StrategyUnit

Introduction
Tyler Cowen (from Marginal Revolution) presents an excerpt for this interesting paper:

Results of the experiment demonstrated dramatic cultural differences in financial value estimations, as well as on the influence of variables such as framing effects. Chinese participants made higher object value estimates than Americans did, even when adjusting for differing national inflation rates. In addition, the results showed that contextual information, such as framing, morality information, and group membership affected judgments of financial values in complex ways, particularly for Chinese participants. The results underscore the importance of understanding the influence of cultural background on economic decision-making. The authors discuss the results in the context of behavioral law and economics, and propose that importing cultural competence into behavioral models can lead to cognitive debiasing, both temporary and permanent.

Realism, Decision Making and Culture
One of the fundamental flaws of the school of realism is the belief that all actors are self-interested rational actors. We can assume that all actors are rational, yet we need to recognize that different value systems (as influenced by one’s culture and enviorment) can bring about very logical, but very different decisions.

From my own personal college experience in International Relations courses, I never once remembered a serious considering on how cultural values shaped decision-making, policy objectives and grand strategy objectives. Yet despite all this, we know there’s a difference. There are business consultants who consult on the different business styles of Americans, Indonesians, the French, Russians and others.

While I am sure those inside the walls of the State Dept., DoD and other policy-making and shaping groups know this, there should be a more frank open discussion by the mainstream media, which too are policy-shappers in the area of public opinion.

Summary: The Global Swarm Continues
StrategyUnit has focused on the fact that “Islamic Terrorism” (for lack of a better, shorter term) as it exists today is very much the global guerilla movement that John Robb has been writting about.

The recent arrests in Toronto, aborting a potential attacking, and a recent article by Michael Scheuer (author of Imperial Hubris: Why the West is Losing the War), reinforce the position that Islamic Terrorism is an organic, decentralized beast. Its bigger than Al-Qaida, bigger than Bin Laden and bigger than the now deceased al-Zarqawi. Al-Qaida does have an important role, but as the instigator, the proclaimed vanguard, of a wider Islamist social movement.

Indeed, as StrategyUnit has noted: “As this war is more of cross between an insurgency and a social movement, there maybe no clean cessation of violence in the near or distant future. And in this conflict, there will be no battlefields, but rather our adversaries will be attached as a Global Swarm as Global Guerillas.”

The Toronto 17
The 17 potential terrorists arrested in Tortonto has direct connections to Al-Qaida and were, like the July 7 Londong bombers, homegrown groups. While the details are coming out, the Internet played a major role in communication, indoctrination (recruitment) and training (bombing making).

The suspected terrorists were, luckily for us, inept. A group of “foreign looking” men doing weapons training in the open and later buying three tons of fertilizers (not a fact easy to hide) are not the hallmarks of terrorist masterminds.

Bin Laden - Status: Success or Failure

Michael Scheuer, author of Imperial Hubris: Why the West is Losing the War, notes that many experts have written off Bin Laden as a failure:

Over the past two years, U.S. and Western commentators have concluded that Osama bin Laden is largely irrelevant as the leader of the worldwide Sunni insurgency. Newsweek’s Fareed Zakaria, for example, has said that “by now it is surely clear that al-Qaeda can produce videotapes but not terrorism…And the bad guys are losing” (Newsweek, March 15, 2004). James S. Dobbins at the National Review added that bin Laden “made many threats of course, but was never able to back them up, creating an unbridgeable credibility gap” (National Review Online, September 28, 2005). The new CIA chief, General Michael Hayden, has described bin Laden’s recent audiotapes as a public relations campaign to prove he is still alive. “These attempts,” Hayden said, “may be an attempt on their part [bin Laden and Ayman al-Zawahiri] to kind of re-establish authenticity with their followers” (AP, February 5). Finally, from Sarah Lawrence College, Fawaz Gerges all but dismisses bin Laden’s relevance, arguing that “we are in the throes of the beginning of a new wave [in the Muslim world]–the freedom generation–in which civil society is asserting itself” (Christian Science Monitor, February 4, 2004). In short, these arguments assert that the situation has improved.

But indeed, this is not the case. Scheuer correctly points out that Bin Laden, sees himself and Al-Qaida as the final means, but the “match” to light the Ummah (Islamic World) on fire, motivating it against the West:

“[Bin Laden] has never claimed that al-Qaeda could achieve this goal by itself. Quite the contrary, he has consistently maintained that al-Qaeda is only the vanguard of the large-scale movement that is needed to achieve this goal.”

The recruitment of Europeans to fight in Iraq, the Madrid and London Bombings, the abortive attempt in Toronto, the recent alliance of “”Islamist leaders in Syria, Lebanon, Palestine, Egypt, Jordan and Jerusalem” all point to the face that the “flame” is alive and thriving.

Conclusion
The recent Toronto arrests shows that the threat is still very real and is far more diverse than a threat “from over there”, but it is a threat that can be as homegrown as meatloaf and apple pie (for you American readers).

Econbrowser’s Menzie Chinn

Menzie Chinn, while discussing the new appointed Sec. Treasurer Henry Paulson, puts out to a laundry lists of major and mounumental challenges the U.S. economy is facing. His full article, “Does a new economic team mean a new economic policy?“, is worth the read.

the economy has both underperformed along a number of dimensions, and faces serious challenges in the future.

Regarding the past and present:

• Real compensation has been stagnant.
• Job creation has been lackluster.
• Income inequality has been increasing.
• Federal debt has been exploding and is set to explode further, as the 2001 and 2003 tax cuts are extended.
• Federal government entitlements-based liabiities have been expanded tremendously by the Bush Administration and Congress(Medicare Part D) even as the Bush Administration attempted to modify Social Security.
• Tradable sector output share has been declining.

Regarding future challenges:

• The trade and current account deficits are increasing without seeming end.
• The determination of interest rates on government debt in the US are ever more in the hands of foreign governments and other actors.
• The net income account in the balance of payments is set to go into the negative range.
• High energy dependence exacerbates the problems reserve accumulation in oil exporting countries.
• The possibility of a “hard landing” for the dollar.

Sobering Look at Brazil’s Energy Independence as a Model for the US

“Lessons from Brazil“, TheOilDrum’s Robert Rapier:

Yes, Brazil has in fact “figured it out” with respect to energy independence. But the reason they achieved energy independence is primarily because of their frugal energy usage, not because of ethanol. Increase their energy usage to U.S. levels, and the “energy independence miracle” would quickly vanish. This is the factor that the media and the politicians have overlooked. On the other hand, if the U.S. had the same per capita energy consumption as Brazil, we would be net oil exporters. In fact, our per capita energy consumption could be 11 barrels per person per year - triple the consumption of Brazil - and our production and demand would be in balance. We would be energy independent.