Jim Hamilton, in his latest post at Econbrowser, uses as a point of departure the oft-invoked image that Bernanke is walking a tightrope between inflation and recession.
Because Hamilton is a Serious Economist, he has to be measured and fact based, which sometimes means he can’t be as pointed as I suspect he might like to be.
Hamilton is effectively saying that the notion that there is a path that keeps the economy from suffering either a recession or inflation is garbage.
Bernanke (at least publicly) is failing to admit that our damaged credit system is central to our woes. Cutting rate is not going to make insolvent borrowers suddenly credit worthy (except in a small proportion of marginal cases), nor is it improving liquidity in the sectors where it is needed, such as the securitization market or auction rate securities. Those sectors are suffering from serious doubt about the product, not merely due to the decline in the perceived quality of the collateral/creditworthiness, but the basic design of the product (dubious role of the rating agencies, uncertainty about the effectiveness of credit enhancement, and in the case of CDOs, the discovery that downgrades can be dramatic). Hamilton even suggests that the recent monetary moves played a direct role in the vertical ascent of commodities prices in the last two months.
Hamilton has neither the occasionally combative temperament nor the bully pulpit of a Paul Krugman, but the information he presents, even in his understated manner, is an indictment of the Fed. There are point where he treats Bernanke with more deference that he deserves, for example, when he makes the mind-boggling claim that commodity futures prices indicate that food and energy prices will flatten out this year.
The only defense Hamitlon can find for the central bank’s actions is that it may be deliberately stoking inflation to erode the value of America’s debt overhang.
Hamilton gave an excellent presentation at the Jackson Hole conference that (among other things) argued that interest rate policy would be ineffective in dealing with the credit crisis and that more emphasis needed to be placed on institutional reform. Despite the fact that the reasoning is unassailable (and confirmed by the failure of repeated rate cuts to stop the seize-ups afflicting important sectors of the market), Hamilton’s prescription (and others like it) have been ignored.
Oddly, this conundrum reminds me of the situation that led Daniel Ellsberg to release the Pentagon Papers. Ellsberg was perhaps the best informed person in the US about Vietnam; he had been there for both the Department of Defense and the State Department, and unlike most US operatives, had spent considerable time on the ground, including under fire.
Like many people in the intelligence community (he worked for Rand), he believed if he could only get the ear of the President and get them to understand what a hopeless exercise Vietman was, they would withdraw. But reading the Pentagon Papers, which gave the history of the US involvement from the inside, showed Ellsberg that every Administration involved in Vietnam knew full well that the US would not succeed. The Presidents had not gotten optimistic briefings; quite the reverse. Yet even though they knew this was a costly and doomed enterprise, they refused to withdraw, deeming the prestige of the US to be at stake.
I wonder if a similar dynamic is at work here, that the Fed in fact appreciates full well the nature and depth of this crisis, yet is following a conventional and futile pattern of action because to do otherwise would be to admit the Emperor has no clothes.
From Econbrowser:
Some analysts are saying that Fed Chair Ben Bernanke is walking a tightrope– if he does not drop interest rates quickly enough, the U.S. will be in recession, but if he goes too far, we’ll see a resurgence of inflation. I am increasingly persuaded that’s not an accurate description of the situation.
We’ve seen some quite remarkable movements in commodity markets the last two months. The graph below plots the price of 14 that I could get my hands on quickly through Webstract, with each price normalized at 100 for January 1. Every single one of these prices has risen dramatically since then. The most tame among the group has been zinc, which is up a mere 6.5% over the last two months, or 39% at an annual rate. Topping the group is wheat, up 46% over two months; I won’t try to translate that one into an annual inflation rate because I don’t want to scare you.
When Bernanke opined yesterday,
diminishing pressure on resources is also consistent with the projected slowing in inflation,
he evidently wasn’t referring to aluminum or barley or coffee or cocoa or copper or corn or cotton or gold or lead or oats or silver or tin or wheat or zinc.
If it were just a few commodities moving, I wouldn’t be concerned, as any of these prices can be quite sensitive to small disruptions in supply. But we are clearly looking at an aggregate phenomenon here, and it seems unreasonable to suppose that the phenomenon has nothing to do with choices by the Fed. Although I have been skeptical of Jeff Frankel’s story that low interest rates were the primary cause of the broad movements in commodity prices over the last several years, it is very plausible to me as one explanation of what we’ve seen happen over the last two months.
Bernanke’s latest statement also included the following:
The projections recently submitted by FOMC participants indicate that overall PCE inflation was expected to moderate significantly in 2008, to between 2.1 percent and 2.4 percent (the central tendency of the projections). A key assumption underlying those projections was that energy and food prices would begin to flatten out, as was implied by quotes on futures markets.
Now it is true that if you look at the time profile of futures contracts on these commodities, you don’t see an upward slope, a fact in which Bernanke has taken solace on a number of previous occasions as well. But even if there is no further increase in the price of wheat, surely it’s reasonable to anticipate increases yet to come in the price of bread and Wheaties and pasta.
I think part of the basis for Bernanke’s optimism on inflation must be the dourness of his outlook for real economic activity. The basic macroeconomic framework in Bernanke’s textbook suggests that, for given inflation expectations, if output falls below the “full-employment” level, inflation should go down, not up.
But what exactly does the theoretical full-employment level of output correspond to in the present situation? There are fundamental problems with credit markets at the moment, and these arise not from a nominal interest rate or wage rate that are too high (the usual textbook suspects), but instead from a real disruption in the basic process of financial intermediation, as if somebody had dropped a bomb on our financial system, preventing it from efficiently allocating credit. To the extent that’s the case, it may be that “full-employment GDP” would actually decline this year, and an effort to use a monetary expansion to prevent that would indeed be inflationary.
Of course, a serious problem in the market for credit is another area with which Bernanke the academic is quite familiar. But as I explained when I had an opportunity to address the Fed governors and presidents last fall, fiddling with the level of the fed funds rate is not a particularly efficacious tool for dealing with this problem. I’m not saying it’s of no help. But I think the primary way in which monetary expansion could help alleviate the current credit problems was described by Brad DeLong with remarkable clinical coolness:
Yes, the financial system is insolvent, but it has nominal liabilities and either it or its borrowers have some real assets. Print enough money and boost the price level enough, and the insolvency problem goes away without the risks entailed by putting the government in the investment and commercial banking business.
The monetary cure for our ails of course also has a downside, in that we’ll later need an artificial recession to bring the inflation back down. Greg Mankiw notes Allan Meltzer’s displeasure at this prospect:
A country that will not accept the possibility of a small recession will end up having a big one when the politicians at last respond to the public’s complaints about inflation.
I agree with Meltzer that the recent Fed rate cuts are buying us higher output at the moment at the cost of lower output in the future, for just the reason Meltzer gives. But I disagree that the recession Bernanke is trying to avoid would be a “small” one. The Fed chief must be worried that a recession in the present instance would precipitate major financial instability, in which case perhaps the choice between paying now and paying later argues in favor of latter.
In any case, the tightrope analogy seems a misleading way to frame the issue, in that it presupposes that there exists a choice for the fed funds rate that would somehow contain both the solvency and the inflation problems. In my opinion, there is no such ideal target rate, and the notion that we can address the difficulties with a sagely chosen combination of monetary and fiscal stimulus and regulatory workout is in my mind doing more harm than good. Better for everyone to admit up front just how bad the problem is, and acknowledge that there is no cheap way out.
No, I don’t believe that Bernanke is walking a tightrope at all. But I do hope he’s checked out the net that’s supposed to catch him if he falls.
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The recent move in commodity prices suggests that we are entering into what von Mises described as the crackup boom. The primary feature is the flight from money.
Jim Hamilton. Big deal. I’ve been saying this for 28 years!
I want to quibble with your historical analogy. When people look at history, they tend to view it as far simpler and far more deterministic than it was. Like the man said, it’s hard to make predictions especially about the future. Even more so for warfare, which is one of the least predictable human activities. Anyone who thinks they can confidently predict the outcome of a war is a fool, regardless of how clear things look in retrospect. I suggest a better analogy is the FDA. They routinely kill people by delaying the introduction of usefull drugs. If they approve a drug that turns out to be dangerous this causes enormous damage to the FDA. Killing people by being to cautions causes only minor complaining. The fed acts based on the same approach. They don’t pursue results they attempt to avoid blame.
blueskies
Bloody good read. Thanks.
You say “I won’t try to translate that one into an annual inflation rate because I don’t want to scare you.”
What I am hearing is that most food producers are planning to pass along price increases of approx 6% in the next quarter with the expectation of more price rises in the following quarter.
A 20lb bag of flour in my local grocery costed $10.75 in December 07 and yesterday to restock the pantry I paid $20.75.
I think BB should, just for fun, buy his own groceries next week. Ah that famous saying: How much is a quart of milk?
While the Feds tell all that inflation is on/near/almost/moderating in some acceptable range, this retoric will become very old in the weeks to come as pay checks get less able to put food on the table.
You state (regarding Hamilton’s/DeLong’s view):
“The only defense Hamitlon can find for the central bank’s actions is that it may be deliberately stoking inflation to erode the value of America’s debt overhang.”
It is one thing for inflation to be found in stocks, its another entirely for it to be found in commodities.
Rising commodity prices, unlike stocks, leads to higher consumer prices. It seems to me then that the attempt to inflate debt away goes into commodities/consumer prices. The risk, then, is that the attempt to inflate debt away backfires and has the consequence of making a recession worse.
The Fed can’t direct where the inflation goes, speculators do. The flight into commodities can’t hold up when the recession takes hold. There will be a deleveraging out of commodities. This would then reverse the increase in consumer goods prices. Is this what the Fed is counting on?
“Blueskies” makes an extremely misleading analogy, claiming that delaying the introduction of drugs “routinely” kills people, while approving a dangerous drug “causes enormous damage to the FDA.” Approving a dangerous drug can also kill or permanently injure people. There’s more at stake than bureaucratic self-interest. And that’s true with the Fed as well.
“The Presidents had not gotten optimistic briefings; quite the reverse. Yet even though they knew this was a costly and doomed enterprise, they refused to withdraw, deeming the prestige of the US to be at stake.
I wonder if a similar dynamic is at work here…”
For any Administration to admit that either a) their policies failed b)their ideological framework is to blame for a crisis so deep or c) that the country has been sliding backward economically or in prestige under their aegis is very difficult to stomach.
For THIS Administration, it is simply inconceivable. It simply cannot be true, hence any excuse, any move shall be targeted in denying the facts.
The truly sad thing is that the Fed accept this as a given and play along.
When a serious blog like The Big Picture post an entry with this title:
“Why the Fed is Compelled to Lie to Congress”
“http://bigpicture.typepad.com/comments/2008/02/why-the-fed-is.html
it becomes pretty obvious that the fix is in. Trouble is, the fix just won’t work and the end result could be very ugly.
As an addendum to my previous comment:
Delaying the day of reckoning is also a godsend for the hardcore Republican political operatives. Should a democrat gain the presidency, everything that punt the financial/credit grenade into next year will allow those operatives to start anew a systematic campaign of political undermining and destruction, like they have been doing since 1992.
It’ll be fascinating to watch how they will react should McCain get into the White House.
The bottom line: no one should expect any significant political leadership into this crisis until the People send a clear majority of get-real people in DC.
I’m not holding my breath.
Very bad news here, because The Fed and all The Bush Coup are in denila about the housing bubble and inflation and a recession and meanwhile, we have the next bubble in place taking off in a parabolic explosion, which will be fueled by further rate cuts….oh my God! This is not good, we have people rushing to stay out of a liquidity trap and in the process, they are generating certain systemic collapse!!!
http://online.wsj.com/article/SB120424991252301815.html?mod=googlenews_wsj
Yesterday on the New York Mercantile Exchange, oil surged $2.95 to $102.59 a barrel, a new high in nominal terms. After rising 12% this month, oil prices are now just below their inflation-adjusted peak of $103.76 set in 1980.
But oil has been a laggard compared with other commodities. So far this year, natural-gas prices are up 26%, coal is up 56%, platinum up 41%, wheat up 32% and cocoa up 38%.
Instead, commodities have been riding a wave of investment money diverted from stocks and bonds by investors chasing better returns. A weaker dollar, lower interest rates and fears of inflation have added momentum to the rally.
“People are wondering where they should put their money. Treasury bonds are overpriced, they’re scared to death about equities, and they’re even afraid of money markets,” says Shawn Rubin, a senior adviser at Smith Barney. “So everybody is asking about commodities.”
Yesterday on the New York Mercantile Exchange, oil surged $2.95 to $102.59 a barrel, a new high in nominal terms. After rising 12% this month, oil prices are now just below their inflation-adjusted peak of $103.76 set in 1980.
But oil has been a laggard compared with other commodities. So far this year, natural-gas prices are up 26%, coal is up 56%, platinum up 41%, wheat up 32% and cocoa up 38%.
Instead, commodities have been riding a wave of investment money diverted from stocks and bonds by investors chasing better returns. A weaker dollar, lower interest rates and fears of inflation have added momentum to the rally.
“People are wondering where they should put their money. Treasury bonds are overpriced, they’re scared to death about equities, and they’re even afraid of money markets,” says Shawn Rubin, a senior adviser at Smith Barney. “So everybody is asking about commodities.”
yves,
I posted an OT Q yesterday and wanted to follow up with a topic that might be of interest:
http://en.wikipedia.org/wiki/Plaza_Accord
My Q had to do with why Treasury rates disconnected from equities around 1985, as there was a period when yields and equity performance were somewhat related, versus the current era of synthetic supercharged debt that is unregulated, but then fed back into Treasuries (TAF) as collateral for more debt:
Consider: The reason for the dollar’s devaluation was twofold: to reduce the US current account deficit, which had reached 3.5% of the GDP, and to help the US economy to emerge from a serious recession that began in the early 1980s. The U.S. Federal Reserve System under Paul Volcker had overvalued the dollar enough to make industry in the US (particularly the automobile industry) less competitive in the global market. Devaluing the dollar made US exports cheaper to its trading partners, which in turn meant that other countries bought more American-made goods and services. The Plaza Accord was successful in reducing the US trade deficit with Western European nations but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan because this deficit was due to structural rather than monetary conditions.
>> This is a backdrop for systemic global change and something along these lines may be needed to re-order the chaos we have, but as Rumsfeld put it:
Now what is the message there? The message is that there are known “knowns.” There are things we know that we know. There are known unknowns. That is to say there are things that we now know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know. So when we do the best we can and we pull all this information together, and we then say well that’s basically what we see as the situation, that is really only the known knowns and the known unknowns. And each year, we discover a few more of those unknown unknowns.
We are in the hands of monkeys:
The Monkey Shakespeare Simulator was created by Nick Hoggard to see how long the famous quote “If you have enough monkeys banging randomly on typewriters, they will eventually type the works of William Shakespeare,” would actually take to accomplish.
The monkeys began their work on July 1, 2003. There were 100 monkeys to begin, but their number grows as they find time to procreate (basically, the population doubles every couple of days). The lifespan of each monkey is set at 50 years. One monkey is assumed to hit one key per second with 2000 characters per page. The monkey’s typewriters have keys that are all the same size, so the monkeys have an equal chance to hit any key.
“This would then reverse the increase in consumer goods prices”
Ah, maybe but it has been my observation that prices rise fast but move lower, much slower. The lagged response in final consumer prices prolongs the pain. Besides once prices rise, workers will want more in wages. Wages mean more overhead which means more price increases. So prices might come down but it will be a higher low than yesterday.
It was lunchtime in one of Haiti’s worst slums, and Charlene Dumas was eating mud.
With food prices rising, Haiti’s poorest can’t afford even a daily plate of rice, and some take desperate measures to fill their bellies.
Charlene, 16 with a 1-month-old son, has come to rely on a traditional Haitian remedy for hunger pangs: cookies made of dried yellow dirt from the country’s central plateau.
The mud has long been used by pregnant women and children here as an antacid and source of calcium. But in places like Cite Soleil, the oceanside slum where Charlene shares a two-room house with her baby, five siblings, and two unemployed parents, cookies made of dirt, salt, and vegetable shortening have become a regular meal.
“When my mother does not cook anything, I have to eat them three times a day,” Charlene said. Her baby, named Woodson, lay still across her lap, looking even thinner than the slim 6 pounds, 3 ounces, he weighed at birth.
Though she likes their buttery, salty taste, Charlene said the cookies also give her stomach pains. “When I nurse, the baby sometimes seems colicky, too,” she said.
Food prices around the world have spiked because of higher prices for oil, which is needed for fertilizer, irrigation, and transportation. Prices for basic ingredients such as corn and wheat are also up sharply, and the increasing global demand for biofuels is pressuring food markets as well.
Jim Hamilton is a terrific economist, but it was your comparison of recent Fed action to Pentagon Papers era Vietnam policy which was most insightful, I thought. The implication would seem to be that the belief in the power of the Fed, its politicization, and the clamor for help, the belief in the right to ever-expanding good times, is so strong, that the Fed can never do nothing. It must always act, even when it knows that its actions won’t help, and may even harm, because to sit back and watch a recession unfold would be to provoke revolt. Perhaps the candidate with Volcker’s endorsement can undo that legacy of enabling.
I think we go one stp further and instead of just talking about what a rotten job Ben is doing, get rid of him and all the fools in there now! We do not have time for an election and it seems as if these people there now are trying as hard as they can to screw things up as much as possible just to make the next group like like idiots. Hey, maybe these guys are smart?
Dear DH:
Many many years ago, the comedian Bob Newhart did a bit on Shakespeare’s monkeys. The punch line comes from the guy observing the output of the monkeys at their typewriters: “Hey Jim, I think we’ve got something here, come take a look” “To be, or not to be, that is the gzorninplatt”!
Um, the US military actually won the Vietnam War. At least, if by “won” you mean “defeated the NLF and the NVA.”
It’s an astounding feat of revisionist history to call Ellsberg “the best informed person in the US” about the Vietnam War. He wasn’t even a soldier, for cripes sake! It’s like saying that Gil Amelio was the best informed person in Cupertino about the System 7 scheduler.
Ellsberg was a civilian staffer at OSD. He wrote and compiled a set of documents that said the US military could not defeat the FLN and NVA. No one listened. So he leaked his own work illegally to the Post, opening our present era of government by journalist. And look at the wonderful results!
Later, the US military defeated the FLN and NVA. Hardly anyone knows. Hardly anyone cares. Welcome to Ingsoc. If at first you don’t succeed, just lie and say you did.
The rest of the post is good, though…
Mencius,
I don’t know where you get your information from, it is just about entirely wrong. Ellsberg had been a soldier, He was a Marine. a company commander for two years.
When Kissinger became head of the NSC, he interviewed Ellsberg. Ellsberg was recommended to Kissinger precisely because Ellsberg WAS considered to be the most knowledgeable person re Vietnam.
When with the he was with Department of State and the DOD in Vietnam, unlike the vast majority of operatives, he spent a substantial amount of time in the field, often at considerable physical risk. He not only joined some platoons as a supposed observer, actually wound up having to give guidance to the commander as he was about to take actions that would have exposed his troops to fire. Ellsberg also wound up taking up arms and acting as a member of the troop.
Similarly, what he leaked was not his own work, it was a compilation. I forget the circumstances under which Ellsberg came to have access to it, but his role in producing it was minor. However, by virtue of having the highest level of security clearances, he was one of the few who had access to all the documents. Per Wikipedia:
The study was commissioned in 1967 by then Secretary of Defense Robert S. McNamara. McNamara appointed Leslie Gelb, director of Policy Planning and Arms Control for International Security Affairs at the Pentagon, to oversee the project. Gelb hired 36 military officers, civilian policy experts, and historians to write the monographs that constituted the content of the project. The ‘Papers’ included 4,000 pages of actual documents from the 1945–67 period.
Again from Wikipedia, this re Ellsberg:
He further believed that nearly everyone in the Defense and State Departments felt, as he did, that the United States had no realistic chance of achieving victory in Vietnam, but that political considerations prevented them from saying so publicly.
Finally, I don’t know how you can say US defeated the FLN and NVA. Yes, we won the Tet offensive, but it was so ferocious compared to what the US military had led the public to believe re the weakness of the enemy that it wound up serving their ends.
Rand interviews of NVA prisoners were like none others they had conducted, including those during WWII, North Korea, and various Cold War skirmishes. They concluded that the Vietnamese, unlike other opponents, could not be coerced. The only way to defeat then would be to exterminate them, and given their integration into the Vietnamese population, that meant exterminating the Vietnamese, which was not a viable course of action. It took the Vietnamese 100 years to expel the Chinese, but they succeeded. Few populations have that sort of tenacity.
Why can’t they admit they are, and have been wrong?
I think it’s both the skill set and the ideology of the Republicans, frankly. They don’t believe in the competence of government, and they don’t “do” competence in government, either.
Is this Bernanke thing kinda like a sexual fantasy thing where he wears tights too tight and then whips wall street into submission or is this the reality where wall street wears wears nice suits and whips puppets like Bernanke into playful submission?
To be honest, both fantasies make be really sick!
I don’t know where you get your information from, it is just about entirely wrong.
I was wrong about one thing, actually, which you don’t mention: the PPs were leaked to the Times, not the Post. Not that it matters.
Ellsberg had been a soldier, He was a Marine. a company commander for two years.
“Had been.” Listen to the spin. This is coming out of your own mouth. You are so brilliantly skeptical on financial matters, and so utterly credulous on everything else.
Ellsberg was a veteran, but not a soldier (or a sailor). He was a civilian in OSD, in McNamara’s policy shop. He was one of the DoD “whiz kids,’ with people like Alain Enthoven, etc. These were the people who thought they could beat North Vietnam with game theory and body counts. If anyone was responsible for the screwups, they were.
Yeah. He visited the troops. So did Bob Hope.
None of these Harvard types was in any way part of the organizational chain responsible for the war. They were not, in other words, military commanders. What they had was guanxi with people like Neil Sheehan.
Am I saying Westmoreland was perfect? Heck, no. (Though Abrams was a lot closer.) But to suggest that this glorified management consultant – who, considering his “hard left” connections, was probably not too many degrees of separation from the actual people who were actually fighting against American troops – knew more about the war than its actual commanders, reflects a level of antimilitarism that defies belief.
Similarly, what he leaked was not his own work, it was a compilation. I forget the circumstances under which Ellsberg came to have access to it, but his role in producing it was minor.
Here is a good summary of the creation of the PPs. Ellsberg was special assistant to McNaughton, whose project it was.
(Disclaimer: my stepfather, who certainly does not endorse these or any of my opinions, was a student and protege of McGeorge Bundy, one of McNaughton’s cronies.)
Finally, I don’t know how you can say US defeated the FLN and NVA. Yes, we won the Tet offensive, but it was so ferocious compared to what the US military had led the public to believe re the weakness of the enemy that it wound up serving their ends.
You didn’t even click on the link I posted, did you? You probably looked at the source and thought “Commentary bad, New York Review of Books good,” like a good servant of the powerful. An attitude which, I hasten to reiterate, does not mar your financial reporting at all.
From Herman:
As we have seen, however, the withdrawal had actually been under way since 1969; by August 1972, there were no more U.S. combat forces left in Vietnam and a year later there were no U.S. military personnel at all. The reason, in Sorley’s words, was that by then “the South Vietnamese countryside had been widely pacified, so much so that the term ‘pacification’ was no longer even used.” Once again, this was not the picture presented by the media, to Congress, or to the American public.
Are you saying that there were US combat forces in Vietnam between 1972 and 1975? Or that the Viet Cong (NLF) were not defeated? If so, these are some of the best kept secrets in history.
You write:
Rand interviews of NVA prisoners were like none others they had conducted, including those during WWII, North Korea, and various Cold War skirmishes. They concluded that the Vietnamese, unlike other opponents, could not be coerced. The only way to defeat then would be to exterminate them, and given their integration into the Vietnamese population, that meant exterminating the Vietnamese, which was not a viable course of action. It took the Vietnamese 100 years to expel the Chinese, but they succeeded. Few populations have that sort of tenacity.
Yup. This is exactly the sort of material that appeared in the Pentagon Papers.
Did it turn out to be true? See the above.
Did it make any sense whatsoever? Weren’t the Germans and Japanese a little fanatical, too? Did the US Army have to exterminate them? Listen to the words that are coming out of your mouth. They are cant, drivel, propaganda. They are not worthy of your keen and skeptical mind.
When you do financial reporting, do you ascribe infinite credibility to the WSJ, the FT, the NYT? Heck, no. You mock them on a regular basis, and this is as it should be. But somehow, you accept their first drafts of history, published 40 years ago and never revised, as if they came straight from the Vatican. I just don’t get it.
Reading over the above, I’m not sure I’ve made my interpretation of the Ellsberg scandal clear enough.
What happened is that there were two factions within DoD – the actual military (who wanted to fight a normal war against North Vietnam, a weak and easily defeatable adversary), who were Republicans, Birchers, etc; and McNamara’s people, the wonks, who wanted to try out the preposterous and unrealistic ideas of graduated conflict they had developed at places like RAND. (You’ve heard of “mark-to-model.” This was “war-by-model.”)
When the wonks’ limited war failed to achieve the results their theories were predicting, they shifted to plan B: the war was militarily unwinnable. Because the North Vietnamese were fanatical supermen, or whatever. Thus, they were not at fault for preventing the military from winning it.
In order to shop this line, they constructed a study to fit the result. When the military, quite rightly as it later turned out, ignored them, they fought back by leaking their study to the press.
This is something that happens every fifteen minutes in DC.
At least, it is standard operating procedure now. Perhaps less so in the day. But it was especially unusual at the time, because the study was marked “Top Secret.” Under, say, FDR, Ellsberg would have spent the rest of his life in Leavenworth.
When the Supreme Court failed to enjoin publication of the PPs, they came to no legal conclusion about whether the offence could be prosecuted. But it never was. Why?
Because the Court, in reality, was deciding who was stronger: the Times or the US military. I certainly am no under illusions that the latter is perfect. But neither is the former. DC is a world of power, not hugs and kisses and puppy dogs and “change.”
The result of this power play was the current precedent that no secrets are off-limits to the Times and the Post. Which allows them to more or less run the government. But perhaps you won’t believe it from me – in that case, try it from Tony Blair.
I had written a much longer reply, which disappeared when I clicked on one of your links, so I will be brief.
It’s easy to attack Ellsberg when you have no regard for facts. Oh, and BTW, the Pentagon Papers were first published in the Times, which was then subject to a temporary restraining order (the first time any Administration had tried to challenge the freedom of the press). the the Post, then the Boston Globe and the St. Louis Dispatch. Twenty papers ran installments, of which four were enjoined.
Ellsberg had been a Marine rifle company commander. He was in Vietnam 20 months, and unlike almost every other American, traveled almost entirely by car (the norm was helicopter). He visited every province, and in some provinces, traveled every passable road, often on routes considered to be dangerous. This was twenty months of on the ground fact-gathering that sometimes put him in physical danger.
He was originally there for the DOD under Landsdale, but based on his reputation for fieldwork, Deputy Ambassador Porter wanted him to make an independent assessment of the ARVN, and so he was reassigned to State.
He was also assigned for two weeks to a platoon that was sent into a VC controlled area (Rach Ken) to demonstrate that the US could take and pacify such an areas. He was with them at all times, took and (despite his civilian standing) returned fire.
And you compare this to a Bob Hope visit?
When Ellsberg reviewed the ARVN operations, he found a consistent pattern dating back to Diem and continued under the junta of considerably exaggerating their degree of control of the countryside. The ARVN also had a nasty habit of torching hamlets suspected of harboring VCs. This had no effect on the VC, who simply left, and alienated the population against the government.
Any reports of VC presence or absence came from the same South Vietnamese government that had consistently demonstrated a pattern of lying in order to maintain our sponsorship, so I take the claim that South Vietnam was pacified as of 1972 with a pound of salt.
As for Herman’s article, I note he claims that Ho Chi Minh was an ally of the Chinese. When McNamara managed to arrange to meet his old enemies (I believe over a dinner in Hanoi), it was very awkward and the worst moment was when he mentioned the role of the Chinese in supporting the Vietnamese. His hosts nearly jumped across the table, furious. They said that that showed how little the US knew about Vietnam. The Vietnamese hated the Chinese, who had been occupiers, and were not going to put themselves in a position to be under their thumb again.
I’m not so naive to believe that they didn’t barter intelligence and favors around the margin, but the two governments were not allied.
As for your belief that the government is controlled by the press, that is delusional.
How, pray tell, do you explain the fact that vote scrubbing in Florida in the 2000 election was reported widely in the UK? This was during that period when the outcome was in play. Yet the press that I am certain you believe is overly liberal didn’t touch it with a ten-foot pole.
And the math is compelling: at least 90,000 black votes scrubbed. 90,000 x 30% turnout x 90% propensity of blacks to vote Democrat = 27,000 more votes for Gore, far more than the hanging chads at issue.
Similarly, I was in Australia during the run-up to the Iraq war and during the war. Virtually daily, stories would run there, in prime time news, that were either not reported in the US (I would e-mail friends to tell them) or buried in the back pages of the newspaper.
We do not have a free press in this country, Friends of mine who lived in Eastern Europe when it was Communist and know what a controlled press looks like say the same thing.
Dear Mencius,
You are at risk here. The extreme, utter baloney you’re peddling with your credulous promotion of ideological revisionism will, if it continues to characterize your comments, lead readers to skip your entries.
You’re branding yourself. And, the brand, unfortunately, announces this: Ideological, fact free, manure. Not worth the time.
As for Herman’s article, I note he claims that Ho Chi Minh was an ally of the Chinese.
Um, where do you think they got their arms from? Bolivia? Sure, many were shipped directly from the Soviet Union.
When McNamara managed to arrange to meet his old enemies (I believe over a dinner in Hanoi), it was very awkward and the worst moment was when he mentioned the role of the Chinese in supporting the Vietnamese. His hosts nearly jumped across the table, furious. They said that that showed how little the US knew about Vietnam. The Vietnamese hated the Chinese, who had been occupiers, and were not going to put themselves in a position to be under their thumb again.
I love that “had been occupiers.” Yeah, what – 500 years ago?
As La Wik puts it:
“From at least 1965 onwards, both China and the Soviet Union provided aid to North Vietnam in support of its military activities.”
Of course, Wikipedia is a hotbed of Birchers. You can’t trust it at all.
Here’s a simpler explanation: the Hoists and the Maoists were both a bunch of Orwellian gangsters. They worked together for a while. Then they fell out. They were mad at McNamara because he was saying that Eastasia had not always been at war with Oceania.
He was also assigned for two weeks to a platoon that was sent into a VC controlled area (Rach Ken) to demonstrate that the US could take and pacify such an areas. He was with them at all times, took and (despite his civilian standing) returned fire.
He returned fire! Yeah, so did Michael Yon.
Ellsberg is to Bob Hope as the people who were actually running the war were to Ellsberg.
Any reports of VC presence or absence came from the same South Vietnamese government that had consistently demonstrated a pattern of lying in order to maintain our sponsorship, so I take the claim that South Vietnam was pacified as of 1972 with a pound of salt.
Really? You don’t think there were any Americans in Vietnam between 1972 and 1975? All those Times reporters, all those State people, whom you trust the way a Catholic trusts the Pope, they just went home? Talk about the dog that didn’t bark.
Think about what you know about the Vietnam War. Think about how much of it predates 1969. Ask yourself why.
As for your belief that the government is controlled by the press, that is delusional.
Really? Because you go on for several miles about the press’s misdeeds, I assume you at least agree that the press is very influential. Otherwise, why would you care? I’ll also give you the credit of assuming you read that Tony Blair speech.
The question is then: who has the most influence over what appears in the press? Gee, let me guess: (a) journalists? (b) Punch Sulzberger? (c) the White House? (d) the Freemasons, Skull & Bones, etc?
Occam’s razor, people.
I live in San Francisco and am a regular reader of the SF Bay Guardian, which is about as Maoist as it gets these days.
As for “vote scrubbing,” I heard about it constantly. But maybe this was just SF osmosis.
Which do you consider worse: “vote scrubbing” (removing felons from the voter rolls) or the addition of illegal voters to the rolls? Is it worse to drop a legal voter, or add an illegal one? Why? How much of the latter do you think is going on, which party do you think is responsible, and when was the last time your beloved press mentioned it to you?
As for Communism, I will have to agree – I get a very Pravda feeling off our official press. But not in the same way.
There are two kinds of Orwellian state: in one, the government controls the press, and in the other it’s the other way around. In both cases, the two are permanently and irrevocably on the same page. Whether or not you agree that our system is actually a case of the second type, I hope you’ll agree that they are both creepy as hell.
And I simply can’t believe “the first time any Administration had tried to challenge the freedom of the press.”
Do you really get all your history from Howard Zinn? What was John Adams, a dogcatcher? Forget the Sedition Act – Abraham Lincoln must have closed half the newspapers in the North at one time or another. Try this Google search. Or this Wikipedia page. And don’t even start me on FDR.
I don’t know where you’re getting your history from, Yves. But I think you really ought to consider switching providers.
I am not saying that the Washington Times, the John Birch Society, the ARVN, Commentary, ExxonMobil, etc, are purveyors of nothing but the pure, sweet truth. If only it were as easy as that! What I’m saying is that all these stories have about fifteen sides, and you are barely getting one.