Abortion as a right... and obligation?

I had a interesting (and somewhat fiery) discussion with a student the other day. We are both pro-choice, so it was a bit surprising that the excitement occurred while discussing abortion. She bemoaned that doctors in Austria are not required to perform abortions at the patient's behest. I said I thought that was just fine. She was angry, because abortion in Austria is still technically illegal, though it has been decriminalized, so there's apparently little problem in getting one in practice, especially in "liberal" Vienna. Well, she has a point, and as a pro-choice supporter, I think it should be up to the individuals involved to decide.

Still, abortion is not "just a medical procedure" like any other, as she tried to convince me. There are real ethical considerations involved, not to mention some very strong feelings (as she herself can surely attest). To brush others' concerns aside would be to commit the same bigotry that pro-lifers, in my view, do: wishing to force those who disagree with them to live by their rules.

To a certain extent, civilization requires that we do just that. Just a small example: I have been known to voice the opinion that speed limits in America are too low. Still, when I drive fast and am caught, I have to pay a fine. This is called the rule of law. It is definitely not tyranny, despite what some anarchists might have you believe. Again, though, abortion isn't just some ordinance. It is a topic that very often defies consensus. At the root of the problem are differing beliefs about when life itself begins. Such a question is almost impossible to answer in a way that will satisfy everyone. For this reason, the most logical conclusion for me seems to be to allow individuals to choose whether or not to have an abortion. At the same time, though, I think most people would agree that abortions are not wonderful things, but are instead a last resort. Efforts to encourage mothers to give up children for adoption, to help young mothers raise them themselves, etc., are all all right, so long as the mother, in the end, is free to decide.

So back to the doctors, now. Following the logic that abortion is controversial because the point at which life begins cannot really be defined, it stands to reason that doctors, too, may disagree on abortion. Some doctors may have deeply held convictions that tell them that abortion, when the mother's life is not in danger, is wrong. Maybe they just feel uncomfortable with it. After all, I have been told, and this seems very plausible, that few women choose to have an abortion lightly. It may be a decision that haunts them long afterwards. Why should we assume doctors are any different? They may also suffer from a moral dilemma and be robbed of sleep at night, even if they feel they've made the right choice, due to the difficulty of making such a decision at all. Because of this, I feel it is only fair that doctors be free to choose whether to perform abortions or not, assuming the woman's life is not in immediate danger (this caveat is crucial). Maybe they could be required to refer patients in a timely manner to another doctor who will do it. Another reason is that I suspect that the quality of a doctor's work might suffer if s/he were performing an operation s/he were strongly opposed to.

Let's remember that the guiding principle here is freedom. I know, it sounds really cliché and Bush-esque, but it's true. A woman's freedom to choose should not infringe upon a doctor's right to do the same.

In the long run, commodities are a bad bet

Commodities are booming at the moment. If you also happened to buy into silver at any time in the last year, you'll know this. It's seems as if the commodity boom will have no end. The "optimists" point out that we have a limited supply of natural resources, and demand for them shows no sign of declining.

True, but there is a serious flaw to this logic. There's a market adage that basically says if you bet raw materials are going to get more expensive, you are selling human ingenuity short, and you are also betting on political stupidity and greed. Over the past century, commodities have actually gotten cheaper in real terms, according to The Economist. This has been due to ingenuity (vast increases in efficiency, mining, transport, and production).

Political stupidity and greed seem like pretty good long-term (or any-term, really) bets. But hold on: if you are betting on commodity price increases and greed, you are also betting on economic growth to drive those prices up. Failing ingenuity, if prices continued to rise, this would eventually stall growth and cause them to fall again (much as they did a mere two years ago).

Commodity prices can only rise if ingenuity is insufficient while growth nonetheless remains strong (let's just assume government foolishness and avarice are a given). Since rising prices eventually destroy growth, commodity prices essentially check themselves over time. The questions are:

1. How long a time?
2. What's going to bring them down; ingenuity, or recession?

These questions matter a lot, because some answers are painful. One way or another, though, another old adage will surely hold true: what goes up, must come down.

Palestinian elections in the West Bank: An opportunity for Fatah AND Israel

There has been talk of legislative and presidential elections in the West Bank, which would occur in September. This is an opportunity for Fatah to strengthen its mandate. It is also an opportunity for Israel. The reason? Hamas is refusing to go along with elections. This is good news for moderates for two reasons:

1. Hamas cannot come to power in the West Bank if it does not run. The idea of Hamas actually coming to power there gives Israelis chills.
2. It shows Palestinians that Hamas is not a viable alternative. Hamas's failure to hold elections lays bare its lack of democratic credentials.

If done right, then, the Palestinian Authority can show that it is the legitimate representative of the people, at least in the West Bank, while calling Hamas's credibility into question, including within the Gaza Strip. Israel and the West would do well to support free and fair elections and to respect their outcome. The alternative would likely be Palestinian unrest caused by an increasing sense that their (nominal) government is not respecting their wishes. This would be bad news for Israel, too.

What happens if Hamas, recognizing that it is being shown up, decides to hold elections in the Gaza Strip and to campaign in the West Bank? This is Israel's nightmare scenario, ending with Hamas winning both Palestinian territories. It doesn't have to end that way, however. It is not certain that Hamas would win. Israel and the West cannot continue with the cognitive dissonance of claiming to support democracy and human rights and then refusing to recognize elected governments, however.

This does not mean it should sit idly by. Many Western governments provide financial support to Fatah in the West Bank. They should continue to do so to support its campaign there, while underlining Hamas's failings. Concessions from Israel would help put Fatah in a better light as well. Isn't this outside influence just another form of meddling in "free" elections? Yes, but the choice and power would still be with the voters in the end. Under normal circumstances, this sort of meddling would be unacceptable, but these are not normal circumstances, I think we can all agree.

What if Hamas participated and won both territories? I'm not sure how likely that is, especially if other things are done right. Still, it is a possibility. One positive result would be Palestinian unity that would give Hamas a stake in the outcome of talks regarding all Palestinian land. Sure, this strengthening of their position would by default mean a weakening of Israel's. I would note, however, that Hamas has actually done a good job of keeping violence at bay in the Gaza Strip and promoting stability there. Hamas's rhetoric is still horridly anti-Israeli and sounds dangerous. It would be naive to underestimate this. Still, we are seeing an age-old effect: once the terrorist-insurgent group becomes a government, it has a stake in stability and non-violence. Controlling a state tends to have a moderating effect if one looks past rhetoric.

Why? It's hard to threaten an insurgent group. Invade? Big deal. We're guerrilla fighters and want to bring down the state anyway! That would only HELP us! If a group controls a country, however, the calculus looks decidedly different. Now there is someone who can answer for misdeeds who is a legitimate representative of the people there. They can be held to account more easily.

There are dangers, but the situation will only get more heated over time anyway. It's not now or never, but it is now or at some-unexpected-and-inconvenient-time-in-the-future-selected-by-revolutionaries. It's a choice between risky but principled vs. dangerous and fiery-ideological. I know what I'd pick...

Why inflation outside the US is neither the Fed's fault nor its problem

There's been a lot of bellyaching around the world lately about the US and, to a degree, Europe exporting their loose monetary policies to the rest of the world and causing inflation. It's mostly the US that people complain about, and European commentators do their fair share of the complaining as well. An article in Der Standard, a daily paper based in Vienna, Austria, this week claimed that the US was attempting to solve its problems by pushing them onto others by devaluing its currency. The currency value is a separate (though related) issue, so I'll come back to that later.

World-wide rates of inflation are neither the US central bank's fault, nor are they something the Fed should really care about. Other countries' inflationary problems are just that: their problems. It may sound harsh, but it's actually not. It helps, too, that this is simply the truth.

The Federal Reserve, the US's central bank, has the responsibility of setting and targeting interest rates for the United States. Its concerns are ensuring price stability and low unemployment. Over the last few decades, it's done a pretty good job at both, though it definitely shares blame for the financial crisis and the high unemployment it caused. The past has been discussed enough here, however (see previous articles on the subject starting in 2008). The reason interest rates in America are at record lows is very simple: unemployment is high and core inflation is extremely low at 0.8%. Most banks in the rich world target rates of around 2%. The Federal Reserve is, very rightly, concerned about deflation at the moment. Deflation would mean falling prices. It is very dangerous because falling prices encourage people to save more and spend less, which causes prices to fall farther. This is because you would rather save your money a little longer, knowing that TV you wanted will get cheaper. Likewise, companies concerned about costs will be reluctant to invest, as the prices they can charge will fall in the future. All this makes spending now less appealing than spending later. Cue the vicious cycle of deflation and recession. Cue Japan since its financial crisis in the early '90s. What's more, interest rates cannot drop below 0%, meaning deflation would be extremely hard to fight once it got going. With unemployment high and people worried about the economy, booming demand is also unlikely to drive up prices. All good reasons for super low rates. This is the Federal Reserve's responsibility. If the US economy sinks into deflation, the whole world would suffer from that, too.

The reason the inflation in the rest of the world is not the Fed's problem comes in two parts. For one, it is simply not its mandate. More importantly (and less selfishly), however: other states can set monetary policies of their own independent of the Fed. It is only their reluctance to do so that is causing problems! Economic conditions vary around the world and call for varied monetary policies. Overheating developing countries should raise policy rates, allow their currencies to appreciate, and yes: instate capital controls. A good way to do this would not be caps, but rather taxes on capital inflows (as Brazil has done). This would make their currencies effectively more expensive, while not damaging exports or encouraging imports too much. This damage to exports and encouragement of imports is a worry for developing countries that are on the receiving end of cash looking for higher returns. (If cash inflows drive up the currency, the country's exports become more expensive and imports become cheaper.) It is a justified worry, but the solutions lie with the countries in question -- not with the Fed. If the Fed were to raise rates just to make others happy, it would destroy the US's meager recovery, which would hurt everyone else, too. It just makes no sense.

Since inflation and hot money in the developing world are not the Fed's problem and can be addressed by developing world central banks, it stands to reason that the "fault" lies with them, not the Fed. Case closed.

How about the dollar devaluation Europeans are moaning about? Far from "pushing its problems on others," the Fed is now actually moving America out of a position where it buys everyone else's stuff on credit (essentially subsidizing everyone else's economies while plunging itself foolishly into debt). The US dollar is overvalued, judging by America's current account (essentially trade) deficit with the rest of the world. America's consumers are broke. They can't keep buying everyone else's stuff anymore. Sorry. You'll have to look for customers elsewhere, perhaps in your own country (Germany and China!). A devaluation of the dollar would be part of the global process of rebalancing that needs to happen for the world economy to be on a stronger footing. America needs to consume less; and save, invest, and export more. Places like Germany and China need to do the opposite. Germany can't go on repressing spending and wages within its borders to sell more and buy less outside its borders. The Fed is (actually inadvertently) taking a step in that direction.

Have monetary problems? Then implement policies to address them and stop whining about the Fed. Unless you're whining about overly lax regulation and the Fed's tendency to inflate bubbles repeatedly. Those are legitimate criticisms (and the latter is admittedly related to loose policy). We can discuss those another day (and I have in the past as well, the posts are still on this site). For now, suffice it to say that the Fed's policy, while not without risks for America itself, is necessary and the only real option. What's more, other countries are not powerless in the face of any possible risks and have the ability to protect themselves, if this is even really necessary. They should implement sensible policies themselves. The world is changing. Get over it and start changing with it.

Saudi Arabia: The Elefant in the Room

The protests in Egypt, which now seem to be dying down, leaving the regime still in place, have sparked a lot of talk about what other countries in the Arab world might have their autocratic regimes toppled by protesters. Jordan and Yemen, having experienced protests already, are obvious candidates. Absent from most discussions, though, is Saudi Arabia. This is presumably because most view it to be rock-solid. Or is it because the idea of a revolution or civil war breaking out in Saudi Arabia is too frightening to contemplate?

Robert Baer famously argued in an article in the Atlantic Monthly back in 2003 that Saudi Arabia was not nearly as stable as many presumed/wished. Aside from concerns about Saudi money funding Islamist outfits all over the globe (read the article, it's an eye-opener), the assertions of the frailty of the regime, as well as of the importance of stability in Saudi Arabia for world political and economic security, are unnerving:

• "Saudi Arabia controls the largest share of the world's oil and serves as the market regulator for the global petroleum industry.
• If the Saudi oil spigot is shut off, by terrorism or by political revolution, the effect on the global economy... will be devastating.
• Saudi oil is controlled by an increasingly bankrupt, criminal, dysfunctional, and out-of-touch royal family that is hated by the people it rules and by the nations that surround its kingdom."

What's more, Saudi Arabia's oil infrastructure is very vulnerable to attack. Shutting down just one or two major processing centers and pipelines could essentially stop the oil flow out of the kingdom. This could happen as a side-effect of a revolution (e.g. through neglect and a collapse in the support infrastructure between governments). Gasoline prices of $4 per gallon would then seem Utopian. The weak recoveries in the rich world could end with high inflation and higher interest rates. Unemployment would rise further.

Then there are the political consequences. Right now, US-backed Saudi Arabia can be counted on to act as a counterweight to Iran in the region and to ensure the free flow of oil and other goods off both of its coasts. Indeed, one theory about the reasoning behind the Iraq War was that some US policymakers feared the eventual collapse of Saudi Arabia and wanted to create an American ally (Iraq) to counterbalance Iran's influences in the region. If Egypt were ruled even by a moderate grouping including the Muslim Brotherhood, it could nonetheless be expected to take a decidedly less pro-Western stance. Now imagine losing Saudi Arabia as an ally, too, which has generally been willing to boost oil output when the US was in need and to provide a moderating political influence in the Middle East (at least through its official diplomacy, if not through the Islamist ventures it funds abroad!).

If Egypt and Saudi Arabia became real democracies (and this is a big "if," especially in the case of the latter), this would be something to celebrate, even as we learned to deal with the political and economic consequences as best we could. There is a whole range of possible scenarios. Some of them, though, border on the apocalyptic. Baer believes it's only a matter of time before Saudi Arabia collapses. It could be a turbulent and, at times, scary new world.