A Plague on the Nation

Rewarding Incompetence

Dear Time Editors:

My son, Spc. Casey Sheehan was killed in Iraq on 04/04/04. This has been an extraordinary couple of weeks of "slaps in the faces" to us families of fallen heroes.

First, the Secretary of Defense—Donald Rumsfeld—admits to the world something that we as military families already know: The United States was not prepared for nor had any plan for the assault on Iraq. Our children were sent to fight an ill-conceived and badly prosecuted war. Our troops were sent with the wrong type of training, bad equipment, inferior protection and thin supply lines. Our children have been killed and we have made the ultimate sacrifice for this fiasco of a war, then we find out this week that Rumsfeld doesn't even have the courtesy or compassion to sign the "death letters"—as they are so callously called. Besides the upcoming holidays and the fact we miss our children desperately, what else can go wrong this holiday season?

Well let's see. Oh yes. George W. Bush awards the Presidential Medal of Freedom to three more architects of the quagmire that is Iraq. Thousands of people are dead and Bremer, Tenet and Franks are given our country's highest civilian award. What's next?

To top everything off—after it has been proven that Iraq had no weapons of mass destruction, there were no ties between Saddam and 9/11 and over 1,300 brave young people in this country are dead and Iraq lies in ruins— what does Time Magazine do? Names George W. Bush as its "Man of the Year." The person who betrayed this country into a needless war and whom I hold ultimately responsible for my son's death and who was questionably elected, again, to a second term, is honored this way by your magazine.

I hope we finally find peace in our world and that our troops who remain in Iraq are brought home speedily—after all, there was no reason for our troops to be there in the first place. No reason for my son and over 1,300 others to have been taken from their families. No reason for the infrastructure of Iraq to be demolished and thousands of Iraqis being killed. No reason for the notion of a "happy" holiday to be robbed from my family forever. I hope that our "leaders" don't invade any other countries which pose no serious threat to the United States. I hope there is no draft. I hope that the five people mentioned here (and many others) will finally be held responsible for the horrible mistake they got our country into. I hope that competence is finally rewarded and incompetence is appropriately punished. These are my wishes for 2005.

This isn't the first time your magazine has selected a questionable man for this honor—but it's the first time it affected my family so personally and so sorrowfully.

Cindy Sheehan

Cindy Sheehan lives in California.

10 December 2004

It may not be easy in this Bush-hating era, but a little sympathy nonetheless is surely in order for American visitors to Europe. This Christmas British shoppers by the tens of thousands are flocking to New York as naturally as they once stormed Oxford Street, saving a small fortune in the process. Not so Americans who this holiday season find themselves in London, Paris or Berlin.

Once upon a time, their currency was king. Now a trip across the Atlantic is like a visit to the financial dentist, in which small fortunes are extracted from their pockets without even the benefit of an anaesthetic. The reason of course is the accelerating decline of the dollar, now about to breach the $2 to the pound barrier for the first time in a dozen years.

But their discomfort hides a paradox. This December, the American visitor to Europe finds himself paying $4 for a cup of coffee or metro fare that would cost $1 at home. His familiar $40 meal will cost $100, and the hotel room that runs at $60 in the typical Midwestern city of Edwardsville, Illinois, say, costs five times as much in London or Manchester. If only he had stayed at home.

The United States itself remains a land of eminently affordable plenty. Go into a dollar store, as I did the other day in Edwardsville, and you will be amazed at what can still be purchased for a humble $1 bill.

Thus this modern crisis is barely noticed back home. Despite the trauma of 9/11, the US remains in many respects oblivious to the world beyond its borders. Only 20 per cent of the population have passports. There is of course nothing intrinsically wrong with that. America is a continent in itself - and what distinction attaches to a British passport, when its sole function is to get the bearer to booze and sex binges in Prague or Majorca? Far more than European countries, the US is economically self-sufficient.

True, Americans grumble over rising petrol prices (all of 30p a litre right now). But most of what they consume comes from home. Foreign trade accounts for only a quarter of gross domestic product, compared with up to half in the case of France or Germany. Many big American regional papers do not bother to quote exchange rates; across swaths of the US, foreign currencies (and foreign countries) might as well not exist.

And ditto for dollar crises. In the early 1970s, the currency was devalued twice. The world might have trembled. But for the average American the upheaval had no more impact than a worthy piece in Foreign Affairs magazine.

Today, a political drama to match Labour's agony in 1976 over the IMF loan, or John Major's humiliation when Britain crashed out of the European exchange rate mechanism in 1992, is inconceivable in the US.

To history-scarred Britons of a certain age, nonetheless, today's events have a familiar ring. I would be the first to admit that the pound has had its moments: as a university student in the mid-1960s studying modern Greek, for instance, I would write to my mother from Greece asking her to send me a £5 note, from the drachma proceeds of which I could easily live for a week.

But for most of my life, at least until the late 1980s, the pound seemed in almost permanent free-fall. Before the First World War, when Britain was indisputable top nation, it bought about $5. Sterling was devalued to $4.03 when we left the gold standard in 1931. In 1949, it was devalued to $2.80, and then again in 1967 to $2.41. At one point in 1985 the pound withered to virtual parity with the dollar.

The passing of the baton of world power from the Old World to the New was mirrored in the currency markets. "If the English pound is not to be the standard which everyone knows and can trust," Winston Churchill mused in 1925, "the business not only of the British Empire but of Europe as well might have to be transacted in dollars". For Depression-battered and imperially over-stretched Britain, the Second World War was the last straw. When the US and Britain negotiated the IMF, the Bretton Woods agreement and other financial arrangements for the post-war world, our clever diplomats whiled away dull moments by composing condescending doggerel:

"In Washington Lord Halifax [the British Ambassador] once whispered to J M Keynes, 'It's true they have all the money bags, but we have all the brains.'" The reality however was that by 1945, Britain had been reduced to beggar at America's abundant table. The pound - before 1914 our proudest global brand, when a letter of credit issued by a London bank was as good as gold - was so diminished that acquiring foreign currency for an overseas trip was a bureaucratic nightmare.

The greatest financial brand on earth was now the dollar, a more potent ambassador for America than even Coca-Cola, Disney, or McDonald's. The greenback was prized the world over, as means of exchange, store of value and symbol of the freedom, wealth and promise of the US. Even physically, it never seemed to change.

Several efforts have been made to get rid of the $1 bill, but every one has failed - despite studies showing many millions of dollars would be saved by a switch to more durable dollar coins, and irrespective of the fact that in Europe and Britain, the lowest denomination bank notes are now worth almost $7 and $10 respectively.

Innovations like the $2 bill and, more recently, the copper/zinc dollar coin introduced in 2000, have flopped.

Scorn and amazement were etched on the face of the man in front of us at St Louis airport in the heartland last month when he received one of the latter in change at a vending machine selling Metrorail tickets into town. "What the hell is this?" he asked, peering at the offending object in his palm as if it were a hand grenade.

Until some mid-1990s tweaks with design to deter counterfeiters, dollar bills had looked exactly the same for some 70 years. The marked $10 bill that cracked the Lindbergh baby kidnapping case and sent Bruno Hauptmann to the electric chair in 1936 would have been as familiar in 1996. Fickle francs, perfidious pounds and lightweight lire might change their shape and colour every few years. Not so the trusty dollar bill, black and white on the front, dull green on the back, a visibly unchanging store of value cherished by a deeply conservative country.

But for how much longer? Just possibly, the dollar as global brand is now going the same way as our pound half a century earlier. The parallels should not be exaggerated, for the relative clout of the US is far greater than that of Britain, even in its imperial heyday. But the implications for America's global dominance are ominous nonetheless.

In weighty turn-of-the-millennium pieces in 1999 and 2000, commentators to a man saw US dominance, underpinned by its swelling population, its vast resources and its unparalleled military might, stretching as far as the eye could see. But throughout history great powers - be they ancient Rome, Spain, Britain or the Soviet Union - have been brought down not on the battlefield, but by economic weakness. And now perhaps, the US.

Right now the world's greatest power is the world's greatest debtor. If and when American power crumbles, the reasons will be found within. As threats to the American way of life, Osama bin Laden, Iranian ayatollahs and North Korean crackpots with their nuclear bombs are nothing compared to the stockpiles of dollar-denominated assets held by the central banks of China and Japan.

The US is like a shopper on a credit card binge, living beyond his or her means. In this case the cards are issued by the foreign central banks, mostly in Asia, who use the dollars generated by their huge bilateral trade surpluses to buy US government securities. In effect, they are lending the money to keep the binge going. But what if the lenders tire of the depreciating dollar, and switch into more rewarding currencies? The stakes are enormously high. To finance its deficits, the US needs to attract around $2bn a day of investment from abroad. The federal budget deficit exceeds $400bn annually, while the current account is in the red to the tune of $650bn (almost 6 per cent of America's $11 trillion GDP). Just last week, Congress quietly raised the national debt ceiling from $7.4 trillion to $8.2 trillion, to accommodate the budget deficit.

Few economists doubt that the dollar has further to fall. If we are lucky, the decline will continue on its present steady, relatively undisruptive course (though that will be of scant comfort to American visitors to Oxford Street). Financial market adjustments, however, tend to overshoot. And if matters should get out of hand, US interest rates would have to rise sharply to protect the dollar. Both Wall Street and house prices would tumble, and the result would be a recession, probably a deep one.

Now America is in a special position. Not only does it account for a quarter of the entire world economy. For all its problems, the dollar remains the unchallenged reserve currency, meaning that the US can simply print its own currency to pay international debts.

For years too, the US consumer has been the world's buyer of last resort, whose profligacy has kept the factories humming in Asia, and to a lesser extent Europe. Their trade surpluses will be no protection if the dollar goes through the floor. A sharp recession in the US would damage everyone - West End store-owners, European car-makers and Chinese textile mills alike. But these momentous matters are barely examined on television newscasts and talk shows. When they are, the tone is usually accusatory, against foreigners who bite the hand that feeds them. The deficits, it is argued, are a sign of American strength, a favour by a generous power that permits the rest of the world to buy a little slice of economic heaven. Occasionally, with greater justification, blame is laid at the door of China and the other countries which keep their currencies artificially cheap.

President Bush meanwhile recites his usual mantra about seeking "a strong dollar", while pursuing policies that achieve the opposite. Nor is the US deterred from lecturing other countries about fiscal irresponsibility. Hypocrisy is not a sentiment that occurs to its policymakers.

In reality, Mr Bush is determined to go on cutting taxes. He also wants to part-privatise social security, allowing Americans to invest part of their contributions in special investment accounts - a change that could add trillions to the budget deficit, just as the great wave of baby-boomer retirement is about to break over the system. Barring serious spending cuts or tax increases, the public finances of the US will be a mess for decades.

Maybe the worst won't happen. Maybe Mr Bush will finally choose between guns and butter, maybe Americans will discover the virtues of saving. Maybe China will revalue its currency, maybe Europe's sclerotic economies will reform their over-padded welfare systems. Maybe pigs will fly. Only one thing is sure. To borrow the immortal line of the late Herbert Stein, chairman of President Nixon's council of economic advisers, the last time the dollar was officially devalued: "If something cannot go on forever, it won't."

Iraq's Silent Dead

Jeffrey Sachs

December 02, 2004

November 2004 has the dubious distinction of being tied with April as the bloodiest months in Iraq for American soldiers. In both months, at least 135 U.S. servicemen or women died. But it's anyone's guess as to which months were the bloodiest for Iraqi citizens. No one is counting their deaths—and the American media isn't reporting on it, either. Jeffrey Sachs of Columbia University's Earth Institute goes where the mainstream media doesn't tread: deep into a war where civilians are targets as often as insurgents.

Jeffrey D. Sachs is professor of economics and director of the Earth Institute at Columbia University.

Evidence is mounting that America’s war in Iraq has killed tens of thousands of civilian Iraqis, and perhaps more than one hundred thousand. Yet this carnage is systematically ignored in the United States, where the media and government portray a war in which there are no civilian deaths because there are no Iraqi civilians—only insurgents. 

American behavior and self-perceptions reveal the ease with which a civilized country can engage in large-scale killing of civilians without public discussion. In late October, the British medical journal Lancet published a study of civilian deaths in Iraq since the U.S.-led invasion began. The sample survey documented an extra 100,000 Iraqi civilian deaths compared to the death rate in the preceding year, when Saddam Hussein was still in power— and this estimate did not even count excess deaths in Fallujah, which was deemed too dangerous to include.
 
The study also noted that the majority of deaths resulted from violence, and that a high proportion of the violent deaths were due to U.S. aerial bombing. The epidemiologists acknowledged the uncertainties of these estimates, but presented enough data to warrant an urgent follow-up investigation and reconsideration by the Bush administration and the U.S. military of aerial bombing of Iraq’s urban areas.
 
America’s public reaction has been as remarkable as the Lancet study—for the reaction has been no reaction. The vaunted New York Times ran a single story of 770 words on page 8 of the paper (October 29). The Times reporter apparently did not interview a single Bush administration or U.S. military official. No follow-up stories or editorials appeared, and no New York Times reporters assessed the story on the ground. Coverage in other U.S. papers was similarly frivolous. The Washington Post (October 29) carried a single 758-word story on page 16.
 
Recent reporting on the bombing of Falluja has also been an exercise in self-denial. The New York Times (November 6) wrote that “warplanes pounded rebel positions” in Fallujah, without noting that “rebel positions” are actually in civilian neighborhoods. Another New York Times story (November 12), citing “military officials,” dutifully reported that, “Since the assault began on Monday, about 600 rebels have been killed, along with 18 American and 5 Iraqi soldiers.” The issue of civilian deaths was not even raised.
 
Violence is only one reason for the increase in civilian deaths in Iraq. Children in urban war zones die in vast numbers from diarrhea, respiratory infections and other causes owing to unsafe drinking water, lack of refrigerated foods, and acute shortages of blood and basic medicines at clinics and hospitals (that is, if civilians even dare to leave their houses for medical care). Yet the Red Crescent and other relief agencies have been unable to relieve Fallujah’s civilian population.
 
On November 14, the front page of The New York Times led with the following description: “Army tanks and fighting vehicles blasted their way into the last main rebel stronghold in Fallujah at sundown on Saturday after American warplanes and artillery prepared the way with a savage barrage on the district. Earlier in the afternoon, 10 separate plumes of smoke rose from Southern Fallujah, as it etched against the desert sky, and probably exclaimed catastrophe for the insurgents.”
 
There is, once again, virtually no mention of the catastrophe for civilians etched against that desert sky. There is a hint, though, in a brief mention in the middle of the story of a father looking over his wounded sons in a hospital and declaring that, “Now Americans are shooting randomly at anything that moves.”
 
A few days later, a U.S. television film crew was in a bombed-out mosque with U.S. troops. While the cameras were rolling, a U.S. Marine turned to an unarmed and wounded Iraqi lying on the ground and murdered the man with gunshots to the head. (Reportedly, there were a few other such cases of outright murder.) But the American media more or less brushed aside this shocking incident, too. The Wall Street Journal actually wrote an editorial on November 18 that criticized the critics, noting as usual that whatever the United States does, its enemies in Iraq do worse—as if this excuses American abuses.
 
It does not. The United States is killing massive numbers of Iraqi civilians, embittering the population and the Islamic world, and laying the ground for escalating violence and death. No number of slaughtered Iraqis will bring peace. The American fantasy of a final battle, in Fallujah or elsewhere, or the capture of some terrorist mastermind, perpetuates a cycle of bloodletting that puts the world in peril. Worse still, America’s public opinion, media and election results have left the world’s most powerful military without practical restraint.