Category Archives: Politics

Government, Iran, Middle East, Politics, United Nations, United States

US-Iran rapprochement requires time…

US-IRANIAN RELATIONS

Where a diplomatic stalemate that has lasted, off and on, for several decades, it would be foolhardy in being anything but wary before dealing again. No more so when the country in question is Iran who has made peaceful overtures towards the United States. The opportunity for misrepresentations and misunderstandings – on both sides – is more pronounced than most others.  Greater still, given the unpredictability of a domestic political scene in Tehran in which the remit of the President and the Supreme Leader are not always clear.

However, Iran’s new President, Hassan Rouhani, has made encouraging noises. He has released political prisoners, exchanged letters with the U.S. President and even used social media to offer New Year greetings to Iran’s Jews earlier this month. And, most significantly of all, he has shifted responsibility for the nuclear programme to a moderate former diplomat who has long established ties to the United States. Mr Rouhani says this has the express support of the Ayatollah.

With Washington responding in good faith, the world’s media expected a meeting to be held between the US and Iranian presidents following Mr Rouhani’s speech at the United Nations earlier this week. Not since the toppling of the Shah in 1979 have both presidents met.

In the end, though, no meeting took place. After more than 30 years without diplomatic relations, some commentators later argued that the absence of a meeting may have been for the best. Undoubtedly, there remains great hurt and pain on both sides. The US has had no official representation in Tehran for almost two generations, with a gulf of understanding left widely prized open. Compared with Iran, the US is an open book. The risk of misunderstandings, especially on the American side, would have been great. It would have been little short of tragic if the early signals from Tehran had been misread which might have squandered any chance of forging better relations.

It was apparent, from their respective speeches at the UN General Assembly that both leaders treaded carefully. They did, after all, have their own public opinion to consider, as well as the expectations that were running so high elsewhere in the world. Mr Rouhani’s stated readiness, though, to engage in ‘results-orientated’ talks on his country’s nuclear programme, and his disclosure that he has negotiating authority, delegated from the Supreme Leader, does raise hope. President Obama would be derelict if he did not now try to test them out in some way.

The rewards from improved US-Iranian relations could be far reaching, particularly if agreement can be made on the nuclear issue. Iran would be brought in from the cold at a crucial time, and the regional map – which looks increasingly hostile to the West – would seem a little friendlier. With the stakes so high rapprochement must be given time rather than scuppering any deal by rushing it through.

Mr Obama, of course, risks charges of capitulation. The concern of Israel, which has Iranian nuclear facilities on its radar, and is ready and willing to bomb them, is again raising its head. But the prize of a safer and less divided Middle East must be pursued with as much vigour as the West can muster. Syria’s bloody civil war, and the threat of regional meltdown, only makes the need for a deal with Iran more urgent.

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Arts, Britain, Economic, History, Philosophy, Politics, Scotland, Society

Quantum Leaps: Adam Smith (1723-1790)…

‘UNINTENDED CONSEQUENCES OF INTENDED ACTION’

Scottish philosopher of morals, politics and economics, Adam Smith was a contemporary of the Empiricist, David Hume (1711-1776), and is very close to him in outlook and philosophic temperament. His lectures on ethics and logic were published under the title Theory of the Moral Sentiments but he is most famous for his work of political economics, The Wealth of Nations.

Favoured philosopher of Margaret Thatcher and darling of Conservative economists, Smith is famous for his views on private property, the free market economy and the doctrine that ‘unintended consequences of intended action’ will be to the benefit of society at large. The idea behind this most fortunate if true of principles is that in intentionally serving one’s interests one unintentionally serves the interests of society as a whole.

'The Wealth of Nations' is one of the most important and deservedly read works of economic and political philosophy in the history of Western thought.

‘The Wealth of Nations’ is one of the most important and deservedly read works of economic and political philosophy in the history of Western thought.

A simple example will illustrate the essence of Smith’s idea. Suppose that Jones, in seeking his own fortune, decides to set up and run his own business, manufacturing some common item of everyday need. In seeking to provide for his own fortune, Jones’ entrepreneurial enterprise has a number of unintentional benefits to others. First, he provides a livelihood for the people in his employ, thus benefiting them directly. Second, he makes more readily available some common item which previously had been more difficult or more expensive to obtain for his customers, thus easing one, if only minor, aspect of their lives. The forces of market economy ensure that these unintentional benefits occur, for if Jones’ workers could find more profitable employ elsewhere they would either cease to work for him or he would have to raise their salaries in order to secure a workforce. Likewise, if Jones’ product was available more readily or less expensively from some other source, Jones would either go out of business or be forced to lower his prices to a competitive rate. The model assumes the absence of a monopoly, both in the labour and economic markets.

The belief that ‘unintended consequences of intended action’ will be of benefit to society held great imaginative power over the industrial philanthropists of the 18th and 19th Centuries and provided the philosophical groundwork for the later ethical theories of Bentham and Mill. However, criticism is not hard to come by. It is surely a blinkered view, if comforting for the entrepreneurial capitalist, to suppose that pursuing one’s own self-interest constitutes a magnanimous and philanthropic act towards society at large. One has only to review the social history of industrial Britain, to witness the treacherous and exploitative working practices of the industrial age, the extreme poverty and degrading social conditions of the suffering working classes, to realise Smith’s idealistic model has far more serious ‘unintended’ consequences. What has largely brought an end to such conditions in the industrialised West is not a triumphant adherence to Smith’s principles in Western economics, but a shifting of the poverty and exploitative working practices from one part of the world to another. In other words, the living conditions of those in the West has improved to the detriment of other countries just insofar as the labour required to support Smith’s economic philosophy has been removed from Western societies and transferred to those of the Third World.

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Regardless of one’s political views on Smith, The Wealth of Nations is one of the most important and deservedly read works of economic and political philosophy in the history of Western thought. It needs to be read and understood by its detractors as much as it does by its supporters.

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Economic, Financial Markets, Government, Politics, Society, United States

Surprise at the Fed’s decision to maintain an economic stimulatory programme…

ECONOMIC RECOVERY

…The Federal Reserve maintains its quantitative easing programme, but the implications of a taper were felt around the world

The spectacle and irony of the world’s financial markets shooting upwards in response to reports that the global economy is in less than rude health than had been thought appears paradoxical.

The surprise decision this week by the Federal Reserve to maintain its monthly $85 billion quantitative easing programme – the process by which money is artificially printed – indicates that U.S. monetary policymakers are far from convinced by the incipient American recovery. Whilst Washington has reported a much improved unemployment rate of 7.3 per cent, that is still considered to be too high, and more needs to be done before the recovery can be deemed sustainable. The uncertainty of rate-setters on the Fed’s Open Market Committee is undeniable as evidenced through their downgraded growth forecasts up until the end of 2014. Yet, from baulking at the downbeat assessment, investors from Tokyo to London have remained in bullish mood.

Their relief is perhaps not entirely irrational. The implications of Ben Bernanke’s suggestion in June that the Federal Reserve would start ‘tapering’ its Q.E. programme and stimulatory bond-buying some time before the end of the year were felt around the world. Emerging economies, for instance, particularly in Asia, saw their currencies plummet as money was pulled out in favour of newly rising, and much safer, US markets. Nor was the developed world any more insulated. Even though the Fed has not yet done anything, just the prospect of a U.S. taper has sharply sent long-term interest rates upwards in anticipation.

There are two lessons to be taken here. First, for all the new-found economic optimism, whatever green shoots there are (either here or elsewhere in the world), remain about as fragile as they can be. And secondly, the route from where we are now back to (unstimulated) pre-crisis normality will be an uneven and bumpy journey.

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