"Wherefore We must interrupt a silence which it would be criminal to prolong, that We may point out...as they really are, men who are badly disguised." Pope St. Pius X, September 8, 1907, Pascendi Dominici Gregis


Thursday, March 31, 2011

How Lolcatz Change the World

Or, Social Constraints Outweigh Contractual Constraints



While there is a great deal to be said in favor of the modern, legalistic phenomena of interaction based on written contract, as Francis Fukuyama argues in his book, Trust, and as Clay Skirky demonstrates empirically in this video, unwritten social and cultural constraints are far more effective, in terms of cost and otherwise.

As a fore-warning to interventionists, the data presented in the video suggest that once a cultural institution is disrupted by new, legalistic impediments, the original, more optimal cultural interactions do not immediately re-emerge even if the new legalistic intervention is removed. Indeed, all the king's horses and all the king's men could not put humpty dumpty together again. This may be an empirical indication of Ludwig von Mises' claim that one intervention inevitably leads to another: that there is no "middle road."

Or, more succinctly, the middle of the road policy always leads to socialism. Particularly important to realize, it seems, is that in today's impatient world, even if we win a deregulation victory, it takes a great deal of time for the former cultural or societal constraints that governed a particular arrangement to re-assert themselves, or perhaps be re-learnt, after their disruption by government policy. In the case of the example in the video, it is a shame the researchers did not prolong the study to see if, or what type of, new cultural or societal arrangements would eventually come to an equilibrium out of a post-deregulation world. How long is the half-life of a regulation?

During the intervening period of time after deregulation, similar in a way for society it seems as personal withdrawal symptoms, there would be an immediate call by state-intellectuals to return to the less effective policy in order to avoid the costs of re-imposing a higher-level optimal, cultural or societal equilibrium. The real lesson, then, should be clear: do not intervene in the first place. The social planner is not smarter than those who originally introduced the behavior the planner intends to modify. Indeed, the modification will not only lead to a less optimal outcome, but even once state-imposed incentives are withdrawn after an honest recognition of their ineffectual nature, the original optimal social equilibrium does not immediately return.

The ensuing, seemingly relatively chaotic correction period is then used as an excuse to re-impose regulation, and even expand it in order to correct for the most immediately recognizable unintended consequences of the intervention. No doubt, such increased intervention will only further undue the optimal, social equilibrium. This continual one step forward, two steps back process lends itself ultimately to a crescendo of authoritarianism. Such crescendos either doom humans to a subhuman life, as in the case of North Korea, or lead to the total destruction of society, like in Nazi Germany, with the hope that the naturally occurring optimal cultural institutions will be reborn out of the rubble.

In the cases where we have disturbed the natural equilibrium of society by regulation, let us pay the price for deregulation now, rather than consistently uping the ante and going for broke. Click here for a great interview about how this dynamic plays out in the monetary system.

Wednesday, March 30, 2011

Good News on the Corporate Accountability Front

ActualAnarchy has long argued that the costs currently born by taxpayers of particular types of costly, destructive activities by large, well-connected corporations ought to be born by those corporations themselves.

For a recent example, we argued that BP, if it were actually held fully accountable and forced to pay to restore the effected environment substantially in a confirmed way to the quality that existed prior to its recent Gulf of Mexico oil spill, would likely have gone bankrupt and rightly so. But because the Gulf of Mexico is not privately owned, BP's liability was limited to the amount the government was willing to extract. Because, we argue, BP did not fully bear the costs associated with its destructive activity, most corporations have a greater incentive to allow such destructive events to take place than they would in a fully-privatized system.

Good news, then, from Tokyo that Tokyo Electric investors may be wiped out after nuclear crisis. This is the proper market consequence of their behavior and, if it actually occurs, will send a clear message to all other nuclear power providers in Japan that similar accidents mean a total elimination of your company.

Saturday, March 26, 2011

Just Get Back to Work

For all the policy wonks pondering the best policy to get this country out of its financial mess there comes a succinct response from entrepreneur Alan Sugar, who started his first business making "extra money by boiling and selling beetroot from a stall."


See the full interview here: http://www.youtube.com/watch?v=GkfVLC43vPA&feature=player_detailpage#t=42s

And a great follow up answer to "why aren't the banks lending?"

A Bright and Profitable Chilean Idea

Continuing with our theme that one ought to invest in such a way as to help alleviate the problems facing our world, today we will highlight one emerging opportunity. Chileonaire blog indicates that solar plants built in Chile's Atacama desert "will produce more direct current electricity than almost any other place in the world." What does that mean? It means solar power will be profitable in Chile at a much lower threshold, viz., sooner and for relatively less upfront investment.

Indeed, SolarPlaza indicates that a joint venture between SolarPack and Codelco, Chile's state-owned copper miner, will build the world's first solar plant "without subsidies or specific tax benefits for solar energy." As far as we can tell however, a direct investment in SolarPack is not available to the typical retail investor. Let us hope that with time this changes, and in the meantime there is always Brazilian ethanol and hydroelectricity.

Thursday, March 24, 2011

NationBuilding Classic: Take the Revolution to the Boardrooms

Before ActualAnarchy, there was NationBuilding blog. Occasionally, we will run articles here that originally appeared on this previous blog. This is the first NationBuilding classic.


ACTION ITEM:  VOTE YOUR SHARES!  The next time you receive proxy voting ballots to elect members of a board of directors of a corporation in which you own stock, find out the nominees’ political connections here and vote appropriately.

At nationbuilding blog, we actually believe in using the means available to us to advance the changes we want to see in the world. One way in which we have recently become more proactive is by voting the shares we own in various corporations. Many investors receive proxy voting ballots from their broker in the mail that they ignore. Instead, these investors should vote their shares according to their conscience. In regards to voting for or against board of directors nominees, we have recently discovered a great resource:  http://www.nndb.com/  The database provided at this web site provides the political ties of many in the boards rooms of our largest corporations. It is was our recent pleasure to vote against Bob Marbut and Robert A. Profusek in their bid to become board members at the Valero Corporation, as they are both tied to presidential candidates other than the only decent man in the running, Ron Paul.

Wednesday, March 23, 2011

Slaves in Southern U.S. Enjoyed Free Health Care, Low Crime Rates and Low Unemployment

In an effort to address the concerns of many Americans about the costs of health care and housing and ensuring full employment, ActualAnarchy has begun a search for economic systems that solved these problems. Our first recommendation takes us to the economic system that prevailed in the pre-Confederate South.

In the American South, Wikipedia reports, "slaves were fed, clothed, housed and provided medical care." Slaves were even paid "small bonuses at Christmas, and some slave owners permitted their slaves to keep earnings and gambling profits. One slave, Denmark Vesey, is known to have won a lottery and bought his freedom."

Americans with similar concerns about the availability of housing, food, and medical care should be relieved to discover that not only has a system which permanently resolves these long term concerns been tried in the past, but it has historical precedent in their own country!

We think contemporary American conservatives will most be drawn to the zero tolerance, one strike and your out misbehavior policies, drug prohibition, the emphasis on hard work and profit sharing programs. While the cradle-to-grave provision of basic necessities by the governing authorities will appeal to Americans of the left-wing persuasion.

American conservatives will likely be quick to point out that it is no longer necessary for the federal and even state governments to provide food stamps, Obama-care, lottery-tickets, and subsidized housing as local institutions can do this far more effectively and actually produce cotton as well. While left-wing Americans will reply that slavery and its accompanying institutions should not be instituted for "private gain," states cannot provide fully comprehensive coverage, and thus slavery should be instituted by government at the federal level. Regardless, recent concerns over the growing federal deficit may force some if not all of the responsibility for organizing slavery out of the hands of the federal government.

Regardless of the ultimate outcome of the debate, we are fully confident that the economic regime of the pre-Confederate South will appeal to the majority of Americans, relieving them of the necessity of securing their own futures and providing plenty of time for TV.



A Conversation About Catholicism

Faith is absolutely necessary to existence; the only question is what will you believe in. Even the most rigorous scientist, positivist, or empiricist has faith that his theory that the best way to understand the world (through the scientific method, controlled experiments, and/or observation) is logically sound and that his faculty of logic is to at least a certain extent accurately reflective of phenomena in reality, not to mention that his tools by which he observes the world are not distorted. And even if one is circumspect enough to admit that one's observations are accurate and therefore applicable only to beings that perceive the world in the same manner as you, one must have faith that even this statement is true, as there is no ultimate, indisputable evidence, only massively supportive evidence that this is the case. Is it any surprise then that the scientific method originated and was brought to the pinnacle of its use in cultures heavily influenced by Christendom? But that is for another article.

Thus, I think this recent online conversation concerning Catholicism is instructive. The comments have been slightly modified because of privacy concerns.

Other Person: So what got you so deep into your religion? Was there an ah ha moment? or did it come over time? Convert or be left behind... God really doesn't believe that, does he/she/it?
 
Actual Anarchy: There wasn't really a zen-like enlightenment "ah ha" moment, just more of a cumulative effect that eventually caught up with me. I was raised a Catholic and went to Catholic school, but that didn't translate into an immediate piousness for me. I was certainly your typical teenager, with many of the same material excesses or superficiality of thought. But there were really two contributing factors that forced me to re-evaluate the value of my faith. Quite ironically, if my Catholic school teachers had actually emphasized these things effectively from the beginning, my Catholicism likely would have stuck.

First, in college I encountered Austrian economics. This particular path to Catholicism applies probably to me and two other people, so it really won't have wide applicability (but you asked!). In short, I studied econ, but wasn't happy with the typical insights provided. In my spare time, I stumbled upon this school of thought and immediately fell in love with it. Truth is beauty is it not? Anyway, as I studied Austrian econ, and it's ability to explain things that other econ theories could not, I delved into the background and reason for this. That led me back to the Doctors of the Church, Thomas Aquinas, Saint Augustine and the scholastic tradition. Heck, if these guys could come up with decent economic theory that can help me make money in the stock market, maybe there was something to this morality thing too?

Second, at approximately the same time, I met a woman I thought I would marry. I didn't think that right away, but as our relationship progressed I came to that conclusion. Avoiding unnecessary details, it didn't work out. That led to a lot of soul searching and in the end, the only answers I could come up with that would ensure things went differently in the future were those presented by the Catholic Church.

In both instances it really was the necessary relationship of cause and effect, or natural law, that led me to see the truth of what the Church teaches. There are a lot of "Catholics" who really don't understand that side of the church, and can end up portraying the Church in a way that does more harm than good. I think, however, if you stick with the eternal, rational truths as taught by the most significant historical teachers of the Catholic Church, you really can't go wrong. "Converting" to the realization of these truths is more important to God, I think, than whether you call yourself a Catholic or not.


Other Person: do you ever question the church? do you ever think that catholicism has a sort of "elitist" tinge to it? are you drawn to any one type (sorry i think there is a better word than type) of Catholic following? ie Jesuit, Marianist, etc?

[At this point, as an aside, I will make a few comments about the questions found immediately above. I have no reason to discourage this person's curiosity, but the way it is expressed is highly indicative. Here is someone that should be able to see from foregoing reply that indeed I am not a slave to Church doctrine, as such, but merely because it has been demonstrated to me through experience to be true. How then can you ask, unless your intentions are less than honest, "do you ever question the church?"   ....With sarcasm apparent, no, the minute I discovered through experience that Catholic doctrine was an accurate reflection of the nature of things I immediately disregarded all past, present and future personal experiences and blindly subjected myself to a ban on the use of my own rational faculties. I am now just a robot totally subject to a doctrine that I cannot even rationalize. Thank you. I mean, c'mon...]

I don't think you can both sincerely and automatically accept what the church teaches. To practice something without understanding its justification is not to practice it at all. It is often those who take what they are taught in religious schools at face value who most misunderstand what traditional scholarship posits.

But if you take the time to understand why moral rules exist and how they are to your benefit, you are more content to let people come and go as they please. Clearly, we are all sentient beings with free will. To some extent at first I rejected Catholic teaching, and it was only in encountering parallel truths through soul-searching elsewhere (in economics, in relationship psychology) that led me to see the necessity of it all.

Also, I accept the doctrines as a whole not on the authority of the Church, except insofar as that authority is based on the Church's recognition of the rational justifications that underlie the bulk of Catholic doctrine. That is to say, basic Catholic morality is rationally coherent. The minute you admit one premise, you admit all the others. And the minute you deny one, you effectively deny the others.

I'm sure you can argue that Catholicism has an elitist tinge to it. Part of this is historical. For centuries the economic situation did not allow much in the way of education for most people, and so the priests would specialize in this. I'm talking, say, 6th century here. That has more to do with the division of labor than elitism, though. I don't think the Catholic church is any more elitist than say the NBA, the NFL, Universities or any other organization that ranks its members and demands excellence in performance.

Not everyone is a St. Augustine, a Thomas Aquinas or a Mother Teresa. To recognize that fact and celebrate accomplishment is neither here nor there. Is nature, in creating the diversity in the first place, also elitist? That's just part of the natural order.

I am most drawn to Spanish Scholasticism, see http://en.wikipedia.org/wiki/School_of_Salamanca, for their providing of a sound basis for economic theory.

Monday, March 21, 2011

Duh.



I always love when establishment journalists panic in the face of common sense. She will grasp at anything, most easily the standard tripe parroted in the media, to keep from admitting that the only reason to attack Libya, perhaps one of the less bad dictatorships in a sea of Western-installed or backed dictatorships that all treat their populations brutally, is BP's oil interests in the country. Paraphrase:

Galloway: The only reason we're in Libya is to protect BP's oil interests.

Journalist: But mustn't we do something to help the Libyan population?

Galloway: Well, sure, if we could afford it, but we can't even help our own population or the subject populations of our buddy-dictators in the Middle East. And it's not our real focus anyway, it's just a cover.

Journalist: But, but our buddy-dictators who are equally brutal to their own populations say they want us to invade Libya!

Galloway: Indeed, isn't that an argument against an invansion?

Journalist: So you're just saying we shouldn't interact with anyone.

Galloway: I'm saying that any engagement we have with these countries needs to be a consistent attempt to push them all in a more humanitarian direction.

Journalist: But, but.... but the sky is blue!           ...You're not saying anything....!

Galloway: Quite honestly, you're not either.

Journalist: But, but, but I've got to find some reason you're wrong to avoid cognitive dissonance! Or maybe I do work for a bunch of serial-murdering psychopathic fascists?

Sunday, March 20, 2011

Question

I have heard casual commentators insinuate a number of times that as long as the recent spike in commodity prices does not translate in to corresponding or similar changes in the level of wages paid generally in the economy, we don't have to worry about inflation.

Am I the only one that thinks it takes an extremely dense mentality to actually believe this?

At least, in the case where wages tend to catch up with the rise in the prices for goods and services, workers can strive towards maintaining a semblance of their current standard of living. (...nevermind those on fixed incomes) Although, because the wage increase necessarily follows an increase in the prices for goods, they are in that time differential (viz., the time between an increase in the price of the good they buy and the time of the corresponding increase in their wage) further impoverished.

But a case where only the prices of goods and services increase, while wages stagnate is wholly impoverishing. There is no mitigating effect, even for wage earners! Why is such a situation preferable?

Saturday, March 19, 2011

Earth to Detroit: The Age of American Exceptionalism is Over

Someone needs to let a couple of car companies in Detroit know that the age that built America is long gone. The only things we're on the cutting edge of now are social networking apps (used mostly to waste time at school and work) and being the first to spend freshly printed, crisp dollar bills (used mostly to waste time at home). And we're not even good at manufacturing the later. 

We mentioned elsewhere that the class of earlier American car models is not well embodied in the most recent creations of Detroit. It almost goes without saying that the contemporary American SUV is more an ode to the consumptive excesses of the abuses of our tentative monopoly possession of the world reserve currency than to manufacturing prowess or efficiency. It seems the 2011 Jeep Grand Cherokee is no exception. Do you think the workers that built the bridge over which the train passes in the video sulked because they didn't have universal health-care coverage and had to compete with China?

Even the commercial admits as much:  "This was once a country where people made things, beautiful things." Today, we are just made.

I can understand the desire to parlay America's past via marketing into sales today. I just want to point out that the spirit is no longer there and the commercials ring hollow. Next time you have a chance at a bail-out and you decline, you'll change my mind. And you'll probably (have to) make a better car.

Sooner or later God'll cut you down.

Neutrality for Switzerland and the United States

As Americans participate in their third simultaneous war, we bring back an article that perhaps started it all. Related question:  How many wars can we participate in simultaneously before the dollar collapses? I guess the sad thing is, we may find out.

Neutrality for Switzerland and the United States:  A Viable Alternative to Interventionist Foreign Policy

For over half a century neutrality has been largely ignored in mainstream American foreign policy debates.  The belief that America must participate in the conflicts of her time is commonplace, and it is accompanied today by the shunning of neutrality as naïve and anachronistic.  Switzerland, meanwhile, is facing a situation in which she must decide whether to persist in her neutrality or begin a process that could ultimately result in the decisions which govern Swiss foreign policy being made somewhere other than Switzerland, i.e., Brussels.  Both situations merit a review and reconsideration of neutrality.  The presumptuous exclusion of neutrality has been extremely detrimental to the foreign policy debate in America.  Not only has neutrality’s exclusion from the debate allowed interventionists to pursue their agendas with ever increasing recklessness and abandon, its exclusion has also denied us a viable foreign policy option that succeeds precisely where interventionism fails: preventing wars in the first place.  It will be argued then that neutrality is a feasible foreign policy option for Switzerland and the United States.  Such an argument will be based on the tenets of neutrality, its history in both countries, and a discussion of the plausibility and practicality of neutrality in addressing the needs of both countries, past, present and future.
There seems to be a great deal of confusion in the United States as to what exactly constitutes neutrality.  Neutrality has been tied to other ideas such as isolationism, pacifism, and appeasement (Nordlinger 5).[i]  It is important to separate neutrality, strictly speaking, from these and other ideas.  While it is true, for example, that isolationism and neutrality are not mutually exclusive, it is equally true that isolationism is not neutrality per se.  To begin with, neutrality can be defined as the “status of a nation that refrains from participation in a war between other states and maintains an impartial attitude toward the belligerents.”  Isolationism, defined as “a policy of national…abstention from alliances and other international political and economic relations,” is then clearly not a synonym of neutrality.  For example, a neutral state does not have to abstain from “international…economic relations” as long as it “maintains an impartial attitude toward the belligerents.”  Similarly, while neutrality can be seen as pacifist in tendency in that it involves the opposition of a particular state to its own use of “war or violence as a means of settling disputes” between two other states, there is nothing in neutrality that prohibits a state from using war and violence to defend its neutrality if its rights as a neutral are violated.  In fact, international law requires just such an armed defense.[ii]  And in regard to the use of violence by any two third parties as a means of settling disputes between them, neutrality is per se completely agnostic.
It is a characteristic of post-Second World War America that American neutrality during that war is too often associated with appeasement or weakness in the face of Nazism.  While it should be clear that the tenets of neutrality do not warrant any such association, one can go further.  Political scientist Eric Nordlinger points out that “it is strategic internationalism, not [a strategy like neutrality], that could involve appeasement.”  Moreover, if one spells out what appeasement consisted of in the context of World War II, it becomes clear that “it was Britain and France, not [neutral] America, that pressured Czechoslovakia to concede much of its territory to Hitler” (5).
Proponents of neutrality are also often accused of being naïve and out of touch with reality.  Certainly, though, one can use these same adjectives to describe the ideas of contemporary, mainstream advocates of interventionism from the left-wing and the right.  During the year prior to her appointment as Secretary of State by Bill Clinton, Madeleine Albright faced questioning about the fact that economic sanctions sponsored by the United States against Iraq had led to the deaths of “half a million children.”[iii]  Albright’s questioner pointed out that half a million children “is more…than died in Hiroshima,” asking, “and, you know, is the price worth it?”  Albright replied that “…the price, we think, the price is worth it.”  It is important to note that this is a price paid for a failed policy.  As recent events have shown, sanctions failed to accomplish the alleged goals of U.S. interventionists of the left and the right, leading to the air strikes against Iraq under Clinton and the eventual invasion of Iraq in 2003. 
Similarly, there are the instances at the end of the twentieth century of liberal and conservative interventionists alike insinuating that “new” Pearl Harbor attacks are necessary in order to convince a reluctant American public to maintain America’s worldwide hegemony.  The right-wing Project for a New American Century’s report entitled “Rebuilding America’s Defenses” tells us that “the process of [military] transformation” endorsed by the Project “is likely to be a long one, absent some catastrophic and catalyzing event – like a new Pearl Harbor.”  Zbigniew Brzezinski comes to a similar conclusion in his book, The Grand Chessboard:  American Primacy and Its Geostrategic ImperativesBrzezinski was the national security advisor to former President Jimmy Carter.  Anyone who implies that new Pearl Harbor attacks are an apt way to advance his or her interventionist agenda is displaying more naïveté and disconnectedness than even the most radical proponents of U.S. neutrality.  It would appear, then, that perhaps the epithets commonly associated with neutrality are not necessarily warranted.  A fair examination of neutrality requires that the epithets associated with it and its supporters be put aside and that neutrality be looked at in and of itself.
Neutrality is both a legal status in international law as well as a practical political concept that is a part of larger political ideologies (Karsh 5).  A brief general summary and history of the legal development of neutrality will suffice, as the primary concern of this study is the plausibility of whether or not neutrality can provide for Switzerland and America’s security concerns.  Historically, one can consider neutrality a corollary to war (Karsh 13).  It has been traced all the way back to ancient Greece (Rubin 11).  The legal framework which enumerates the rights and duties of neutrals and those countries interacting with neutrals slowly developed over many years and culminated in the provisions for neutrality established by the Hague Conventions (Karsh 18-19).  The basic legal conception of neutrality provides that “the belligerents’ obligations towards a neutral state [are]…to respect [the neutral] state’s independence and territorial integrity” (Karsh 22).  The neutral state is obliged to “prevent the [warring] parties…from exploiting its territory…for military purposes” and “to maintain absolute parity in its relations with the two rival camps” (Karsh 24).  Such parity in relations, though, does imply that a “neutral state [must restrain its] sympathy or condemnation towards the belligerents” (Karsh 23-24).  Lassa Oppenheim, an international law expert, points out that “the required attitude of impartiality [of the neutral state] is not incompatible with sympathy with one belligerent, and disapproval of the other, so long as these feelings do not find expression in actions violating impartiality” (qtd. in Karsh 24).  Some will argue, though, that neutrality, as with other legal concepts, must sometimes be bent in order to be politically practical.  It is one author’s opinion that “instances where [a] neutral state has succeeded in remaining outside the circle of war, even at the cost of [not entirely fulfilling its obligations as a neutral, should] be considered the success of neutrality as a foreign policy instrument” (Karsh 25-26).  It will be interesting to note later on the implications of the experience of the United States during the world wars on such an argument.  Neutrality, as a foreign policy, can be maintained on an “ad hoc” basis or as a “permanent” status (Karsh 26-27).  It seems that Switzerland and the United States ought to pursue permanent neutrality, if they are to pursue neutrality at all, as permanent neutrality is far more “credible” than “maintain[ing] neutrality with regard to one war, while participating in another” (Karsh 26-27).
Neutrality has its political basis in two different ideologies, isolationism and classical liberalism (Gabriel 203-207).  The two ideologies can best be differentiated by their treatment of international trade.  While the isolationist, as mentioned earlier, prefers “abstention from…international… economic relations,” the classical liberal fully endorses international free trade (Mises xvi).  This difference may seem tangential to the concept of neutrality, but it is actually the source of much debate concerning the economic basis required for a neutral foreign policy.  Some argue that a necessary precondition for neutrality is autarky (Schwok 80).  History has shown, though, that autarky most readily goes hand in hand with tyranny, rabid militarism and interventionism; Nazi Germany’s attempt at autarky and its subsequent demand for ‘lebensraum’ provides one such example.  The incompatibility of neutrality and autarky is well summed up by economist Frederick Bastiat’s words, “When goods don’t cross borders…armies will.”  Since the United States “export[s] and import[s] more goods and services than any other country” and since Switzerland “is highly dependent on foreign trade,” it seems unrealistic to argue for a neutral policy grounded in self-sufficiency; thus, the classical liberal free trade approach is preferred.[iv]  Some sort of amalgamation of the two is also rejected as schizophrenic; a good policy, it seems, must be based on consistent premises.[v]
Edgar Bonjour, a professor of history, says “the idea of Swiss Neutrality is actually almost [as old as the] Swiss nation [itself]” (11).  As early as 1481 the Swiss contemplated neutrality, considering “Swiss monk Niklaus von Flüe[’s]" argument that “the [Swiss] Confederation [ought] to remain neutral during foreign conflicts” as a way to “deny potential aggressors a casus belli” (Halbrook 7).  It was not until after their defeat at the battle of Marignano in 1515, however, that the Swiss adopted a de facto policy of permanent neutrality (Halbrook 8).  Marignano put an end to the Swiss expansionism of the late fifteenth and the early sixteenth centuries; during that time, Switzerland had come to be seen “as one of the most formidable of European states” (Steinberg 28-30).  While the end of the militarism of “the invincible Swiss” and the move towards permanent neutrality in 1515 may seem to be an unlikely event at first glance, the underlying trends appear to be more continuous (Steinberg 30).  As mentioned earlier, the Swiss always saw neutrality as an option, even if they didn’t always practice it.  As an increasingly diverse country, Switzerland chose neutrality as a way to prevent the country from being torn apart by external conflicts (Halbrook 8).  The Protestant-Catholic split of the Thirty Years’ War and the French-German divide of later wars exemplify the reason why participation in foreign wars could have easily torn Switzerland apart (Rubin and Wehrli 44-50).
After 1515, Swiss political entanglements abroad slowly dwindled; one hundred and fifty-nine years elapsed before Switzerland actually made “perpetual armed neutrality” its “official [foreign] policy” (Rubin and Wehrli 45).  Author Stephen Halbrook tells us that perpetual Swiss neutrality paused only once, at the behest of Napoleon’s army.  The “brave” defense of Switzerland and its eventual succumbing to the French taught the Swiss and its potential enemies a lesson.  “The Swiss,” Halbrook indicates, “[became] determined never to allow an invasion again.”  Potential enemies of Switzerland acquiesced and never invaded again (Halbrook 13-15).  In 1815, the great powers of Europe recognized Switzerland’s permanent neutrality and enshrined it in international law (Bonjour 59-60)
“When the ‘Great War’ broke out…with combatants on all borders of Switzerland,” says Halbrook, the Swiss were ready.  The nation mobilized a citizen’s army of nearly half a million (19).  While that is not an insignificant number, it is also small relative to the armies of the other powers.[vi]  Yet, Switzerland had another advantage; according to author Julian Grande, the Swiss army was composed of “all good marksmen,” against which the French and German soldiers paled in comparison (qtd. in Halbrook 20).  Those critical of Switzerland’s purported greed and cynicism in dealing with Nazi gold during World War II ought to remember the first World War in which “a small country strategically located in the heart of Europe” risked much to preserve its neutrality (Halbrook 20).  “Neutrality,” Halbrook reiterates, “did not lead to prosperity [for Switzerland] during World War I” (20).  In the end, of course, Switzerland maintained her independence, only to face a similar situation twenty-one years later.
Much has been written on the Swiss experience in World War II.  Needless to say, Switzerland found itself in yet another difficult situation.  This is obvious from a strategic military standpoint, but it is also true from a moral standpoint.  There are stories that demonstrate Swiss compassion for Jews before, during and after the war, as well as stories that demonstrate indifference to the same (Halbrook 38, 53, 207-208).  Perhaps what is most regrettable is the denial of “unlimited asylum…or free emigration to German and Austrian Jews” (Halbrook 53).  That the denial of asylum to Jews, however, was motivated primarily by racism does not appear to be true (Halbrook 53).  This is not to say that there were no anti-Semites in Switzerland, but it is important to note that while Nazi Germany disarmed Jews as a preliminary step to their eventual extermination, Switzerland had armed every Jewish male citizen as part of her policy of armed neutrality (Halbrook 57).  It is also important not to blame neutrality.  Neutrality, as a foreign policy, would have been completely compatible with a policy of asylum for all Jews.  The decisions Switzerland made about asylum were strategic and moral in nature and are not the primary focus of the discussion at hand.[vii]
Issues of asylum aside, Switzerland survived another world war; her deterrence policy, armed neutrality, served her well.  She managed to “[avoid] much of the damage” associated with the war, “retain[ing her] old-world charm.”[viii]  Despite this fact, many criticisms have since arisen about Swiss neutrality during World War II.  Some critics maintain that Switzerland “prolonged the second world war” because of its trade with Nazi Germany; these same critics often ignore the war-prolonging implications of Roosevelt’s unconditional surrender policy and the fact that it was the vengeful Treaty of Versailles that prompted the rise of Hitler in the first place (Hofer 76).  Clearly, wars are terrible things and there is much blame to go around; nevertheless, that the unconditional surrender policy promulgated by Allied leaders could have easily cost millions of unnecessary Allied deaths is “unquestionabl[e]” (Fleming 467).  Whether Switzerland’s contribution to the German military effort, “0.05% of the total,…could have prolonged the war cannot be answered at all,” argues writer Walther Hofer, “simply because there are too many imponderables in the picture” (Hofer 77).  Moreover, this ignores the fact that Swiss trade with the belligerents was roughly equal at the beginning of the war, disproportionately favored Germany in the middle of the war, and disproportionately favored the Allies as the war ended (Karsh 52-54).
Switzerland’s trade with both sides was essential to her survival as a neutral and therefore essential to her uninterrupted survival as a nation (Schaffner 4).  Siding with the Allies would have meant, from Switzerland’s position, certain defeat at the hands of Nazi Germany; siding with the Axis powers is almost inconceivable, assuming the Swiss did not want to alter their institutions of government, not to mention the vast increase in Allied criticism that would have been rightfully heaped upon Switzerland for such actions.  Unless critics of Switzerland’s policy of trade with both sides would have preferred Switzerland as an ally of Germany or a war-ravaged and nonexistent Switzerland, at least from 1939 to 1945, they must come to realize that Switzerland’s only option was neutrality.  The maintenance of neutrality, in turn, since Switzerland was dependent on foreign trade, required equal trade with both sides (Schaffner 4).
The idea of American neutrality, like that of Swiss neutrality, is nearly as old as the nation itself.  Two months after the Declaration of Independence was issued, John Adams argued, “we ought to lay it down as a first principle and a maxim never to be forgotten, to maintain an entire neutrality in all future European wars” (Borchard and Lage 21).  The emphasis on ‘never to be forgotten’ is added as an admonishment of the fact that, in terms of the contemporary American foreign policy debate, neutrality has been nearly totally forgotten.  Certainly, though, this was not always the case.  The most famous annunciation of American neutrality is found in George Washington’s Farewell Address, in which he advises his countrymen:
Against the insidious wiles of foreign influence, I conjure you to believe me, fellow citizens, the jealousy of a free people ought to be constantly awake, since history and experience prove that foreign influence is one of the most baneful foes of republican government.  But that jealousy, to be useful, must be impartial, else it becomes the instrument of the very influence to be avoided . . . Excessive partiality for one foreign nation and excessive dislike of another cause those whom they actuate to see danger only on one side and serve to veil…the…influence [of] the other.  Real patriots, who may resist the intrigues of the favorite, are liable to become suspected and odious, while its tools and dupes usurp the applause and confidence of the people to surrender their interests.  The great rule of conduct for us, in regard to foreign nations, is in extending our commercial relations to have with them as little political connection as possible (Washington 27).
Washington was not only the first President, but as such, he was the first President to make neutrality an official foreign policy of the United States.[ix]  When “war broke out between Great Britain and France” in 1793, Washington issued a “Proclamation of Neutrality” (“The United States Should Remain Aloof from Europe” 23-24).  American neutrality did not end with Washington.  Thomas Jefferson attempted to maintain U.S. neutrality during his presidency, although the country had trouble enforcing its neutral rights to trade with both belligerents when war again broke out between Britain and France.[x]  In response to British violations of American neutral rights, Jefferson asked “Congress in 1807 for an embargo that would suspend all U.S. trade with foreign nations.”[xi]  The embargo failed, doing massive harm to the American economy, again demonstrating the necessary coupling of neutrality and free trade.
            America’s neutrality during this period allowed for the “maximiz[ation of] the nation’s security and minimized the risks in providing for it” (Nordlinger 50).[xii]  In other words, America expanded and developed domestically, while avoiding wars she did not have the resources to fight.  Taking into consideration America’s position on a continent thousands of miles from its potential rivals, it appears to be very reasonable that almost no one questions the merits of early American neutrality towards European affairs (Nordlinger 11).  It is in questioning the merits of American interventionism during and after the emergence of America as a superpower, then, that controversy arises.  Many claim that ‘everything changed’ at the end of the nineteenth and the beginning of the twentieth century (“Washington’s Farewell Address No Longer Applies to the United States” 29).  It is important therefore to review the history of America’s emergence as a world power and as an intervener in European affairs in order to decide whether this claim is actually true or just a convenient ploy to advance an interventionist agenda.
            Eric Nordlinger gives us a summary of America’s emergence as a superpower:  “Toward the end of the nineteenth century the United States attained the…resources and potential capacities of a major power…It began to act like a major power with the building of a world-class navy, war with the…Spanish…over Cuba, followed by [numerous Pacific] annexations.”  Nordlinger, a strong advocate of what he calls a “national strategy” for American foreign policy, points out that on the face of it, the claim that America has to forgo a neutral foreign policy because she has attained superpower status is absurd.  That things changed during the years in question is true, but these changes “did not require or justify the rejection” of a strategy like neutrality.  Nordlinger asks: 
…how does it follow that [America’s emergence as a world power] somehow require[s] [her] to take up the activist mantle of…internationalism?  The internationalists of the time and their subsequent scholarly defenders voiced a truly paradoxical argument:  The resources of a great power make for constraint rather than autonomy, the need for effortful involvements rather than (more) safety at home…Theodore Roosevelt was wrong in flatly asserting what became the conventional…wisdom: ‘We have no choice as to whether or not we shall play a great part in the world.’
Admittedly, great power status does allow American culture and commerce to play “a great part in the world,” but that does not justify political entanglements and intervention (52-54).  One scholar, Efraim Karsh, who wrote a book entitled Neutrality and Small States, goes further, arguing that neutrality is actually an easier choice for a more powerful nation.  Karsh says, “the chances that a large state will succeed in maintaining neutrality are, ostensibly, better than those of a small power – due to the belligerent’s awareness of the high cost of violating the large state’s neutrality” (4).
            After the battle of Marignano, the Swiss made a choice.  This choice was nearly the opposite of the choice America made at the end of the nineteenth century.  On the one hand, the Swiss chose to forsake their expansionism for de facto neutrality.  America, on the other, chose to forsake her history of neutrality and opt for overseas interventionism.  If it is possible for a small, formerly warring state in the midst of Europe to give up its expansionism and to successfully maintain its territorial integrity and sovereignty via a foreign policy of neutrality, how much easier it would have been for a large, powerful, non-engaged state oceans away from potential rivals to renounce any future expansionism and maintain its sovereignty and integrity by the same method! 
Some will point out that modern technologies eviscerated the ocean barrier between America and her potential enemies abroad.  Yet, a new barrier had seamlessly replaced the old.  America’s emergence as the world’s strongest power would be more of a deterrent to aggressors than an ocean had ever been.  So, the same benefits of neutrality that America enjoyed in her earlier years could still be enjoyed within the context of America’s new status as an emerging superpower.  America could still grow and develop domestically, while avoiding wars, since they were wholly unnecessary to the maintenance of America’s security. 
            Yet, opponents to neutrality persist, arguing that the world wars demonstrate that American neutrality does not work.  It seems, though, a better argument would be that the world wars demonstrate that an attempt to maintain nominal neutrality while in fact pursuing a biased foreign policy does not work.  It is a cruel irony that one collection of essays for and against the isolationist form of neutrality depicts President Woodrow Wilson as a hero of neutrality (“The United States Should Be Neutral” 45-46).  Thomas Fleming, an eminent American historian, calls neutrality under Wilson “a sham” (32).  “At the outset” of the war, one source says, “Germany and Britain…sought to terminate U.S. trade with the other. Exploiting its naval advantage, Britain gained the upper hand and almost ended U.S. trade with Germany.”[xiii]  Yet, Fleming states, “the Americans [did] little or nothing to protest the British blockade.”  Proponents of neutrality wondered “why the United States had kept its ships out of the war zone that England had created but refused to recognize the German war zone around the British Isles.”  In other words, America, an emerging world superpower, did “little or nothing” to defend its right to trade with Germany (32).  Meanwhile, the United States continued trading in large volumes with the Triple Entente (Fleming 71).  “By 1916,” Fleming writes, “the [U.S.] was supplying…Britain, France and Russia with 40 percent of their war matériel. …Watching this performance, Germans…became more and more embittered and skeptical about Wilson’s [avowals] of neutrality” (71-72).  In the end, lack of food, which Germany would have been receiving from neutrals in absence of the British blockade, drove Germany to begin its own submarine blockade of Britain (Fleming 36, 74).  After the sinking of a British ship carrying armaments by a German submarine killed 128 Americans, America abandoned pseudo-neutrality and declared war on Germany (Fleming 55-56).  One U.S. Senator, Robert La Follette, put it best when he said, “The failure to treat the belligerent nations alike, to reject the illegal war zones of both Germany and Great Britain, is wholly accountable for our present dilemma” (qtd. in Fleming 36).
Deja vu may be the best way to summarize American neutrality in the Second World War.  The Roosevelt administration’s de facto oil embargo against Japan and its commitment to a lend-lease program of which Britain was nearly the only beneficiary put Roosevelt on par with Wilson in his disregard for authentic neutrality (Fleming 18-19, 82).  Yale law professor Edwin Borchard criticized the Roosevelt administration’s attempts to send military aid to Britain as “a hostile act” that “is inconsistent with that neutrality which official groups profess to wish to maintain” (Borchard 108-109).  Japan, dependent on foreign oil, imported nearly half of her oil from the U.S. prior to the embargo (Fleming 16).  The oil embargo helped to provoke the Japanese attack on Pearl Harbor, after which any pretense of U.S. neutrality came to an end (Fleming 20-24)
It seems likely that America’s security even if she had remained neutral in World War II would have been maintained. This is best demonstrated by Nordlinger’s assertion that “a Germany in control of continental Europe could not breach [the English Channel].”  “Surely” then, says Nordlinger, “there was no way for [German] forces to cross thousands of miles of ocean to threaten a many times over more formidable opponent” (58).  Thus, honest neutrality could have saved millions of American lives; America could have stood as a pillar of peace and security in a world twice gone insane.  Instead, America despite her strength joined in the insanity that the small, relatively weak nation in the middle of Europe, Switzerland, managed to stay out of.  The defeat of Nazi Germany and its allies came at the cost of an alliance with one of the few governments to outdo the Nazis in terms of the murder of their own citizens, the U.S.S.R., and America’s sad status as the only nation to ever actually use a nuclear weapon offensively.  So, it appears that the humanitarian justifications for U.S. intervention in World War II are lacking.
In summary, it seems that Wilson and Roosevelt participated, perhaps intentionally, in a historical maneuver that discredited neutrality in the eyes of Americans.  By actively labeling their policies as ‘neutral,’ they twice facilitated the depiction of war as a result of American neutrality when the country actually went to war as a result of the de facto biases in their policies.  This discrediting of American neutrality and America’s subsequent unnecessary interventions all over the globe have the potential to become the greatest of all the humanitarian costs of American intervention in the world wars.
            The Cold War has long been the realm of the internationalist and the interventionist.  If American neutrality during the two world wars is to be criticized, then American neutrality during the Cold War is unspeakable.  Yet, there are those that question this conventional wisdom.  Nordlinger contends that America’s security remained ensured in the aftermath of the Second World War.  “Manifest superiority in strategic air and naval power” it is argued, “was more than adequate to guarantee control over both oceans, rendering impossible any significant threat to the Western Hemisphere.  And there was the additional check [of] the atomic arsenal and its ability to destroy the Soviet war machine before it could be employed against the United States” (60).  It is important to mention here that Karsh believes a nuclear deterrent is more effective if practiced by a neutral.  “While the nuclear weaponry of a particular member of an alliance,” Karsh reasons, “is perceived by the rival superpower as being offensively oriented, as part and parcel of the overall power of an opposing camp…the neutral[‘s]…possession of nuclear arms tend to be perceived more readily as being purely defensive in nature.”  Thus, a neutral country can more easily evade “such dangers…[as] a pre-emptive blow and preventive attack…[and] being dragged into other countries’ wars” (185).  Some interventionists argue that it was necessary for America to save Western Europe from Soviet domination, but this would only “dissipate America’s power by trying to extend defense perimeters across the Atlantic.  Given its geostrategic…advantages, U.S. defenses should be concentrated in the Western Hemisphere” (Nordlinger 60-61).  “Containment policies” were also unnecessary Nordlinger contends, as “Soviet expansion would…succeed” at first only to cause “likely [future] targets….[to] balance against Moscow.”  Internal pressures would overwhelm the communist world causing it to split under its own weight; these pressures were made manifest by Yugoslavian and Chinese “refus[als] to accept Stalin’s directives” (61).  Moreover, Richard Lebow and Janice Stein in their book We All Lost the Cold War put forth the argument “that Washington’s faith in the efficacy of showdown diplomacy actually prolonged the Cold War.”  Perhaps most important is the great economist Ludwig von Mises’ assertion of the impossibility of rational economic calculation in a socialist system; the Soviet Union, it seems, was doomed to failure from the beginning.  If America had put more faith in the strength of her own supposed ideals, i.e., freedom and capitalism, she might have avoided the Cold War altogether.
            Some general critiques of interventionism also apply to the Cold War period.  Nordlinger suggests that U.S. officials have learned the purported lessons of the 1930s too well.  Interventionists still concerned about the 1930s in the 1980s can be accused of the same thing of which they accuse proponents of neutrality, recklessly adhering to a policy that no longer applies (113-118).  Nordlinger reasons that blind adherence to internationalism and the failure to consider policies like neutrality have led to intervention as a default foreign policy doctrine.  In other words, if something is wrong in the world, no matter how distant, in geographic or other terms, from the U.S., our default policy is to intervene.  This “geo-strategic indiscriminateness” has led the U.S. to involve itself in far too many conflicts (78).  Even one who favors an actively interventionist foreign policy should see the wisdom in ‘picking one’s fights.’  The willingness to develop what author Robert H. Johnson refers to as “a geostrategic rationale for the importance of [intervening in] almost any country” leads to the military and other resources being stretched too thin (qtd. in Nordlinger 78).  This in turn leads to a less, not more, secure America.
            Many interventionists have a pet cause; some maintain that America must go abroad to secure access to oil.  Yet, the law of unintended consequences is omnipresent; an argument can be made that interventionism to secure oil supplies has actually increased our dependence on oil imports and thereby hurt our security in the long run (Nordlinger 86-87).  Instead of becoming more and more energy efficient, like Japan for example, allowing the military to guarantee a constant supply of oil has not provided American businesses with any incentive to decrease our reliance on foreign oil (Nordlinger 86).  The worst case scenario after Saddam Hussein’s invasion of Kuwait, that Hussein would have eventually “gained control of all the oil fields in the Gulf” region and by monopoly “drive[n] up the price of oil to maximize revenues,” would only have resulted in a ten dollar increase in the per barrel price of oil (Nordlinger 85-86).  This, argues Nordlinger, surely did not justify claims “that Saddam could ‘strangle’ the world economy.”  Intervention in the Persian Gulf region, therefore, is unjustifiable even on financial grounds in that it cost “$40 billion a year to protect $14 billion of current oil imports” (86).          
If there has ever been a time for a return to neutrality in America, it is now.  In terms of her rival states, she is unmatched; in fact, she could easily spend less on military expenditures and still strengthen the defense of America itself.  Continued military engagement abroad can only stretch her too thin.  ‘Rogue nations,’ even those that would threaten the use of a nuclear weapon against the United States, should be deterred by what remains the largest nuclear arsenal in the world.  And even if they are not, intervention can only further provoke them.  The “War on Terrorism” has turned a conflict between the United States and Al Qaeda into a wider confrontation involving ourselves, Iraq, Iran, North Korea and other terrorists and insurgents formerly unaffiliated with Al Qaeda.  Moreover, we have allied ourselves with some of the primary sponsors of radical Islamic terrorism, Pakistan and Saudi Arabia.  Aside from this, few Americans have come to face the fact that, as one Middle East scholar, William Cleveland, puts it:
…perhaps the most crucial link among September 11, Al Qaeda, and the core Middle East can be traced to US foreign policy and perceptions of the United States itself.  The attacks of September 11 gave rise to a brief period of US soul-searching in which the predominant question was “Why do they hate us so much?”  It seemed to come as a surprise to many Americans that their country’s policies could generate levels of anger and frustration sufficient to trigger such deadly retribution.  Yet…recent history reveals a pattern of US policy that was insensitive to, and largely ignorant of, Arab and Islamic public opinion.  Bin Laden himself identified the following causes of grievance:  the US position on the Palestinian-Israeli conflict, continued US support for the maintenance of economic sanctions against Iraq and the hardships they imposed on the Iraqi people, and the presence of US troops in Saudi Arabia – a presence seen as an insult to the holy cities of Mecca and Medina (Cleveland 543).
This is not to say that a renewed commitment to U.S. neutrality would pacify the entire Islamic world, but it is to say that a problem, i.e., U.S. intervention in the Middle East, is not its own solution.  Insofar as terrorism is motivated by Muslim anger about foreign intervention, neutrality can be seen as a step in the right direction.  And insofar as terrorism is motivated by Muslim anger in general, neutrality is irrelevant.  There will always be those madmen willing to use violence as a means to achieve their irrational purposes, but intervention only lends them support; an impoverished Muslim that resents the West will not be impressed by the coercive hand of the U.S. government attempting to rectify his position.  This is where private, voluntary American philanthropic efforts and free exchange between cultures must come in.  In short, the U.S. military should come home now.
            On the issue of terrorism, the same is true for Switzerland; though, Switzerland finds itself in a better position, having never intervened in the Middle East in the first place.  There is no reason for Switzerland to take sides in the War on Terrorism, despite the Bush administration’s rhetoric.  Switzerland can fight terrorists in the same way it fights all other murderers and arsonists.
The real issue that Swiss neutrality faces is that of European integration.  It may appear that Swiss neutrality and some form of integration with Europe, particularly that of the economic variety, are not completely mutually exclusive.  It also seems that Swiss neutrality’s success in providing for Switzerland’s defense for nearly five hundred years, from 1515 until the present, except for Napoleon’s invasion, is an impressive track record.  The European Union, if it is successful in its avowed goals, will create a peaceful community with which Switzerland can cooperate economically without abandoning neutrality.[xiv]  And if the E.U. is unsuccessful, if it breaks up or stalls, Switzerland’s neutrality will regain its importance as a mechanism for avoiding conflict in the heart of Europe.  As there are no clear and present military dangers to Swiss security that would merit a rethinking of neutrality, neutrality ought not to be abandoned, if and when Switzerland chooses any further economic integration. 
Swiss neutrality, which persisted in the very midst of two world wars, should not be abandoned for “light and transient causes.”  European unions have been attempted before.  The prior attempts were under conquerors; the attempt at hand is seemingly a more voluntary one.  Yet, perhaps the greatest threat to Swiss security arises in the form of a European Union itself.  Jørn K. Baltzersen, a concerned European citizen, tells us that massive voluntary political unions like the one which united the thirteen former-colonies into one United States of America have a tendency to become involuntary.  The American Civil War put an end to the concept of a voluntary union of states, outlawing by force any ability to secede.  History is fraught with such examples.  The potential exists in the E.U. for the same result, though obviously not in the short term.  Economic cooperation and the preservation of neutrality would allow Switzerland its best safeguard against such a union-gone-wrong.  A Switzerland that is fully integrated into the E.U. stands less of a chance against such a union than a Switzerland which has maintained its neutrality and independence.
            Neutrality, then, is not a foreign policy for those that favor the trend of the day.  Neutrality stands as an option that looks to the future, as the Swiss did after the French occupation.  Neutrality attempts to minimize and prevent conflicts before they start, through deterrence, preparedness, and free exchange.  Neutrality is realistic, at a time when the goals of the internationalists and interventionists are becoming less and less so.  Neutrality is confident, not like the overconfidence of imperialism, but the quiet confidence of a nation whose goal, in spite of war, is peace.  Most importantly, neutrality has worked.  A small nation in the middle of Europe’s conflicts avoided these conflicts in all instances except for one in a period of five hundred years.  Another small nation on the Atlantic seaboard of North America avoided these conflicts as well, allowing it to emerge as a leading world power. 
And neutrality will continue to work.  No country would dare challenge the world’s pre-eminent power, which places its defense over the temptations and costs of empire.  Switzerland too, for security purposes, would do well not to inherit through union the reputations of the former imperial powers of Europe and the conflicts associated with them.  History, it has been shown, is on the side of neutrality.  The future, by implication, is as well, since “there is nothing new in the world but the history you do not know” (Fleming v).  For these reasons, neutrality can and ought to serve as the foreign policy for both the United States and Switzerland.  Such a proposal has long been missing from the debate; this article has attempted to fill the gap.


[i] All book sources are cited using parenthetical documentation of page numbers with a link to the cited book on Amazon.com or another appropriate website; all internet sources are cited using hyperlinks within the sentence in which the cited information is contained.
[ii] Wilfried Aichinger, “What Actually is Neutrality?” Austria Today, 3/89, 14.
[iii] The source itself refers to “U.S. led” economic sanctions against Iraq.  It is unclear from the source whether the U.S. and U.N. sanctions were one in the same. It is important to point out that Switzerland, a neutral country, did, unilaterally and not as a member of the U.N., participate in sanctions against Iraq.  See Samantha Tonkin, “Swiss Lift Trade Embargo on Iraq,” The Iraq Foundation, 30 May 2003, <http://www.iraqfoundation.org/news/2003/emay/30_swiss.html> (2 April 2006); see also Dietrich Kappeler, “Switzerland,” DiploFoundation, < http://conf.diplomacy.edu/conf/NEUTRALI/switzer.htm> (2 April 2006), 4.7. Swiss neutrality and the Gulf War, as well as “Global Energy Sanctions,” Energy Information Administration, July 2004, <http://www.eia.doe.gov/emeu/cabs/sanction.html> (2 April 2006), U.N. and U.S. Sanctions Against IRAQ Lifted.  Unfortunately, there is a dearth of sources delineating the relationship of the Swiss sanctions to the U.N. and U.S. sponsored sanctions.  If interested, it is recommended that the reader do more research.  It will suffice to say that the purpose of the quote as cited here is to demonstrate the mentality of an avowed interventionist.
[iv] Microsoft Encarta Encyclopedia Standard 2004, s.v. “United States (Economy)” and “Switzerland” respectively.
[v] While there are other sources for this concept, much credit must be given to Professor Peter Hess of the University of Texas for the idea of using the term ‘schizophrenic’ in this instance.  Also see Llewellyn H. Rockwell, Jr., “Are Conservatives Crazy?” LewRockwell.com, 30 March 2006, <http://www.lewrockwell.com/rockwell/two-brains.html> (4 April 2006).
[vi] Microsoft Encarta Encyclopedia Standard 2004, s.v. “World War I”
[vii] This article makes the case for neutrality as a viable foreign policy; it does not specifically advise, for example, how much a neutral country ought to spend on armaments.  Neutrality can certainly be a strategic decision, but it is not in the exact same sense that spending on armaments is.  Thus, a country like Switzerland that is strategically neutral can, under that umbrella, pick and choose other strategies:  let the Jews in as a way to rally allied nations to defend Swiss neutrality; or not let the Jews in as a way to reduce the likelihood of a German invasion.  This is not to say that letting the Jews into Switzerland would have actually rallied any allied support for Swiss neutrality, or that letting Jews in ought to be considered from a strategic standpoint.  It is certainly this author’s opinion that the asylum issue ought to be decided from a moral standpoint and that the Swiss should have forgone the decreased likelihood of a German invasion in favor of doing what, in hindsight, is clearly the right thing to do.
[viii] Microsoft Encarta Encyclopedia Standard 2004, s.v. “Switzerland”
[ix] No information could be found as to the practice of neutrality under the Articles of Confederation.
[x] Microsoft Encarta Encyclopedia Standard 2004, s.v. “United States (History)”
[xi] Microsoft Encarta Encyclopedia Standard 2004, s.v. “United States (History)”
[xii] It is important to point out that the American neutrality Nordlinger refers to in this instance was maintained on an ad hoc basis.  One possible example of America’s interventionist policies during the same period is the Monroe Doctrine which put America in the business of deterring European intervention in other nations in the Americas, although it can be argued that the original proponents of the doctrine never intended to use actual intervention to back it up; instead, they could easily rely on the British Empire’s support for the same policies the doctrine embodied.  Moreover, the Monroe Doctrine actually reaffirmed America’s commitment to stay out of European affairs.  See “Monroe Doctrine,” Wikipedia, <http://en.wikipedia.org/wiki/Monroe_Doctrine> (27 January 2007).
[xiii] Microsoft Encarta Encyclopedia Standard 2004, s.v. “United States (History)”
[xiv] Microsoft Encarta Encyclopedia Standard 2004, s.v. “European Union”

Singapore Media Versus American Media

It became an issue of discussion surprisingly quickly after Japan's recent earthquake whether the Japanese government, corporations, citizens or some combination thereof would need to repatriate large amounts of overseas savings (Japan is the third largest holder of US treasuries after the Fed and China) in order to pay for all of the damage.  Most American journalists have tended to downplay this possibility, with the notable, if expected, exception of "Lord" Browne of Euro Pacific Capital. In that second clip, Ron Insana argues that the Japanese can't afford to lose one of their biggest export markets, insinuating that any such repatriation would lead to a higher Yen and thus an increase in the cost of Japanese exports to Americans.

Perhaps, but the lack of affordability inhibition has not prevented Japan from running up the largest cumulative deficit in the world, near 200% of GDP. Is it comforting that the only nations with higher deficits as a percentage of GDP are Lebanon and hyperinflationary Zimbabwe? I think most informed viewers take it for granted that the current situation benefits those who arranged it, i.e., Japanese exporters and their allies in government. The questions is, when does it become so stretched to the limit that the game of endless debt-creation (on both the part of the Japanese and the Americans) must finally come to an end. If an earthquake-tsunami-meltdown doesn't do it, the worst crisis for Japan since WWII, then what will? I don't think anyone argues, given Japanese demographics, that the trend is sustainable so the only remaining issue is when? And why not now?

Accustomed to the apparent irrationalities in the market (e.g., an increase in the price of US Treasuries during a disaster that ultimately may set off a run thereon), there appears to be no immediate reason why one should think this time would finally lead to a run on US Treasuries. But that is always true, until it actually is different. So it is not even remotely surprising that most folks in the US financial media who are to an extent dependent on the perpetual motion machine that is the current world dollar-dominated fiat currency system would try to make this eventuality seem as distant as possible. But, they could always be right.

Well, now some evidence that their quick push to rule out a run on treasuries is indeed a positively selfish or unconsciously cultural phenomena. This from Seah Chiang Nee of The Star in Singapore:

Even discounting a nuclear nightmare, Japan -- which is the world's third biggest economy and one of Singapore's top trading partners -- faces years of economic struggle. It will have to divert hundreds of billions of dollars to rebuilding shattered infrastructure by using its reserves, selling bonds or by reducing overseas spending.
"Knowing their nationalistic fervour, it will not be a surprise if Japanese corporations worldwide start soon to divert funds back home," said a stock researcher.
The Japanese will likely buy or invest less in Singapore and the number of tourists will likely drop. Japan ranks as one of the five economic pillars that sustain Singa-pore's prosperity, next to the United States, Europe, China and South-East Asia.

Singapore, over the last thirty years, has worked very hard to build a world class economy, and they have succeeded. Their prowess is due not to a natural endowment of resources or a partnership with a larger power, but their foresight, technical ability, discipline and economic freedom. It is highly suggestive then that the Singaporeans, whose economic might depends less on a sleight of hand con game and more on hard work and the free flow of information are taking seriously, for their own county, the possibility of massive Japanese repatriation.