Your humble blogger will be making his first visit to South Korea in less than twenty-four hours, and is very excited about that prospect.  Blogging will therefore be on the lighter side for the next few days. 

Talk amongst yourselv-- wait, then again, maybe you shouldn't do that. 

Before I explain what I mean, let's have some disclosure.  I blog at the foreign affairs portal in the United States.  I'm a member of the Council on Foreign Relations.  I've done the occasional consulting gig.  I'm on reasonably good terms with foreign policy wonks from across the spectrum.  Occasionally I get invited to swanky DC events and interview Tiger Moms.  The point is, relative to a lot of people reading this paragraph, I'm pretty damn insider-y. 

I bring all of this up because I probably have a higher tolerance for inside-the-Beltway bulls**t... and yet after reading this and this, I had to suppress my desire to vomit on my computer screen.  The first link merely confirms the epistemic closure that pervades much of the right wing in Washington, DC.  The latter is, on the other hand, the most incestuous thing ever written about anything, ever, in the history of mankind.  Really, compared to those stories, the George W. Bush library ceremony seems... tame. 

Combined, the two stories either function as a damning indictment on the state of DC insideriness... or I'm overreacting to the standard offal that comprises much of political journalism.  I'm honestly not sure.  Contrary to a lot of outside-the-beltway folk, I've come to see a utility for rent-seeking and back-scratching in politics.  It functions as a necessary lubricant to get useful legislation passed.  One could argue that part of the problem with Washington as it currently functions is that there's not enough earmarking, vote-buying, or other cross-cutting political exchanges. 

At the same time, the revulsion I felt after reading these essays was quite real.  I could barely finish Allen's Politico story, it was that insipid.  These are the kind of essays that cause even a jaded foreign policy hand like myself to mutter "you'll be the first ones up against the wall when the Revolution comes" after reading Politico.  Sure, much of this behavior is baked into the cake that is American political science... but I still ponder about the future of the Republic.  

So I'll leave this as something for readers to ponder while I'm in the ROK -- over the next week there's going to be some serious foreign policy questions being debated:  whether to react to Syria's chemical weapons use, or what to do about inter-Korean tensions, for example.  Will this conversation be taking place in a policy universe that is just too damn small? 

What do you think? 

Over at the Guardian, Ed Pilkington notes a rather curious silence from a powerful American interest group:

The National Rifle Association is so tied up fighting new gun restrictions in the wake of the Newtown shooting that it has failed so far to mount its expected lobbying blitz against a new international arms control control treaty.

With just a few weeks to go until the world's first Arms Trade Treaty (ATT) is put to a final vote at a UN conference in New York campaigners have voiced surprise at the NRA's relative silence on the issue. Until the Newtown tragedy, in which 20 young children died in their classrooms on 14 December, the UN's attempt to contain the loosely regulated international trade in weapons had been one of the gun lobby's biggest targets....

[A]head of the final ATT conference, which opens on 18 March, the NRA has been notable by its absence. Though the organisation continues to vow that it will do all in its power to prevent the arms trade coming into effect – arguing that it is a "ticking time-bomb" and "the most serious threat to American gun owners in decades" – it has not been applying the same strong-arm tactics as it did in 2012.

So what's up? Pilkington suggests that the NRA is so distracted fighting against domestic gun control measures that it's taken its eye off the ball of this treaty -- particlarly since, according to the American Bar Association, there's nothing in the ATT to infringe on Second Amendment rights. 

That might be true, but let me suggest an alternative hypothesis based on LaPierre's own rhetoric. The standard NRA defense against gun control has been concern about a Leviathan stripping citizens of their right to bear arms. Based on LaPierre's recent Daily Caller essay, however, I think they've switched arguments. The concern is no longer about creeping totalitarianism; it's creeping anarchy:

Hurricanes. Tornadoes. Riots. Terrorists. Gangs. Lone criminals. These are perils we are sure to face—not just maybe. It’s not paranoia to buy a gun. It’s survival. It’s responsible behavior, and it’s time we encourage law-abiding Americans to do just that....

Responsible Americans realize that the world as we know it has changed. We, the American people, clearly see the daunting forces we will undoubtedly face: terrorists, crime, drug gangs, the possibility of Euro-style debt riots, civil unrest or natural disaster.

Gun owners are not buying firearms because they anticipate a confrontation with the government. Rather, we anticipate confrontations where the government isn’t there—or simply doesn’t show up in time.

To preserve the inalienable, individual human right to keep and bear arms—to withstand the siege that is coming—the NRA is building a four-year communications and resistance movement (emphasis added).

They say "communications and resistance movement," I say "doomsday preppers."   

I'm hardly the only one to notice this kind of doomsday prepper rhetoric from LaPierre. What's interesting is that the NRA's allies in Congress are talking the same way. Gail Collins offers up the following Lindsey Graham quote: 

The senator from South Carolina wanted to know what people were supposed to do with a lousy two-shell shotgun “in an environment where the law and order has broken down, whether it’s a hurricane, national disaster, earthquake, terrorist attack, cyberattack where the power goes down and the dam’s broken and chemicals have been released into the air and law enforcement is really not able to respond and people take advantage of that lawless environment.”

Do you think Graham spends a lot of time watching old episodes of “Doomsday Preppers?” Does he worry about zombies? That definitely would require a lot of firepower (emphasis added).

I don't know if Graham worries about zombies, but I've given this matter some thought, and I do wonder if there's a fusion of various apocalyptic fears going on in some political quarters. 

To get back  to the Arms Trade Treaty, since Newtown the NRA appears to have shifted tactics in its arguments about the necessity to bear arms. But the fear of state collapse is a very different logic from a fear of an overpowering state. If you believe that governments will simply crumble at the first sign of a threat, then you're not gonna bother lobbying against some silly international treaty. It's not like the ATT will make a difference when the s**t hits the fan. Rather, groups like the NRA should be more concerned with declining gun ownership rates in the United States. 

In the argot of international relations theory, a leader or organization that finds itself trapped by its political rhetoric is suffering from "blowback." In an irony of ironies, I wonder if the NRA's shift in rhetoric has hamstrung its lobbying efforts on the Arms Trade Treaty.

Despite the fact that the administration appears to have the votes to confirm Chuck Hagel as Secretary of Defense, activist groups like the Emergency Committee for Israel (ECI) continue to pound away at a brick wall at Hagel's dovishness towards Iran.  In essence, ECI's ads and rhetoric argue forcefully that both Hagel and Obama are not fully committed to defending Israel by revving up for an attack on Iran now. 

Don't take my word for it, though -- here's one of ECI's ads:

Now, as I've blogged before, this kind of interest group campaign is a waste of money if the goal is a partisan effort to weaken Obama and bolster the GOP.  What if the effort is sincere, however?  In other words,  if groups like ECI care only about eliminating the Iranian threat as soon as possible, is this their best expenditure of resources? 

Based on Sheera Frakel's McClatchy story from yesterday, I'd say the answer is no.  Clearly, the greatest threat to a softening Western posture towards Iran comes from... dare I say it... Israel itself!!!

Israeli intelligence officials now estimate that Iran won’t be able to build a nuclear weapon before 2015 or 2016, pushing back by several years previous assessments of Iran’s nuclear ambitions.

Intelligence briefings given to McClatchy over the last two months have confirmed that various officials across Israel’s military and political echelons now think it’s unrealistic that Iran could develop a nuclear weapons arsenal before 2015. Others pushed the date back even further, to the winter of 2016.

"Previous assessments were built on a set of data that has since shifted," said one Israeli intelligence officer, who spoke to McClatchy only on the condition that he not be identified. He said that in addition to a series of "mishaps" that interrupted work at Iran’s nuclear facilities, Iranian officials appeared to have slowed the program on their own.

Oh.  My.  God.  We already knew that there was a fifth column of Israelis who were pooh-poohing the notion of a pre-emptive strike on Iran.  Now, with this intelligence walkback, the credibility of the Israeli national security establishment has taken a pretty serious hit. 

If ECI and like-minded groups really think that Iran poses an existential threat and that the time to act is now, then I think they're targeting their resources at the wrong country.  Trying to convert Rand Paul to their point of view isn't enough, and opposing Hagel is fruitless at this point.  No, only a full-throated ECI campaign in Israel itself will be sufficient to prevent Jerusalem from falling into the appeasement camp.  And if they fail to redirect their activities, then I have no choice but to conclude that ECI has gone soft on Iran as well. 

Am I missing anything? 

There are a lot of concerns rumbling around the wonkosphere that the United States is headed for a "fiscal cliff" at the end of this year.  Unless Congress acts, all $300 billion of the Bush tax cuts will expire, the $200 billion Obama payroll tax cut will expire, and $100 billion in spending will be automatically cut as per the debt deal from the summer of 2010.  Now, unless you reject Macroeconomics 101, you know that $600 billion in fiscal retrenchment in this economy practically guarantees a double-dip recession. 

Of course, Congress could change this if it acted in bipartisan fashion.  HA HA HA HA HA HA HA HA HA!!!  I kid, of course.  Except I don't -- any politial action to avert the fiscal cliff really would require some kind of bipartisan compromise. 

Earlier this week Josh Marshall posted an intriguing hypothesis about how the Democrats are thinking about this situation: 

For years and years now, the Democrats have been a much more fiscally responsible party than the Republicans. (Here, fiscally responsible means that they try to pay for the federal programs they support, not fiscally responsible in the way Republicans define it, where social spending programs are “fiscally irresponsible” even if they’re paid for.)

Republicans, by contrast, have intentionally drawn up big deficits with massive tax cuts, so that popular programs they don’t really like will eventually have to be cut. This is more or less the central organizing principle of the conservative movement, and the main way the conservative movement exerts control over the GOP. It’s no coincidence that when Republicans came back to power in 2011, they made deficits a huge legislative priority, and insisted on reducing them by cutting social programs alone.

The Democrats’ counter-strategy is a bit more subtle, but has essentially been to find ways to make it very uncomfortable for Republicans to maintain such a rigid anti-tax orthodoxy — to ultimately force Republicans to break their anti-tax pledges and badly splinter their party. That’s what the Buffett Rule is about; that why Dems insist they won’t dismantle the so-called “sequester” — big cuts to defense and even to Medicare — unless Republicans agree to tackle deficits in a balanced way, i.e. by supporting significant new tax revenues.

The results have been mixed. They’ve won a small number of GOP votes here and there, and vulnerable members are nowadays more likely to trash or dismiss Grover Norquist in the press than they were last year. But at a very high level within the Democratic Party, there’s a recognition that breaking the GOP on taxes is an absolutely crucial strategic imperative for defending safety net programs over the long term. Getting the revenue in a passive way is a second best option.

Now, if Marshall is correct, what's interesting is that the Democrats have a powerful ally in this push to get the GOP to shift away from their anti-tax orthodoxy -- Wall Street: 

Now that the US is facing the possibility of another budgetary showdown with potentially even higher stakes – the so-called “fiscal cliff” at the end of this year – Wall Street lobbyists are preparing an aggressive campaign to stop the political brinksmanship.

"The experience of last year taught everybody to be ... focused on it earlier and not assume that this is business as usual,” said one bank lobbyist based in Washington. “People who had relied on government to respond eventually were surprised when it didn’t.”...

Different business sectors are preparing for the looming fiscal cliff with varying degrees of urgency. Among the most aggressive in pushing for a deal are defence contractors who would bear the brunt of the planned cuts to the Pentagon budget. Medical providers would also be hit hard by the automatic cuts. Companies that pay large dividends – such as utilities – would be slammed if the tax rate on dividends rise as scheduled from 15 per cent to more than 40 per cent.

But financial services companies also have a huge amount at stake. The question is how to influence the political process that remains gridlocked ahead of the November election....

Then there are tactical considerations. Though one bank lobbyist partly blamed a faction of congressional Republicans for last August’s debt ceiling showdown, saying they were “willing to go off the cliff with all flags flying”, it is unclear whether it is in Wall Street’s interest to take on some of their traditional allies on Capitol Hill by pushing them to accept higher revenues or tax increases in any deficit reduction deal, as Democrats are demanding.

The fiscal cliff is still a long way off in political time, but is the strategy having any effect?  Sort of.  We're starting to see gravitas Republicans -- real ones, too, not just MSNBC media darlings -- calling for compromise.  Calls that are annoying Grover Norquist. 

And look -- here's a real live GOP Senator speaking tax heresy!

[Senator Lindsay] Graham says the debt crisis is so severe that the tax pledge — which says no tax loopholes can be eliminated unless every dollar raised by closing  loopholes goes to tax cuts -- has got to go

"When you eliminate a deduction, it's okay with me to use some of that money to get us out of debt. That's where I disagree with the pledge," said Graham....

Graham said eliminating some deductions should free up money to lower tax rates — but also to pay down U.S. debt.

"I just think that makes a lot of sense. And if I'm willing to do that as a Republican, I've crossed a rubicon," said Graham.

This puts Graham at odds with his party's leadership.

And look!  Real, actual negotiations in the Senate are taking place!  So, does this mean the Democrat/Wall Street strategy is paying dividends?  Will Tom Friedman and David Brooks soon be able to wax poetic about "statesmanlike" politicians cutting a Grand Bargain? 

No, not really.   

Jeb Bush is not an elected official any more.  Lindsey Graham is, but he likes to talk iconoclasm every once in a while, so I'm not sure how much weight it carries  (if it was Jim DeMint uttering these words, I'd be more convinced).  And let's look a little closer at the New York Times story on the Senate negotiations, shall we?

Republican leaders remain largely on the sideline. Senator Jon Kyl of Arizona, the No. 2 Republican, applauded what he called “grass roots” negotiations, but conceded that neither he nor other party leaders had been directly involved, aside from efforts to stave off automatic defense cuts. Still, even he is making conciliatory comments on raising taxes, the issue that has kept Republican leaders from the table.

And this is on the Senate side -- what really matters is whether the House GOP caucus will agree to any of this. 

In some ways, the next six months will be an excellent test of the roles that money and ideology play in current American party politics.  If money is the honey, then a deal will be cut, and well before December.  As the myriad articles suggest, what freaked out business wasn't just the rank partisanship during the last debt deebacle, it was how close things got to a breakdown.  They don't want to see that happen again. 

If ideology is what counts, however, then the House GOP won't budge, if at all, until the last minute.  They don't want to see taxes go up, but I'm not sure that they would be willing to make a compromise that would permanently eliminate tax deductions in order to preserve the status quo in income tax rates. 

What do you think? 

Yesterday Rush Limbaugh asked a former U.S. serviceman who called into his show a totally-hypothetical-and-not-in-any-way-designed-to-impugn-the-patriotism-of-the-sitting-president-kind of question: 

Are you aware of any military contingency plans for a president who might not be your prototypical pro-America president? Are there contingency plans to deal with a president who may not believe that the United States is the solution to the world's problems?

Marc Ambinder provides both a succinct ("No.") and a more detailed answer.  Now, some readers might take umbrage at the partisanship of Limbaugh's question, but I think it dovetails nicely with some recent research interests of my own.  In particular:  what would happen if the president was under threat of turning into a zombie? 

Let's break this down into two phases:  A) a president who's been bitten but is still clearly human; and B) an undead POTUS. 

The first situation could distort the government's initial policy responses.    After all, the actors with the most immediate stake in sabotaging any attack on zombies are those who have been bitten by zombies, and the human relatives of zombies. By definition, the moment humans are bitten, they will inevitably become zombies. This fact can dramatically alter their preferences. This change of mind occurs in many zombie films. In George Romero's Land of the Dead (2005), the character of Cholo has the most militant anti-zombie attitude at the outset of the film. After he is bitten, however, he decides that he wants to "see how the other half lives." In Peter Jackson's Dead Alive (2002), as well as Romero's Dawn of the Dead (1978) and Survival of the Dead (2010), family members keep their undead relatives hidden from security and paramilitary forces.  

Clearly, soon-to-be-ghouls and their relatives can hamper policy implementation.  One would expect a soon-to-be POTUS to order research efforts on finding a cure rather than focusing on prevention, for example. 

If the situation is unclear when the president is infected, all hell breaks lose once he becomes a member of the differently animated.  The law here is extremely murky.  From Ambinder:

The Presidential Succession Act of 1947 spells out a procedure. Let's look at 3 USC 19, subsection "E."  We're dealing with a situation where there is no President, no Vice President, no Speaker of the House and no President Pro Tempore. The law then appoints the Secretary of State as President until either the end of the current president's term in office OR someone higher in the chain of command suddenly re-appears or recovers from injuries and is able to discharge the powers of office.  (The Secretary of Defense is sixth in line, after the Secretary of the Treasury.)

This seems clear: If it's not clear, after some sort of decapitation attack, whether the President, the Vice President or the two Congressional successors are alive, or if they're all alive but disabled, then the Cabinet secretaries become acting President -- until and unless a "prior entitled individual" is able to act.

Let's say that the POTUS, the VPOTUS, the Speaker and the President Pro Tempore are all injured; only the Vice President recovers. As soon as that person is eligible, he or she can "bump" the Acting President aside whenever he wants....

The problem is that, in a catastrophic emergency, the people who need to know who is in charge might not have the resources to find this out immediately. These people are, in particular, the Secret Service, and the folks who execute lawful orders from the National Command Authority (which is another name for the commander in chief's executive powers).

Well, then what the hell happens if a president is bitten by a zombie, dies, and then becomes a zombie?  It seems to me that the Presidential Succession Act of 1947 doesn't cover this contingency. 

There is also the question of the conflicting bureaucratic imperatives that some organizations, like the Secret Service, would face in this scenario.  For example, in Brian Keene's The Rising, the U.S. government falls apart almost immediately. A key trigger was the Secret Service's difficulties altering their In divining bureaucratic preferences, where you stand depends on who you eat. standard operating procedures. After the president turned into a zombie, he started devouring the secretary of state. As a result, "one Secret Service agent drew his weapon on the undead Commander-in-Chief, and a second agent immediately shot the first." 

I think the lesson to draw here for Rush and others is that in divining both bureaucratic and presidential preferences, where you stand depends on who you eat. 

I hereby applaud Rush for being brave enough to highlight this troublesome question during a week when nothing else is going on in the world. 

Hmmm.... this is interesting:

Nations on the front lines of the old Cold War divide made clear here Saturday that they want the Senate to ratify the new U.S.-Russia nuclear treaty, and said that Republican concerns about their well-being were misplaced.

In an unannounced group appearance at the end of an administration background briefing on Afghanistan, six European foreign ministers took the stage with a message for Congress.

"Don't stop START before it's started," Bulgarian Foreign Minister Nickolay Mladenov said.

Conservative Republican senators have said the New Strategic Arms Reduction Treaty, or New START, signed early last year, needs more work and have rejected the administration's hopes of bringing it to a vote in the lame duck session before the end of the year.

The ministers insisted that Obama administration officials, some of whom stood at the back of the room as they spoke, did not put them up to the appeal. All are here participating in the NATO summit.

"I'm the one who initiated this initiative," Danish Foreign Minister Lene Espersen said. The idea, she said, was to "at least make the Republican Party [aware] of how important this is."

In addition to being her country's foreign minister, Espersen said with some indignation, "I'm also the chairman of the Conservative Party of Denmark. Nobody can ever accuse me of being soft on security."

"We're all conservatives," Hungarian Foreign Minister Janos Martonyi added.

So is this:

Polish Foreign Minister Radoslaw Sikorski had endorsed the treaty Friday, saying a failure to ratify it this year "will embolden those in Moscow who would rather have the West as an enemy than as a partner – and who thus would like to see the tenuous progress made in recent months to be undone."

And this:

Two major Jewish groups came out Friday in favor of ratification of the START treaty.

Both the Anti-Defamation League (ADL) and the National Jewish Democratic Council (NJDC) cited the importance of passage of the U.S.-Russian nuclear arms reduction treaty in order to maintain American-Russian cooperation in pressuring Iran to curtail its nuclear program.

"We are deeply concerned that failure to ratify the New START treaty will have national security consequences far beyond the subject of the treaty itself," the ADL said in a letter sent to every senator Friday.

"The U.S. diplomatic strategy to prevent Iran from developing nuclear weapons requires a U.S.-Russia relationship of trust and cooperation," ADL continued. "The severe damage that could be inflicted on that relationship by failing to ratify the treaty would inevitably hamper effective American international leadership to stop the Iranian nuclear weapons program."

The National Jewish Democratic Council, meantime, issued a statement Friday urging citizens to call Senate Minority Whip Jon Kyl (R-Ariz.) and tell "him to put politics aside, and join the broad bipartisan consensus behind START."

Will this have any effect on START's ratification chances?  Earlier this week Fred Kaplan observed that passage might still be a possibility:

If Kyl thinks that the treaty will get ratified anyway—or that, if it doesn't get ratified, he will lose all the extra money for nuclear modernization—then maybe he'll jump onboard. That way he could preserve his standing as a security hawk and, perhaps more important, an effective power broker.

Of course, he and his colleagues in the Republican leadership might think it's more important to deny Obama any victory, to make him seem ineffective and thus erode his chances of re-election in 2012 (the GOP's No. 1 priority, according to Senate minority leader Mitch McConnell). If that's what ends up happening, at least Obama will know the name of the game for the next two years—and, maybe, figure out how to play it.

The first couple of stories suggest that maybe, just maybe, the GOP would pay a price for out-and-out obstructionism -- and let's be blunt, that's really what Kyl's behavior is at this point.  Sure, pissing off France or South Korea comes with few downsides for U.S. Senators, but Poland and other former Warsaw Pact countries are another kettle of fish.  If neoconservatives Jews Eastern Europeans powerful interest groups within the GOP have bigger fish to fry than relations with Russia, then they will make life somewhat more difficult to Republican Senators.   Just how much more difficult remains to be seen, however. 

Developing....

The Troubled Assets Relief Program expired yesterday. I've blogged about how this program was both cost-effective and a pretty significant policy achievement. This appears to be the expert assessment as well. The Wall Street Journal's Deborah Solomon and Naftali Bendavid explain:

It will ultimately cost far less than the initial $700 billion price tag that stunned a nation. Major banks are profitable and can raise capital. Credit spreads -- a key measurement of risk -- are down to pre-crisis levels.

The White House now projects TARP will lose at most $50 billion, down from $105 billion projected earlier this year. Privately, Treasury Department officials say the U.S. may not lose a dime, and could ultimately make money depending on how some investments fare, in particular American International Group Inc. and General Motors Corp. In a $14 trillion economy, $50 billion is less than 1% of economic output.

"The incredible irony here is that TARP probably succeeded wildly beyond anybody's imagination," said Alan Blinder, a Princeton University economist who co-authored a paper crediting the administration's economic policies with preventing a second Great Depression. "Suppose the original TARP bill had been to spend $50 billion to avert a catastrophe. Would anyone have blinked?"

Or consider the Financial Times story by Tom Braithwaite:

[A]ll of the consequences have to be judged against late 2008 and early 2009 when fear stalked the markets and nationalisation of the biggest US banks looked a possibility.

Making a play on a famous MasterCard commercial, Mr [Lee] Sachs outlines what the country got in return for its investments in the banks. “Dividends? Five per cent. Equity warrants? Two per cent. The economy not turning into the second Great Depression? Priceless.”

Despite this fact, however, TARP is ridiculously unpopular with the American people. 

Oddly enough, this might be a very good thing, for two reasons. First, the likelihood that the latest financial reform bill will prevent a future financial crisis is exactly nil. There will be moments down the road when the financial sector will come crying to Washington.   

TARP's biggest problem, however, was that it badly exacerbated the moral hazard problem. If banks know that they are insured against catastrophe, this gives them an incentive to act in a more risk-loving manner to maximize profits -- thereby increasing the probability of a catastrophe. While this might be a good thing in some sectors of the economy, finance is not one of them. 

TARP's political unpopularity, however, could help to eliminate the moral hazard problem. As Solomon and Bendavid observe: 

Perhaps the biggest fallout from TARP is that it precludes another TARP. Should the financial sector run into trouble, the chances of another government bailout are essentially nil. For many on Capitol Hill and beyond, the end of bailouts is a good thing. But some worry TARP's legacy could be a more devastating financial crisis down the road.

"The greatest consequence of the TARP may be that the government has lost some of its ability to respond to financial crises," concluded the Congressional Oversight Panel, which oversees TARP and has been one of its biggest critics.

Now, truth be told, I'm not sure this is entirely accurate. Sure, rescue packages are unpopular now -- but let the Dow Jones Industrial Average fall 800 points and politicians might react differently. If, however, the political perception is that no more bailouts from D.C. will be forthcoming, then it might condition financial players to act in a more prudential manner.

In other words, the Tea Party activists on the right and the netroots activists on the left might be the political lobbies that do the most to preserve the integrity of the U.S. financial system. 

I'll be spending the rest of the day savoring this irony. I welcome commenters trying to burst my cognitive bubble, however. 

The Financial Times has been working overtime to discussing an emergent trend: multinational CEOs in Europe and the United States ripping into China.

In some ways, this started earlier this year. There was Google's complaint, of course. And, as TNR's James Mann noted, "Both the American Chamber of Commerce in Beijing and the European Chamber of Commerce in China have issued reports in recent months conceding that the business climate for foreign companies there has steadily worsened."

Things have been heating up in July, however. First, as Guy Dinmore and Jamil Anderlini report, GE CEO Jeffrey Immelt ripped into China while in Europe:

He warned that the world’s largest manufacturing company was exploring better prospects elsewhere in resource-rich countries, which did not want to be “colonised” by Chinese investors. “I really worry about China,” Mr Immelt told an audience of top Italian executives in Rome, accusing the Chinese government of becoming increasingly protectionist. “I am not sure that in the end they want any of us to win, or any of us to be successful."....

“China and India remain important for GE but I am thinking about what is next,” he said, mentioning what he called “most interesting resource-rich countries” in the Middle East, Africa, Latin America plus Indonesia. “They don’t all want to be colonised by the Chinese. They want to develop themselves,” he said. The comments echo a rising chorus of complaints from foreign business groups in China about the regulatory environment they face.

Gideon Rachman notes that Immelt is hardly alone in his complaints:

[W]hen Google, Goldman Sachs, and GE all run into difficulties simultaneously, it seems clear that a bigger trend is at work. Privately, senior US officials have been worrying for some time that Chinese trade and economic policy is taking a more nationalist direction that is penalising US companies. They worry that, after 30 years of strong economic growth, China believes it can now afford to take a less welcoming attitude to foreign investment, and instead concentrate on promoting national champions.

What's interesting is that European firms are now joining in the chorus of complaints. Furthermore, as Jamil Anderlini notes, they're not doing it in private dinners -- they're blasting the Chinese leadership publicly and directly:

Two of Germany’s most prominent industrialists have attacked the business and investment climate in China during a meeting with Wen Jiabao, the Chinese premier.

The criticism from the businessmen, the chief executives of Siemens and BASF, came against a backdrop of rising discontent among foreign businesses operating in China.

The German executives’ comments were all the more striking as they were made directly to the Chinese premier, and in public, as part of Angela Merkel’s four-day state visit to the country.

Jürgen Hambrecht, chief executive of BASF, the chemical producer, hit out at restrictions on foreign business and complained of foreign companies being forced to transfer business and technological know-how to Chinese companies in exchange for market access.

“That does not exactly correspond to our views of a partnership,” Mr Hambrecht told Mr Wen at the weekend meeting in the western Chinese city of Xi’an.

Addressing government procurement practices, a recent area of complaint by foreign executives and governments, Peter Loescher, chief executive of Siemens, the industrial conglomerate, said foreign companies operating in China “expect to find equal conditions in the fields of public tenders”.

Mr Loescher, who is also chairman of the Asia-Pacific Committee of German Business, called on Beijing rapidly to remove trade and investment restrictions in sectors such as automobiles and financial services.

BASF and Siemens had combined sales in greater China of more than €9bn ($11.6bn) last year and employ more than 36,000 people in the area.

Mr Wen responded to the criticism by telling Mr Hambrecht to calm down, insisting that China remained open to foreign investment and did not discriminate against foreign companies. “Currently there is an allegation that China’s investment environment is worsening. I think it is untrue,” Mr Wen said.

Alan Beattie and the ubiquitous Mr. Anderlini provide some general context for the latest venting:

The risk-reward calculation between staying quiet and speaking up has shifted towards the latter. With China employing policies including ignoring intellectual property rights, forced technology transfer and government procurement skewed towards domestic companies, some foreign businesses feel they are being pushed out of the country. “We are feeling less and less welcome in China, which is why you are seeing more people speaking out and reconsidering their futures in China,” says John Neuffer of the US Information Technology Industry Council.

Business leaders say Beijing’s appetite for more liberalisation of foreign investment has waned after a rapid burst of reform around China’s accession to the World Trade Organisation in 2001. So even when current policies only represent a standstill, they feel like going backwards.

At best, current policies are moving very slowly towards liberalization. The good news is that China is seeking to join the WTO's Government Procurement Agreement, which liberalizes trade among participating countries for government-commissioned projects. The bad news is that China's latest offer is half-assed tokenism underwhelming in terms of what's on offer, and likely to be rejected by the US and EU.

So, why is China suddenly so hostile towards western multinationals? The simple realpolitik answer is that China is simply more powerful than it used to be, and its flexing its muscles now because it has them. In the Wall Street Journal, David Wessel offered a revealing anecdote that suggests President Obama shares this quasi-relative gains view:

Mr. Obama, who took office in an economy far worse and far more hostile to trade than the one Mr. Clinton inherited, appears less convinced of the virtues of free trade per se. He loves exports, easily sold as creating jobs. But he seems to view world trade like a basketball game: He wants to win, and doesn't like feeling that others are taking advantage of his team. He needles aides who worked in the Clinton administration that they let China into the WTO with a better hand than the one he has to play. Aides counter that China would be even more of a threat if not bound by WTO rules. He is unpersuaded....

Mr. Obama's trade strategy is becoming clearer. In international forums, as he did at the Copenhagen climate-change talks, he is arguing that China is posing as a developing country even though it has grown up and needs to be treated like the economic powerhouse it is. At home, he knows—no matter what his economists tell him—that neither voters nor Democrats in Congress will be convinced that free trade is good for them. So he is styling himself as a tough bargainer, who can beat other countries at their own game.

Obama could be right, but on one key dimension his bargaining hand will actually be stronger than those of past presidents. China, by continuing to alienate and frustrate western multinational corporations, is also effectively weakening the strongest pro-China lobbies in both Washington and Brussels. As Rachman notes:

Were it not for the power of big business, the relationship between the US and China might have gone sour years ago. There are forces on both sides of the Pacific – Chinese nationalists, American trade unionists, the military establishments of both countries – that would be happy with a more adversarial relationship. For the past generation it has been US multinationals that have made the counter-argument – that a stronger and more prosperous China could be good for America.

So it is ominous, not just for business but for international politics, that corporate America is showing increasing signs of disillusionment with China....

In the past, American business has acted as the single biggest constraint on an anti-Chinese backlash in the US. If companies such as GE, Google and Goldman Sachs qualify their support for China or refuse to speak up, the protectionist bandwagon will gather speed.

The Chinese government, of course, is not stupid. China’s growing confidence in dealing with the US, and the world in general, is still matched by a cautious desire to avoid conflict. At strategic moments, the Chinese government is likely to make tactical concessions – whether on Google or the currency – in an effort to head off a damaging conflict with the US. But with American business and the American public increasingly restive, the risks of miscalculation are growing.

And here I must dissent from Rachman. In some ways, I do think the Chinese government has been pretty stupid over the past year in executing its "Pissing Off As Many Countries As Possible" strategy. China rankled the Europeans over its climate change diplomacy at Copenhagen. For all of Beijing's bluster, it failed to alter U.S. policies on Tibet and Taiwan. It backed down on the Google controversy. It overestimated the power that comes with holding U.S. debt. It alienated South Korea and Japan over its handling of the Cheonan incident, leading to joint naval exercises with the United States -- exactly what China didn't want. It's growing more isolated within the G-20. And, increasingly, no one trusts its economic data.

This doesn't sound like a government that has executed a brilliant grand strategy. It sounds like a country that's benefiting from important structural trends, while frittering away its geopolitical advantages. Alienating key supporters in the country's primary export markets -- and even if Chinese consumption is rising, exports still matter an awful lot to the Chinese economy -- seems counterproductive to China's long-term strategic and economic interests.

Developing.... in a very interesting way.

Analysts are trying to decipher the content and implications of the Senate's financial regulation bill. Noam Scheiber and James Pethokoukis have surprisingly similar takes, in that the bill doesn't directly address the "too big to fail" problem, though Scheiber thinks it does address the problem indirectly. 

Both takes are worth reading. Touching on a point I have made previously, however, I was struck by this Pethokoukis point: 

Wall Street has an enduring PR problem. Yes, big banks are unpopular. But it has gotten so bad that they may not be able to so easily counter their image issues with campaign cash. Getting Wall Street money now has a stigma attached to it like oil and tobacco money. Candidates like Meg Whitman in California and John Kasich are getting hammered for their Wall Street ties. The industry’s continued unpopularity will no doubt spawn further attempts to tax, regulate and restrict the sector.

If the public stays this outraged for this lomg, then Pethokoukis is right. The political problems of finance are becoming so great that we could be talking about a shift in social norms with regard to what is considered "honorable" work.  

Of course, paradoxically, this could serve to increase the salaraies of those still willing to go into finance. As Adam Smith pointed out in Wealth of Nations: 

[T]he wages of labour vary with... the honourableness or dishonourableness of the employment.... Honour makes a great part of the reward of all honourable professions. In point of pecuniary gain, all things considered, they are generally under-recompensed, as I shall endeavour to show by and by. Disgrace has the contrary effect. The trade of a butcher is a brutal and an odious business; but it is in most places more profitable than the greater part of common trades. The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever.

Question to readers: Will the social stigma against Big Finance persist or fade as the economy bounces back? 

I think it's safe to say that the financial regulation bill has not evolved the way that Simon Johnson predicted last year.  Johnson's thesis was pretty simple -- because of the structural dependence of politicians on financial capital, neither the executive nor the legislative branches would be willing to regulate that sector. 

Johnson wasn't necesaarily wrong in making that prediction -- when in doubt, political scientists follow the money as well.  Still, the regulation that is likely to emerge is clewarly stronger than expected.  In The New Republic, Noam Scheiber has offers his explanation for why: 

Basic political science tells us that, when Congress targets a complex industry with billions of dollars at stake, the legislation should weaken as it moves toward passage. The industry will plead its case with vehemence, while voters will be oblivious to the importance of subtle changes. “Words on the page are not that critical to the public,” one derivatives industry lawyer told me in March, conveying a general truism. But something unforeseen is happening as Congress wraps up its overhaul of Wall Street: Key elements of the bill are getting tougher—in some cases markedly so....

What explains the unexpected success? The financial-services industry had counted on public passion subsiding with time. As the derivatives lawyer told me a few weeks ago, “The current strategy you’re hearing is basically to keep Republicans together till cooler heads prevail.” But cooler heads aren’t prevailing. As the bailed-out banks have surged back to profitability while unemployment hovers near 10 percent, the public has, if anything, grown crankier. By holding the line on a tougher reform package, the White House has been able to ride the anger rather than get trampled by it. In a moment of rising public frustration, the populist argument gains force the longer the debate continues.

So does this contradict basic political science?  Yes and no.  The outcome is still consistent with political science odels -- just not the ones that focus on interest groups.  Any Americanist will tell you that interest group politics matters a lot.  If public opinion is pretty unified around a high-profile issue, however, then there are hard political constraints that block the ability of lobbyists to do that voodoo that they do so well.  And it's pretty clear that the public is thermonuclearly pissed at the financial sector. 

Still, this is pretty surprising, because financial regulation is so friggin' arcane.  Quick, what's a credit default swap?  A collateralized debt obligation?  Are they examples of derivatives or not?  Sure, readers of this blog likely know the answers to those questions, but I guarantee you that 99% of registered voters do not know the answer.  The fact that public pressure and attention is still mobilized on this issue is unusual. 

I think it's tied into the one part of the story that Scheiber failed to mention -- the SEC indictment of Goldman Sachs.  Whether what Goldman did or not was actually illegal is not the issue.  There was a lot of reporting about what Goldman actually did -- and it seems like they weren't acting like  just a couple of bookies.  The indictment changed the political optics of financial regulation and dramatically reduced the utility of lobbying from the financial sector. 

Finreg isn't law yet, and experts like Johnson might argue that their "capture" story works on other dimensions of the regulation.  Still, I don't think this is a case where basic political science failed -- unless you think that poli sci should have predicted the SEC indictment. 

What do you think? 

I've received a bunch of e-mail queries asking me what I think of the Charles Freeman affair.  One could argue that Freeman's actual policy positions got him into trouble.  (When a letter to the Wall Street Journal on his behalf allows that "Chas has controversial political views, not all of which we share," it suggests that something is amiss).  One could also argue pretty persuasively that the Israel Lobby flexed its muscle (as Freeman himself argues in his missive to FP's Laura Rozen). 

In the wake of Freeman's withdrawal, I think everyone is vastly overestimating the influence of outside forces and underestimating the idiosyncracies of Freeman in trying to interpret what the hell happened.  I don't mean his positions -- I mean his relative eagerness to get back into the game.  Freeman's statements on the matter suggests that he was not all that eager to re-enter government life: 

"As those who know me are well aware, I have greatly enjoyed life since retiring from government.  Nothing was further from my mind than a return to public service.  When Admiral Blair asked me to chair the NIC I responded that I understood he was “asking me to give my freedom of speech, my leisure, the greater part of my income, subject myself to the mental colonoscopy of a polygraph, and resume a daily commute to a job with long working hours and a daily ration of political abuse.”  I added that I wondered “whether there wasn’t some sort of downside to this offer.” 

"I wasn't so eager to go back to the government, anyway."

Sometimes these statements are boilerplate, but I don't get that sense from Freeman.  

To put it another way -- if Hillary Clinton had been in the same situation as Freeman, there's no way in hell that she withdraws her name. 

Steve Walt claims that, "this incident reinforces my suspicion that the Democratic Party is in fact a party of wimps."  He's got a point, but I'm not sure it's the one he intended to make.  Freeman is just one of a longer list of policy wonks -- Wendy Sherman, Caroline Atkinson, Robert Gallucci, etc. -- who have either declined or changed their minds about high-ranking postings.  While none of these other names were targeted by the Israel Lobby, they all found the opportunity costs of entering goverment service too onerous.  

Question to readers: Has the vetting process in DC become too absurd, or are Obama's subcabinet candidates too thin-skinned?