgia said privately that as a result, the war risked becoming a foreign policy catastrophe for the United States, whose image and authority in the region were in question after it had proven unable to assist Georgia or to restrain the Kremlin while the Russian Army pressed its attack.
As Russian gets involved in the war with Georgia, the disposition of political forces within the Kremlin itself may shift. Russia’s prime minister Vladimir Putin, who is in China, indicated that Russia would retaliate against Georgia’s aggression. Mr Medvedev may not be best pleased to start his presidency with a war in Georgia: it suggests that he may have to submit to the wishes of the hard-line military and security services. But Mr Putin has a fierce dislike of Mr Saakashvili, Georgia’s maverick president, and seems determined to replace his government.
Mr Putin may also want to deal with Georgia in good time before Russia hosts 2014 winter Olympic games in Sochi, a Black-sea resort town only few miles from the Abkhaz border. A military conflict in Georgia will also derail for a long time Georgia’s aspiration to join NATO—something that Russian finds deeply unpalatable.
The level of corruption remains extremely high," Medvedev said. "In 2007 alone, 10,500 criminal cases involving corruption were launched, and we understand perfectly well this is only the tip of the iceberg."
This author spent the weekend in New Orleans at the Annual Meetings of the American Economic Association (AEA). At a session on the subprime mess moderated by David Wessel of the Wall Street Journal I was a panelist together with Paul Krugman, Bob Shiller and Larry White, a housing expert at NYU/Stern; a crowd of over 400 listeners followed the two hour debate and asked probing questions.
The mood at the panel was gloomy. Bob Shiller spoke of the subprime meltdown, of how households are still deluding themselves – in polls – that home prices will keep on rising for the next decade while they have already fallen by 10% in real terms and need to fall by a cumulative 30% before they bottom out (a loss of home values of about $6 trillion); he also argued that the probability of an economy wide recession is now about 75%....
Paul Krugman also summarized the subprime debacle – an “unmitigated disaster” in his words – but he was more cautious and sanguine on whether this housing meltdown and the large financial losses will lead to a recession. In his view the fall in residential investment – as a share of GDP – has been compensated by a comparable increase in the share of exports in GDP (thanks to a weaker dollar); also so far consumption has held up rather than faltering. So maybe a recession will be avoided event if the ugly December employment figures made him a little more cautious about whether a recession can be avoided. So paradoxically Krugman was the most cautious in his assessment of an economy wide recession.
I’m sitting in an AEA session honoring economic historian Ken Sokoloff, with speakers Claudia Goldin, Bob Allen, Jim Robinson, and Nobel prize winner Douglass North. Ken passed away last year at a still young age. It is a tragic thing to eulogize one’s graduate student, as Claudia did today. Teachers, like parents, should not have to bury their own children.
The coda would be when Duncan Foley asks Krugman not only about bipartisanship, but also extended the question to whether Krugman himself has been contacted by anyone from the other side.
According to an 11th century Arabic book called the Almanac of Health, an old man went to the doctor complaining of a frigid complexion and stiffness in winter. The doctor, after examining his condition, prescribed a rooster. Being a hot and dry bird it was the perfect tonic for a cold and rheumatic old man.
This is medicine by the 4 humours – Black bile, Yellow bile, Blood and Phlegm. The idea that the body is a concoction of these four essential juices is one of the oldest on record. From the Ancient Greeks to the 19th century it explained disease, psychology, habit and personality. When we describe people as being choleric, sanguine or melancholic we are still using the language of the humours today. It also explains why, in the long and convoluted history of medical practice, pigeon livers were an aphrodisiac, blood letting was a form of heroism and why you really could be frightened to death.
