So, the Drachmaized Greece that I see is not the cleanly devalued newly competitive powerhouse that some on the left seem to envision. Instead I see a two-currency economy. Pensioners and government workers and anyone unlucky enough to still have a Greek bank account get Drachmas. Hotel owners, restaurant owners, and exporters get euros, above or under the table.
My comments:
1. I agree with John that nothing real changes with a new currency. Instead, it is a way of arranging the government’s default. In addition to defaulting to bondholders, the government will default to other claimants, including pensioners. But the way it will default to the latter is by paying them in lower-valued currency.
2. I continue to believe that we will see an opaque bailout. What is happening now is pre-concession posturing on the part of the other European nations.
The classic example of pre-concession posturing is the labor union strike. One theory of strikes is that they take place because the union leaders are ready to make a deal, but they need to convince their membership that the union leaders bargained really hard. Going out on strike sends that message. Similarly, for the European leaders, engaging in table-pounding and other theatrics will help convince their constituents that they were really tough on the Greeks. Meanwhile, in the background, an opaque bailout will be arranged.
This theory of representative negotiation also holds for the nuclear negotiations with Iran. The theory predicts that there will be a deal, but in the meantime the negotiators will posture to indicate that they are being very tough with their opponents.
Speaking of Iran nuclear issues, I read Michael Oren’s new book about being Israel’s ambassador to the U.S. I found Oren credible, although for my taste he squeezes too much melodrama out of his experience. One of Oren’s points about the Obama Administration is that it has very tight message discipline, and I believe that we can see that in some of the negative reviews of Oren coming from Obama-linked writers.
Oren’s description of Obama amounts to saying that he operates using the oppressor-oppressed axis, which strikes me as accurate. Even so, it still requires some mental contortions to treat the leadership in Iran as oppressed, rather than as oppressors.
People in a third world country are by definition oppressed. People in a first world country are by definition oppressors. Therefore, Israelis are oppressors and Iranians are oppressed. QED
I think many people emotionally react to Israel as the last European colony. An outpost of the North in the South. One of the many places where Europeans conquered land belonging to other people and took it away from the people who really belong there.
I wouldn’t equate write-off with bailout since there is no one to bailout those that must write-off. The oppressed would be the people of Iran, dealing with the leaders is just a necessity.
Yeah, I think that is the more accurate way to model their thinking.
Along those lines though, you have the Iranian government being both oppressors and the only proxies for the oppressed.
It allows the red and blue tribes to hate when the other guy uses sanctions but support when their guy does it!
“The theory predicts that there will be a deal, but in the meantime the negotiators will posture to indicate that they are being very tough with their opponents.”
Then the theory isn’t holding up too well, is it? Something else seems to be going on. The funny thing is that the U.S. isn’t being perceived as being tough on their opponents, letting deadline after deadline pass, making more and more concessions in public, and reversing their public statements a dozen times now.
So this is being done on purpose for one of two alternative theories:
1. The administration wants a deal – any deal – and since the Iranians know that, they know they can push the limits very, very far and squeeze the negotiations for a deal which still gives them the option of having a nuclear program (and, despite rhetoric to the contrary, the administration may accept or even embrace that possibility); and/or
2. The administration’s strategy is to help the Iranians look tough to their own people, but purposefully looking weak and making multiple public capitulations to their demands. They figure it’s more important for the Iranians to look as tough and successful as possible to their own population in order to justify any deal with the U.S.. Meanwhile, here at home, it’s not so important, because the President can rely on a … more robust … structural advantage of domestic political capital where his party’s voters and the opinion-making media-apparatus will also run interference and provide alibis and cover for any apparent U.S. weakness on the issue.
This rebuttal deserves a counter.
The theory does not predict that the U.S. will be substantively tough. It predicts that the negotiators will try to adopt a tough posture in order to impress domestic constituents. How well have Kerry and others executed this posturing? When the deal arrives, the indicator will be how well the Administration succeeds in getting its talking points echoed by the mainstream media and by left-of-center Jews.
“The theory does not predict that the U.S. will be substantively tough. It predicts that the negotiators will try to adopt a tough posture in order to impress domestic constituents.”
Sure, but one does not appear impressive by being seen as constantly dialing back the substance of the deal without reciprocal moves by the other side. What exactly is the “U.S. gets tough with the Iranians!” moment that is persuasive to the target audience here?
We don’t have one, but the theory says we should, so something’s wrong with the theory, or the real game (or nested games) here is not the one being advertised.
Also keep in mind that the administration knows, and is constrained by the fact, that, eventually, the intelligence they had on the Iranians and their genuine willingness to abandon a nuclear program will come out, and will have to be ‘rationalizable’ both with the substance of the deal itself and the public positions taken.
What we observe is the the U.S. is not adopting a tough posture and that it is probably failing to impress the marginal domestic constituent, which perhaps also includes those liberal Jews on the fence between supporting Obama whatever he does, and balking if it’s clear that he’s making a bad deal which will lead to a reduction in Israel’s security.
For instance, you use the excellent example of union negotiations and strikes (such as the one that just happened with London Underground workers). Anyone who’s seen those negotiations up close doesn’t find much parallel with the way the US negotiators are being portrayed in the media (and that portrayal is key to the representative signalling theory at issue), where, if a journalist even mentions US firmness at all, it is always is a kind of indirect and half-hearted way.
The best we’ve seen is the Secretary of Defense (and it’s not Obama himself for a reason) asserting that the deal must be verifiable, which is pretty small beer for those who know that there are lots of shades of ‘verifiable’ in security diplomacy, plenty of which are worthless.
Where, for example, is the U.S. equivalent of the “NeverThreatenAnIranian!” PR campaign (which not only went viral in Iran, but oddly – or maybe not so oddly – got a good amount of coverage in the Western media)?
Again, there just isn’t one. Instead, the torn constituency you mention is desperate for the administration to throw them some kind of bone, and they are getting pretty nervous that they don’t have one yet. Even the New York Times will publish Op-Eds from Israeli intelligence officials entitled, “Don’t Make a Bad Deal With Iran.”
Actually, we do observe one instance of the the administration and its loyalists getting truly angry and vitriolic in public over something related to the Iranian negotiations: the publication of Michael Oren’s Ally. Uh oh; that’s not exactly comforting. But more to the point, it’s pretty bad for this theory.
Unless … one makes at least one of the two salvaging assumptions I proposed. Either:
(1) There’s a bigger game afoot (actually multiple games) with regards to repositioning the US strategic position in a less Israel-friendly, and more Iranian-normalized direction, as part of a campaign to resolve ‘locked, negative equilibrium’ long-term conflicts through unilateral, non-reciprocal embrace with the hopes of eventual warming and convergence with international norms (e.g. Cuba); and/or,
(2) ‘Highly Asymmetric Representation Requirements’: The Iranian government has more ‘legitimacy fragility’ and needs to look so much tougher and confrontational to their target audience than the US administration does, to the point where they need the tacit agreement to get help in this signalling from the ‘counterparty’ (and the global media apparatus it largely controls).
(French strikes often work this way. The workers appear to be whipped-up, but management is strangely insouciant, and even seems to assist union leadership in its ‘performance’ which periodically vents the proper amount of emotions in polite, short-lived, and non-destructive strikes that amount to little more than a scheduled day-off).
If either of the above two assumptions hold, then the ‘representative’ needs of the administration are not what the theory would predict, and would account for the disparities I’ve described.