vox populi
or what I wish I wrote

Steve Jobs
Fremont, CA
It is every economist's stupidity to think we need to keep expanding the economy to keep us at full employment. We have a few billion people in the world who are slowly reaching to the productivity levels of the developed countries, hence we will need to expand the economy 10 fold to keep them all employed. Alternately, as productivity goes up, we cut down our hours. I would dare to suggest that if Americans merely worked 20 hrs a week on average, we can complete all the work we have plus more. It appears like we work hard for nothing at all.

Europeans seem to be getting it right - you can't really employ everyone at high productivity levels. You can employ everyone and have huge inefficiencies (still pretending to be efficient) or employ a few and give out everyone else welfare checks or cut down hours for all.


I've been thinking about this for a while: Can we indeed go on with our type of economy, or we need to take a page from, say, the Europeans? This is not to say Europe doesn't have its own problems--just ask any young person between 20 and 35 years of age. It only means that we seem to only push harder in directions of diminishing returns, more expensive with less returns, that is. And this goes on for just about everything we do, from wars and foreign policy to K-12 education and local government budgets. The only question I have not been able to answer is whether we can improve the system gradually as it goes, or need a full stop. If history is of any use here, stop ahead--mind the gap! Yes, I do tend to side with history in uncertain times.

President Obama with his national security team to discuss Afghanistan in the Situation Room of the White House, Nov. 23, 2009

P112309PS-0830, originally uploaded by The White House.

Let's get out, folks! Money has been running out, and the more we spend the stronger our creditors get.

Der Spiegel:
[...] following an extended Asia trip that produced no palpable results. The "first Pacific president," as Obama called himself, came as a friend and returned as a stranger. The Asians smiled but made no concessions.

Upon taking office, Obama said that he wanted to listen to the world, promising respect instead of arrogance. But Obama's currency isn't as strong as he had believed. Everyone wants respect, but hardly anyone is willing to pay for it. Interests, not emotions, dominate the world of realpolitik. The Asia trip revealed the limits of Washington's new foreign policy: Although Obama did not lose face in China and Japan, he did appear to have lost some of his initial stature.

Obama visited a new China, an economic power that is now making its own demands. America should clean up its government finances, and the weak dollar is unacceptable, the head of the Chinese banking authority said, just as Obama's plane was about to land.

Obama's new foreign policy has also been relatively unsuccessful elsewhere, with even friends like Israel leaving him high and dry. For the government of Israel Prime Minister Benjamin Netanyahu, peace is only conceivable under its terms. Netanyahu has rejected Obama's call for a complete moratorium on the construction of settlements. As a result, Obama has nothing to offer the Palestinians and the Syrians. "We thought we had some leverage," says Martin Indyk, a former ambassador to Israel under the Clinton administration and now an advisor to Obama. "But that proved to be an illusion."

Even the president seems to have lost his faith in a genial foreign policy. The approach that was being used in Afghanistan this spring, with its strong emphasis on civilian reconstruction, is already being changed. "We're searching for an exit strategy," said a staff member with the National Security Council on the sidelines of the Asia trip.


Can a reserve currency be protected from the whims of people in a democracy?

There are all kinds of views about what has brought the world crisis in 2008. Several conversations seem to point the source either to the FED, or to the so called "savings glut" from oil exporting or manufacturing countries. A good place to start would be with the view that the FED lowered its rates below some natural interest rate. (Nota Bene: This account beats revisionist Greenspan's dead horse).

I think the above views are only partial, and not even when held together could explain 2008. For one, the low US rates must have been met indeed by excess money supply or the so called "savings glut." It always takes two to tango. On the other hand, this is all Popperian science at best. It goes in small small steps and sees not the bigger picture. For example, Beckworth (link) doesn't take into account the fact that the increased productivity he contrasts to the decreasing FED rates was due in great part to outsourcing&offshoring.

Another view is that the FED is responsible for the well doing of the international monetary system. This is an interesting assumption to which I will return. One of the economists operating with this assumption is John B. Taylor (link to paper), who also shows that the FED, by lowering the interest rates, should be held accountable for what happened in 2008. In this case, on the grounds of incomplete models and such, the question becomes: How could the FED be held responsible for the Chinese manipulating their currency?

It's time now I posit that China's entering WTO has been the catalyst of our capitalism's demise.

To counter the point that FED alone could not have caused the events in 2008, one could argue that we had similar situations in the past (war: Vietnam + creditors: Germany/Japan). My answer would be yes, but check also the pains our capitalism had at the time in addition to saying that China's effect comes at a different order of magnitude. Not to mention that both Germany and Japan were US clients for their national security. So, while what China is doing is not entirely different in principle from other partners we've had, it is the size that matters and the stage of decay of our own capitalism (institutions, players, etc.).

As an observation, what's compelling China to keep buying the US paper? I say that in part it's the same reason that had made them do so until 2008. At this time, the other reason may be the fact that if they stop buying they may risk the value of whatever they have bought so far and then some more--it would be so Chinese-unlike.

Let's turn now to Brad DeLong to see the emerging consensus view among economists about the causes for the 2008 crisis:
  • the Federal Reserve and the Treasury decided to nationalize AIG rather than to support AIG's counterparties last fall, allowing financiers to pretend that their strategies were fundamentally sound rather than things that would have shut down their firms had the Feds not paid AIG's bills. (Nota Bene: This is probably a mistake, not a cause)
  • the Federal Reserve and the Treasury decided to let Lehman Brothers go into an uncontrolled bankruptcy last fall in order to try to teach financiers that having an ill-capitalized counterparty was not riskless and that people should not expect the government to come to their rescue always. (Nota Bene: I agree with this and blogged about it)
  • the long-ago decision was made to eschew principles-based regulation and allow the shadow banking sector to grow unregulated with respect to its leverage and its compensation schemes in the belief that government regulation of finance should be minimal and that the government's guarantee of the commercial banking system was enough to keep us out of messes like the one we are currently in. (Nota Bene: This seems to be how economists account for the complexity of the causes, while operating with sketch models that only make good Popperian science).
These are pertinent views, yet incomplete--read, easy to model by economists practicing Popperian science.

At this time, I would add to the above reasons the following:
  • We should pay more attention to the stage of capitalism in the US/west. I've done so, here as well.
  • The US failed to adjust its post WWII trade policies to account for China's entry in WTO. This has led to an implicit contract of sorts. The US party in the contract had an increase in productivity, otherwise hard to come by at our stage in capitalism, and maintained purchasing power of displaced workforce at home. The Chinese bought our dollars, manipulated their currency, gave a better tomorrow to hundreds of millions of their own and, most importantly, they've got a massive know-how transfer that money otherwise could not buy. In effect, this fueled indeed the Chinese share of the "savings glut" symptom.
  • The other point I'd like to make, and DeLong's 3rd cause would come close, is about looking for another cause/mechanism of the "savings glut." It must indeed have been everywhere people's looking for YIELD--in itself a behavior due to low interest rates and late stage capitalism. Yield that had been conveniently MANUFACTURED by the collusion between our politicos and bankers.
Now it's time I returned to John B. Taylor's assumption that the US FED be responsible for the stability of the international monetary system. This view does not seem all unreasonable since the US dollar enjoys the status of reserve currency. In other words, we owe the world that much. That might have been so in the past, notwithstanding the lousy job we did of it. In this day and age, I would argue, if we want globalization to continue its course, especially among democracies, one has to return to Keynes and his recommendation at Bretton Woods for a global currency (Bancor); China seems to favor such thing, and this may be our opportunity to keep the game straight after the demise of the dollar from its position as reserve currency. Indeed, if a democracy controls the reserve currency, what guarantee can it be that the respective currency will be protected from the whims of the people in that democracy?

On a very personal level, I think we are still far from recovery, for I don't think recovery can come in sight before we've heard the truth being spoken in public. Yes, truth is socially constructed, but unless we come together (read, pressed by reality/fused into nationhood) to first see the problem with the same eyes, how can we figure out a solution? If you like, outside observers of all times have always wagered this bet against America--on our inability to come out of a paper bag of our own making. Will we prove them wrong once again? Coming out of the two wars NOW would be a start...

On US, NATO and EU

Here are excellent accounts on the history, present and future of the relation among the US, NATO and EU. Things can go in different directions from here, and one would have to ask what's keeping them from so doing?

Where the distinguished speaker's treatment of the subjects falls short is Afghanistan and the suspiciously unanimous reliance on a poll indicating that the regular Afghans want us there. In fact, Mr. Brzezinski questioned himself the quality of such poll, but then backtracked quickly. So, if this poll is just a WMD-type of excuse, life cannot be good. An indication of what's what will come from the decision of our NATO partners in Europe to withdraw or not.

We Like Lists Because We Don't Want to Die

By Susanne Beyer and Lothar Gorris

Italian novelist and semiotician Umberto Eco, who is curating a new exhibition at the Louvre in Paris, talks to SPIEGEL about the place lists hold in the history of culture, the ways we try to avoid thinking about death and why Google is dangerous for young people.

SPIEGEL: Mr. Eco, you are considered one of the world's great scholars, and now you are opening an exhibition at the Louvre, one of the world's most important museums. The subjects of your exhibition sound a little commonplace, though: the essential nature of lists, poets who list things in their works and painters who accumulate things in their paintings. Why did you choose these subjects?

Umberto Eco: The list is the origin of culture. It's part of the history of art and literature. What does culture want? To make infinity comprehensible. It also wants to create order -- not always, but often. And how, as a human being, does one face infinity? How does one attempt to grasp the incomprehensible? Through lists, through catalogs, through collections in museums and through encyclopedias and dictionaries. There is an allure to enumerating how many women Don Giovanni slept with: It was 2,063, at least according to Mozart's librettist, Lorenzo da Ponte. We also have completely practical lists -- the shopping list, the will, the menu -- that are also cultural achievements in their own right.

SPIEGEL: Should the cultured person be understood as a custodian looking to impose order on places where chaos prevails?

Eco: The list doesn't destroy culture; it creates it. Wherever you look in cultural history, you will find lists. In fact, there is a dizzying array: lists of saints, armies and medicinal plants, or of treasures and book titles. Think of the nature collections of the 16th century. My novels, by the way, are full of lists.

SPIEGEL: Accountants make lists, but you also find them in the works of Homer, James Joyce and Thomas Mann.

Eco: Yes. But they, of course, aren't accountants. In "Ulysses," James Joyce describes how his protagonist, Leopold Bloom, opens his drawers and all the things he finds in them. I see this as a literary list, and it says a lot about Bloom. Or take Homer, for example. In the "Iliad," he tries to convey an impression of the size of the Greek army. At first he uses similes: "As when some great forest fire is raging upon a mountain top and its light is seen afar, even so, as they marched, the gleam of their armour flashed up into the firmament of heaven." But he isn't satisfied. He cannot find the right metaphor, and so he begs the muses to help him. Then he hits upon the idea of naming many, many generals and their ships.

SPIEGEL: But, in doing so, doesn't he stray from poetry?

Eco: At first, we think that a list is primitive and typical of very early cultures, which had no exact concept of the universe and were therefore limited to listing the characteristics they could name. But, in cultural history, the list has prevailed over and over again. It is by no means merely an expression of primitive cultures. A very clear image of the universe existed in the Middle Ages, and there were lists. A new worldview based on astronomy predominated in the Renaissance and the Baroque era. And there were lists. And the list is certainly prevalent in the postmodern age. It has an irresistible magic.

SPIEGEL: But why does Homer list all of those warriors and their ships if he knows that he can never name them all?

Eco: Homer's work hits again and again on the topos of the inexpressible. People will always do that. We have always been fascinated by infinite space, by the endless stars and by galaxies upon galaxies. How does a person feel when looking at the sky? He thinks that he doesn't have enough tongues to describe what he sees. Nevertheless, people have never stopping describing the sky, simply listing what they see. Lovers are in the same position. They experience a deficiency of language, a lack of words to express their feelings. But do lovers ever stop trying to do so? They create lists: Your eyes are so beautiful, and so is your mouth, and your collarbone … One could go into great detail.

SPIEGEL: Why do we waste so much time trying to complete things that can't be realistically completed?

Eco: We have a limit, a very discouraging, humiliating limit: death. That's why we like all the things that we assume have no limits and, therefore, no end. It's a way of escaping thoughts about death. We like lists because we don't want to die.

'People Have Their Preferences'

SPIEGEL: In your exhibition at the Louvre, you will also be showing works drawn from the visual arts, such as still lifes. But these paintings have frames, or limits, and they can't depict more than they happen to depict.

Eco: On the contrary, the reason we love them so much is that we believe that we are able to see more in them. A person contemplating a painting feels a need to open the frame and see what things look like to the left and to the right of the painting. This sort of painting is truly like a list, a cutout of infinity.

SPIEGEL: Why are these lists and accumulations so particularly important to you?

Eco: The people from the Louvre approached me and asked whether I'd like to curate an exhibition there, and they asked me to come up with a program of events. Just the idea of working in a museum was appealing to me. I was there alone recently, and I felt like a character in a Dan Brown novel. (???) It was both eerie and wonderful at the same time. I realized immediately that the exhibition would focus on lists. Why am I so interested in the subject? I can't really say. I like lists for the same reason other people like football or pedophilia. People have their preferences.

SPIEGEL: Still, you are famous for being able to explain your passions …

Eco: … but not by talking about myself. Look, ever since the days of Aristotle, we have been trying to define things based on their essence. The definition of man? An animal that acts in a deliberate way. Now, it took naturalists 80 years to come up with a definition of a platypus. They found it endlessly difficult to describe the essence of this animal. It lives underwater and on land; it lays eggs, and yet it's a mammal. So what did that definition look like? It was a list, a list of characteristics.

SPIEGEL: A definition would certainly be possible with a more conventional animal.

Eco: Perhaps, but would that make the animal interesting? Think of a tiger, which science describes as a predator. How would a mother describe a tiger to her child? Probably by using a list of characteristics: The tiger is big, a cat, yellow, striped and strong. Only a chemist would refer to water as H2O. But I say that it's liquid and transparent, that we drink it and that we can wash ourselves with it. Now you can finally see what I'm talking about. The list is the mark of a highly advanced, cultivated society because a list allows us to question the essential definitions. The essential definition is primitive compared with the list.

SPIEGEL: It would seem that you are saying that we should stop defining things and that progress would, instead, mean only counting and listing things.

Eco: It can be liberating. The Baroque era was an age of lists. Suddenly, all the scholastic definitions that had been made in the previous era were no longer valid. People tried to see the world from a different perspective. Galileo described new details about the moon. And, in art, established definitions were literally destroyed, and the range of subjects was tremendously expanded. For instance, I see the paintings of the Dutch Baroque as lists: the still lifes with all those fruits and the images of opulent cabinets of curiosities. Lists can be anarchistic.

SPIEGEL: But you also said that lists can establish order. So, do both order and anarchy apply? That would make the Internet, and the lists that the search engine Google creates, prefect for you.

Eco: Yes, in the case of Google, both things do converge. Google makes a list, but the minute I look at my Google-generated list, it has already changed. These lists can be dangerous -- not for old people like me, who have acquired their knowledge in another way, but for young people, for whom Google is a tragedy. Schools ought to teach the high art of how to be discriminating.

SPIEGEL: Are you saying that teachers should instruct students on the difference between good and bad? If so, how should they do that?

Eco: Education should return to the way it was in the workshops of the Renaissance. There, the masters may not necessarily have been able to explain to their students why a painting was good in theoretical terms, but they did so in more practical ways. Look, this is what your finger can look like, and this is what it has to look like. Look, this is a good mixing of colors. The same approach should be used in school when dealing with the Internet. The teacher should say: "Choose any old subject, whether it be German history or the life of ants. Search 25 different Web pages and, by comparing them, try to figure out which one has good information." If 10 pages describe the same thing, it can be a sign that the information printed there is correct. But it can also be a sign that some sites merely copied the others' mistakes.

SPIEGEL: You yourself are more likely to work with books, and you have a library of 30,000 volumes. It probably doesn't work without a list or catalogue.

Eco: I'm afraid that, by now, it might actually be 50,000 books. When my secretary wanted to catalogue them, I asked her not to. My interests change constantly, and so does my library. By the way, if you constantly change your interests, your library will constantly be saying something different about you. Besides, even without a catalogue, I'm forced to remember my books. I have a hallway for literature that's 70 meters long. I walk through it several times a day, and I feel good when I do. Culture isn't knowing when Napoleon died. Culture means knowing how I can find out in two minutes. Of course, nowadays I can find this kind of information on the Internet in no time. But, as I said, you never know with the Internet.

SPIEGEL: You include a nice list by the French philosopher Roland Barthes in your new book, "The Vertigo of Lists." He lists the things he loves and the things he doesn't love. He loves salad, cinnamon, cheese and spices. He doesn't love bikers, women in long pants, geraniums, strawberries and the harpsichord. What about you?

Eco: I would be a fool to answer that; it would mean pinning myself down. I was fascinated with Stendhal at 13 and with Thomas Mann at 15 and, at 16, I loved Chopin. Then I spent my life getting to know the rest. Right now, Chopin is at the very top once again. If you interact with things in your life, everything is constantly changing. And if nothing changes, you're an idiot.

Interview conducted by Susanne Beyer and Lothar Gorris

After 20 years

Gorbachev on 1989
By Katrina vanden Heuvel & Stephen F. Cohen

This article appeared in the November 16, 2009 edition of The Nation.
October 28, 2009

On September 23, Nation editor Katrina vanden Heuvel and her husband, Stephen F. Cohen, a contributing editor, interviewed former Soviet President Mikhail Gorbachev at his foundation in Moscow. With the twentieth anniversary of the fall of the Berlin Wall approaching, we believed that the leader most responsible for that historic event should be heard, on his own terms, in the United States. As readers will see, the discussion became much more wide-ranging. --The Editors

KVH/SFC: Historic events quickly generate historical myths. In the United States it is said that the fall of the Berlin Wall and the end of a divided Europe was caused by a democratic revolution in Eastern Europe or by American power, or both. What is your response?

MG: Those developments were the result of perestroika in the Soviet Union, where democratic changes had reached the point by March 1989 that for the first time in Russia's history democratic, competitive elections took place. You remember how enthusiastically people participated in those elections for a new Soviet Congress. And as a result thirty-five regional Communist Party secretaries were defeated. By the way, of the deputies elected, 84 percent were Communists, because there were a lot of ordinary people in the party--workers and intellectuals.

On the day after the elections, I met with the Politburo, and said, "I congratulate you!" They were very upset. Several replied, "For what?" I explained, "This is a victory for perestroika. We are touching the lives of people. Things are difficult for them now, but nonetheless they voted for Communists." Suddenly one Politburo member replied, "And what kind of Communists are they!" Those elections were very important. They meant that movement was under way toward democracy, glasnost and pluralism.

Analogous processes were also under way in Eastern and Central Europe. On the day I became Soviet leader, in March 1985, I had a special meeting with the leaders of the Warsaw Pact countries, and told them: "You are independent, and we are independent. You are responsible for your policies, we are responsible for ours. We will not intervene in your affairs, I promise you." And we did not intervene, not once, not even when they later asked us to. Under the influence of perestroika, their societies began to take action. Perestroika was a democratic transformation, which the Soviet Union needed. And my policy of nonintervention in Central and Eastern Europe was crucial. Just imagine, in East Germany alone there were more than 300,000 Soviet troops armed to the teeth--elite troops, specially selected! And yet, a process of change began there, and in the other countries, too. People began to make choices, which was their natural right.

But the problem of a divided Germany remained. The German people perceived the situation as abnormal, and I shared their attitude. Both in West and East Germany new governments were formed and new relations between them established. I think if the East German leader Erich Honecker had not been so stubborn--we all suffer from this illness, including the person you are interviewing--he would have introduced democratic changes. But the East German leaders did not initiate their own perestroika. Thus a struggle broke out in their country.

The Germans are a very capable nation. Even after what they had experienced under Hitler and later, they demonstrated that they could build a new democratic country. If Honecker had taken advantage of his people's capabilities, democratic and economic reforms could have been introduced that might have led to a different outcome.

I saw this myself. On October 7, 1989, I was reviewing a parade in East Germany with Honecker and other representatives of the Warsaw Pact countries. Groups from twenty-eight different regions of East Germany were marching by with torches, slogans on banners, shouts and songs. The former prime minister of Poland, Mieczyslaw Rakowski, asked me if I understood German. "Enough to read what's written on the banners. They're talking about perestroika. They're talking about democracy and change. They're saying, 'Gorbachev, stay in our country!'" Then Rakowski remarked, "If it's true that these are representatives of people from twenty-eight regions of the country, it means the end." I said, "I think you're right."

KVH/SFC: That is, after the Soviet elections in March 1989, the fall of the Berlin Wall was inevitable?

MG: Absolutely!

KVH/SFC: Did you already foresee the outcome?

MG: Everyone claims to have foreseen things. In June 1989 I met with West German Chancellor Helmut Kohl and we then held a press conference. Reporters asked if we had discussed the German question. My answer was, "History gave rise to this problem, and history will resolve it. That is my opinion. If you ask Chancellor Kohl, he will tell you it is a problem for the twenty-first century."

I also met with the East German Communist leaders, and told them again, "This is your affair and you have the responsibility to decide." But I also warned them, "What does experience teach us? He who is late loses." If they had taken the road of reform, of gradual change--if there had been some sort of agreement or treaty between the two parts of Germany, some sort of financial agreement, some confederation, a more gradual reunification would have been possible. But in 1989-90, all Germans, both in the East and the West, were saying, "Do it immediately." They were afraid the opportunity would be missed.

KVH/SFC: A closely related question: when did the cold war actually end? In the United States, there are several answers: in 1989, when the Berlin Wall came down; in 1990-91, after the reunification of Germany; and the most popular, even orthodox, answer, is that the cold war ended only when the Soviet Union ended, in December 1991.

MG: No. If President Ronald Reagan and I had not succeeded in signing disarmament agreements and normalizing our relations in 1985-88, the later developments would have been unimaginable. But what happened between Reagan and me would also have been unimaginable if earlier we had not begun perestroika in the Soviet Union. Without perestroika, the cold war simply would not have ended. But the world could not continue developing as it had, with the stark menace of nuclear war ever present.

Sometimes people ask me why I began perestroika. Were the causes basically domestic or foreign? The domestic reasons were undoubtedly the main ones, but the danger of nuclear war was so serious that it was a no less significant factor. Something had to be done before we destroyed each other. Therefore the big changes that occurred with me and Reagan had tremendous importance. But also that George H.W. Bush, who succeeded Reagan, decided to continue the process. And in December 1989, at our meeting in Malta, Bush and I declared that we were no longer enemies or adversaries.

KVH/SFC: So the cold war ended in December 1989?

MG: I think so.

KVH/SFC: Many people disagree, including some American historians.

MG: Let historians think what they want. But without what I have described, nothing would have resulted. Let me tell you something. George Shultz, Reagan's secretary of state, came to see me two or three years ago. We reminisced for a long time--like old soldiers recalling past battles. I have great respect for Shultz, and I asked him: "Tell me, George, if Reagan had not been president, who could have played his role?" Shultz thought for a while, then said: "At that time there was no one else. Reagan's strength was that he had devoted his whole first term to building up America, to getting rid of all the vacillation that had been sown like seeds. America's spirits had revived. But in order to take these steps toward normalizing relations with the Soviet Union and toward reducing nuclear armaments--there was no one else who could have done that then."

By the way, in 1987, after my first visit to the United States, Vice President Bush accompanied me to the airport, and told me: "Reagan is a conservative. An extreme conservative. All the blockheads and dummies are for him, and when he says that something is necessary, they trust him. But if some Democrat had proposed what Reagan did, with you, they might not have trusted him."

By telling you this, I simply want to give Reagan the credit he deserves. I found dealing with him very difficult. The first time we met, in 1985, after we had talked, my people asked me what I thought of him. "A real dinosaur," I replied. And about me Reagan said, "Gorbachev is a diehard Bolshevik!"

KVH/SFC: A dinosaur and a Bolshevik?

MG: And yet these two people came to historic agreements, because some things must be above ideological convictions. No matter how hard it was for us and no matter how much Reagan and I argued in Geneva in 1985, nevertheless in our appeal to the peoples of the world we wrote: "Nuclear war is inadmissible, and in it there can be no victors." And in 1986, in Reykjavik, we even agreed that nuclear weapons should be abolished. This conception speaks to the maturity of the leaders on both sides, not only Reagan but people in the West generally, who reached the correct conclusion that we had to put an end to the cold war.

KVH/SFC: So Americans who say the cold war ended only with the end of the Soviet Union are wrong?

MG: That's because journalists, politicians and historians in your country concluded that the United States won the cold war, but that is a mistake. If the new Soviet leadership and its new foreign policy had not existed, nothing would have happened.

KVH/SFC: In short, Gorbachev, Reagan and the first President Bush ended the cold war?

MG: Yes, in 1989-90. It was not a single action but a process. Bush and I made the declaration at Malta, but Reagan would have had no less grounds for saying that he played a crucial role, because he, together with us, had a fundamental change of attitude. Therefore we were all victors: we all won the cold war because we put a stop to spending $10 trillion on the cold war, on each side.

KVH/SFC: What was most important--the circumstances at that time or the leaders?

MG: The times work through people in history. I'll tell you something else that is very important about what subsequently happened in your country. When people came to the conclusion that they had won the cold war, they concluded that they didn't need to change. Let others change. That point of view is mistaken, and it undermined what we had envisaged for Europe--mutual collective security for everyone and a new world order. All of that was lost because of this muddled thinking in your country, and which has now made it so difficult to work together. World leadership is now understood to mean that America gives the orders.

KVH/SFC: Is that why today, twenty years after you say the cold war ended, the relationship between our two countries is so bad that President Obama says it has to be "reset"? What went wrong?

MG: Even before the end of the cold war, Reagan, Bush and I argued, but we began to eliminate two entire categories of nuclear weapons. We had gone very far, almost to the point when a return to the past was no longer possible. But everything went wrong because perestroika was undermined and there was a change of Russian leadership and a change from our concept of gradual reform to the idea of a sudden leap. For Russian President Boris Yeltsin, ready-made Western recipes were falling into his hands, schemes that supposedly would lead to instant success. He was an adventurist. The fall of the Soviet Union was the key moment that explains everything that happened afterward, including what we have today. As I said, people in your country became dizzy with imagined success: they saw everything as their victory.

In Yeltsin, Washington ended up with a vassal who thought that because of his anticommunism he would be carried in their arms. Delegations came to Russia one after the other, including President Bill Clinton, but then they stopped coming. It turned out no one needed Yeltsin. But by then half of Russia's industries were in ruins, even 60 percent. It was a country with a noncompetitive economy wide open to the world market, and it became slavishly dependent on imports.

How many things were affected! All our plans for a new Europe and a new architecture of mutual security. It all disappeared. Instead, it was proposed that NATO's jurisdiction be extended to the whole world. But then Russia began to revive. The rain of dollars from higher world oil prices opened up new possibilities. Industrial and social problems began to be solved. And Russia began to speak with a firm voice, but Western leaders got angry about that. They had grown accustomed to having Russia just lie there. They thought they could pull the legs right out from under her whenever they wanted.

The moral of the story--and in the West morals are everything--is this: under my leadership, a country began reforms that opened up the possibility of sustained democracy, of escaping from the threat of nuclear war, and more. That country needed aid and support, but it didn't get any. Instead, when things went bad for us, the United States applauded. Once again, this was a calculated attempt to hold Russia back. I am speaking heatedly, but I am telling you what happened.

KVH/SFC: But now Washington is turning to Moscow for help, most urgently perhaps in Afghanistan. Exactly twenty years ago, you ended the Soviet war in Afghanistan. What lessons did you learn that President Obama should heed in making his decisions about Afghanistan?

MG: One was that problems there could not be solved with the use of force. Such attempts inside someone else's country end badly. But even more, it is not acceptable to impose one's own idea of order on another country without taking into account the opinion of the population of that country. My predecessors tried to build socialism in Afghanistan, where everything was in the hands of tribal and clan leaders, or of religious leaders, and where the central government was very weak. What kind of socialism could that have been? It only spoiled our relationship with a country where we had excellent relations during the previous twenty years.

Even today, I am criticized that it took three years for us to withdraw, but we tried to solve the problem through dialogue--with America, with India, with Iran and with both sides in Afghanistan, and we attended an international conference. We didn't simply hitch up our trousers and run for it, but tried to solve the problem politically, with the idea of making Afghanistan a neutral, peaceful country. By the way, when we were getting ready to pull out our troops and were preparing a treaty of withdrawal, what did the Americans do? They supported the idea of giving religious training to young Afghans--that is, the Taliban. As a result, now they are fighting against them. Today, again, not just America and Russia can be involved in solving this problem. All of Afghanistan's neighbors must be involved. Iran cannot be ignored, and it's ill-advised for America not to be on good terms with Iran.

KVH/SFC: Finally, a question about your intellectual-political biography. One author called you "the man who changed the world." Who or what most changed your own thinking?

MG: Gorbachev never had a guru. I've been involved in politics since 1955, after I finished university, when there was still hunger in my country as a result of World War II. I was formed by those times and by my participation in politics. In addition, I am an intellectually curious person by nature and I understood that many changes were necessary, and that it was necessary to think about them, even if it caused me discomfort. I began to carry out my own inner, spiritual perestroika--a perestroika in my personal views. Along the way, Russian literature and, in fact, all literature, European and American too, had a big influence on me. I was drawn especially to philosophy. And my wife, Raisa, who had read more philosophy than I had, was always there alongside me. I didn't just learn historical facts but tried to put them in a philosophical or conceptual framework.

I began to understand that society needed a new vision--that we must view the world with our eyes open, not just through our personal or private interests. That's how our new thinking of the 1980s began, when we understood that our old viewpoints were not working out. During the nuclear arms race, I was given a gift by an American, a little figure of a goose in flight. I still have it at my dacha. It is a goose that lives in the north of Russia in the summer and in the winter migrates to America. It does that every year regardless of what's happening, on the ground, between you and us. That was the point of this gift and that's why I'm telling you about it.

KVH/SFC: Listening to you, it seems that you became a political heretic in your country.

MG: I think that is true. I want to add that I know America well now, having given speeches to large audiences there regularly. Three years ago I was speaking in the Midwest, and an American asked me this question: "The situation in the United States is developing in a way that alarms us greatly. What would you advise us to do?" I said, "Giving advice, especially to Americans, is not for me." But I did say one general thing: that it seems to me that America needs its own American perestroika. Not ours. We needed ours, but you need yours. The entire audience stood and clapped for five minutes.

KVH/SFC: And do you think President Obama will be the leader of such an American perestroika?

MG: As far as I know, Americans did not make a mistake in electing him. Barack Obama is capable of leading your society on a very high level and of understanding it better than any political figure I know. He is an educated person with a highly developed capacity for dialogue, and that too is very important. So I congratulate you.

reality seems to stubbornly follow its own ways

From today's NYTimes:
In a July meeting, Chinese officials asked their American counterparts detailed questions about the health care legislation making its way through Congress. The president's budget director, Peter R. Orszag, answered most of their questions. But the Chinese were not particularly interested in the public option or universal care for all Americans.

"They wanted to know, in painstaking detail, how the health care plan would affect the deficit," one participant in the conversation recalled. Chinese officials expect that they will help finance whatever Congress and the White House settle on, mostly through buying Treasury debt, and like any banker, they wanted evidence that the United States had a plan to pay them back.
In the face of so much conversation about modeling our way out of the current problems, reality seems to stubbornly follow its own ways. Even a happy accident may be possible, but not before we see higher taxes, I said it then, I say it now. One of the effects of this situation is probably a more common understanding in the US of what national interest is.

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