iraq war

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On PRISM

prism

First, I want to congratulate the NSA-leaker Edward Snowden for his courage and the great service he has done to Americans and to the world in exposing the NSA’s PRISM surveillance programs. The man must have balls the size of basketballs, although perhaps letting the world know his location — in Hong Kong, territory controlled by the People’s Republic of China, another nation that runs its own share of online surveillance programs  — was unwise.

Some critics like the New York Times’ David Brooks say that what Snowden did was wrong, and that he showed a lack of respect for authority. It is certainly true that we live in an age where distrust of authority and the state has become commonplace. But perhaps that is only fair — after all, it is just ten years since the Iraq war, a war for which David Brooks was a cheerleader, wasted trillions of dollars of taxpayers’ money, and hundreds of thousands of lives chasing after so-called weapons of mass destruction that didn’t exist. If my state goes about wasting my money and thousands and thousands of lives on destroying foreign lands chasing after non-existent weapons of mass destruction, I am prone to distrust the state. Had the security services’ claims been subjected to proper scrutiny, it is possible that the disaster of Iraq could have been averted. Snowden is opening the surveillance and intelligence agencies that brought us the Iraq war — and that have now brought us PRISM — to proper public scrutiny.

In a democratic society, this is critical. These mass surveillance programs have been implemented without any real public discussion, precisely because they have been enacted in secret. This means that there has been no public discussion of goals, evidence, effectiveness and procedure.

We don’t know how effective or ineffective these programs are, because they have been concocted, enacted and analysed secretly. The security services have, in the interests of “national security” been empowered to enact the policies of their choice with limited governmental oversight, and certainly no public oversight. Their implicit hypothesis — that mass surveillance can prevent or reduce terrorism — has not as far as I can tell been subjected to serious academic scrutiny, at least publicly. This is not a scientific approach to policy — it is a knee-jerk approach to policy. In science, you collect data, release your findings and let others review your data, not claim a finding, secretly enact policies based on that finding, and hide any data.

We know that PRISM did not stop the Boston Bombings, or Sandy Hook, or the Aurora massacre. So perhaps it is the case that mass surveillance programs are ineffective against terrorists, particularly lone wolves who may exist outside of traditional social networks. Agencies have many questions to answer. Are there not more effective methods to preventing terrorism than dragnet surveillance? On what scientific basis have agencies enacted their current policies? Would Geiger counters not be more effective than surveillance dragnets in preventing nuclear terrorism? Where is the data to show that mass surveillance is or can be effective?

The bigger question, though, is whether the agencies involved considered the constitutional implications of their actions. The Fourth Amendment to the Constitution states:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

This empowers agencies to search and seize only with a warrant that particularly describes the place to be searched and the persons or things to be seized. A dragnet like PRISM would seem to obliterate any such protections. Did the NSA and those who empowered them to undertake surveillance consider PRISM to be constitutional? If so, why? Although only a slim majority of Americans are against monitoring everyone’s electronic communications for the purposes of preventing terrorism, the Constitution is very clear about the conditions necessary in order to seize evidence.

Ultimately, the essence of national security are the legal and constitutional frameworks upon which civilised countries are based. By shredding constitutional protections through unaccountable and secretive mass surveillance programs, governments may be giving up the national security that they claim to be seeking to save. Only with transparency and daylight can society properly assess which measures are effective and acceptable to public safety and public liberty, and implement them in an accountable way.

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The New Swedish Model?

Swedish-flag-credit-Matti-Matilla

The advocates of “austerity now!” are talking about Sweden.

Last year Fraser Nelson wrote in The Spectator:

When Europe’s finance ministers meet for a group photo, it’s easy to spot the rebel — Anders Borg has a ponytail and earring. What actually marks him out, though, is how he responded to the crash. While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy — the so-called ‘punk tax cutting’ agenda. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.

Three years on, it’s pretty clear who was right. ‘Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit. The recovery started just in time for the 2010 Swedish election, in which the Conservatives were re-elected for the first time in history.

So, how is the Swedish economy doing?

Well, the good thing about assessing the Swedish economy is that Sweden remains monetarily sovereign, meaning that its economy is not dependent upon the monetary policy of a foreign agency like the ECB. This means that it can be fairly assessed side-by-side with other Western monetary sovereigns like Britain, America and Japan.

The thing that austerians are so excited about is that Sweden currently has low debt and is running balanced budgets:

sweden-government-debt-to-gdp

But that hasn’t meant that unemployment has been low. In fact, right now it’s worse than American, British and Japanese unemployment:

sweden-unemployment-rate

And while Sweden’s low debt and balanced budgets may have resulted in low rates, its rates are not significantly lower than Britain and America, and are higher than Japan who carry the highest debt load of all:

sweden-government-bond-yield

But to be fair real GDP growth in Sweden since the crisis has been relatively decent — although notably still below its pre-2008 trend — beating the other three countries who all performed poorly:

fredgraph

I think that Sweden is benefiting less from its actions during the slump and more from its actions during the boom.

In my view, Sweden’s focus on bringing down deficits in the years from 2004 until the crisis in 2008 was very responsible and prudent. Sweden had no wasteful expansionary spending in the mid 2000s on things like occupying Iraq. It was not enacting expensive legislation like No Child Left Behind, Medicare D and unfunded tax cuts that bloated government budgets.

Coming into the crisis with a low debt-to-GDP ratio is very healthy because it gives the government additional fiscal space to cut taxes, and spend money on infrastructure, public goods and tax rebates to bring down the unemployment rate, which is the one aspect of the Swedish macroeconomy with significant room for improvement. An unemployment rate approaching 9% is undeniably unhealthy, and it is disappointing that the Swedish treasury with so much wiggle room is not doing more to assist the private sector in bringing down unemployment. And even though Sweden has had more growth than other Western countries, it has still not caught up with its pre-2008 growth trend.

Sweden’s unemployment woe illustrates that Sweden is not a paradigm of the supposed virtues of austerity in all seasons. Austerity in the slump just frees up resources while the economy is already suffering from a high degree of slack in resources — capital (high savings, low interest rates) and labour (high unemployment). Sweden illustrates this just as much as other Western nations.

The lesson we should take from Sweden is that a countercylical spending policy — less spending in the boom, more spending in the slump — is preferable.