Friday, February 02, 2007

Thomas Friedman on being addicted to selling oil, and then Paul Krugman has a tribute to Molly Ivins. First up, Mr. Friedman.

There may be only one thing dumber than getting addicted to consuming oil as a country — and that is getting addicted to selling it. Because getting addicted to selling oil can make your country really stupid, and if the price of oil suddenly drops, it can make your people really revolutionary. That’s the real story of the rise and fall of the Soviet Union — it overdosed on oil — and it could end up being the real story of Iran, if we’re smart.

It is hard to come to Moscow and not notice what the last five years of high oil prices have done for middle-class consumption here. Five years ago, it took me 35 minutes to drive from the Kremlin to Moscow’s airport. On Monday, it took me two and half hours. There was one long traffic jam from central Moscow to the airport, because a city built for 30,000 cars, which 10 years ago had 300,000 cars, today has three million cars and a ring of new suburbs.

How Russia deals with its oil and gas windfall is going to be a huge issue. But today I’d like to focus on how the Soviet Union was killed, in part, by its addiction to oil, and on how we might get leverage with Iran, based on its own addiction.

Economists have long studied this phenomenon, but I got focused on it here in Moscow after chatting with Vladimir Mau, the president of Russia’s Academy of National Economy. I mentioned to him that surely the Soviet Union died because oil fell to $10 a barrel shortly after Mikhail Gorbachev took office, not because of anything Ronald Reagan did. Actually, Professor Mau said, it was “high oil prices” that killed the Soviet Union. The sharp rise in oil prices in the 1970s deluded the Kremlin into overextending subsidies at home and invading Afghanistan abroad — and then the collapse in prices in the ’80s helped bring down the overextended empire.

Here’s the story: The inefficient Soviet economy survived in its early decades, Professor Mau explained, thanks to cheap agriculture, from peasants forced into collective farms, and cheap prison labor, used to erect state industries. Beginning in the 1960s, however, even these cheap inputs weren’t enough, and the Kremlin had to start importing, rather than exporting, grain. Things could have come unstuck then. But the 1973 Arab oil embargo and the sharp upsurge in oil prices — Russia was the world’s second-largest producer after Saudi Arabia — gave the Soviet Union a 15-year lease on life from a third source of cheap resources: “oil and gas,” Professor Mau said.

The oil windfall gave the Brezhnev government “money to buy the support of different interest groups, like the agrarians, import some goods and buy off the military-industrial complex,” Professor Mau said. “The share of oil in total exports went from 10-to-15 percent to 40 percent.” This made the Soviet Union only more sclerotic. “The more oil you have, the less policy you need,” he noted.

In the 1970s, Russia exported oil and gas and “used this money to import food, consumer goods and machines for extracting oil and gas,” Professor Mau said. By the early 1980s, though, oil prices had started to sink — thanks in part to conservation efforts by the U.S. “One alternative for the Soviets was to decrease consumption, but the Kremlin couldn’t do that — it had been buying off all these constituencies,” Professor Mau explained. So “it started borrowing from abroad, using the money mostly for consumption and subsidies, to maintain popularity and stability.” Oil prices and production kept falling as Mr. Gorbachev tried reforming communism, but by then it was too late.

The parallel with Iran, Professor Mau said, is that the shah used Iran’s oil windfall after 1973 to push major modernization onto a still traditional Iranian society. The social backlash produced the ayatollahs of 1979. The ayatollahs used Iran’s oil windfall to lock themselves into power.

In 2005, Bloomberg.com reported, Iran’s government earned $44.6 billion from oil and spent $25 billion on subsidies — for housing, jobs, food and 34-cents-a-gallon gasoline — to buy off interest groups. Iran’s current populist president has further increased the goods and services being subsidized.

So if oil prices fall sharply again, Iran’s regime will have to take away many benefits from many Iranians, as the Soviets had to do. For a regime already unpopular with many of its people, that could cause all kinds of problems and give rise to an Ayatollah Gorbachev. We know how that ends. “Just look at the history of the Soviet Union,” Professor Mau said.

In short, the best tool we have for curbing Iran’s influence is not containment or engagement, but getting the price of oil down in the long term with conservation and an alternative-energy strategy. Let’s exploit Iran’s oil addiction by ending ours.

And now here’s Paul Krugman on Molly:

Molly Ivins, the Texas columnist, died of breast cancer on Wednesday. I first met her more than three years ago, when our book tours crossed. She was, as she wrote, “a card-carrying member of The Great Liberal Backlash of 2003, one of the half-dozen or so writers now schlepping around the country promoting books that do not speak kindly of Our Leader’s record.”

I can’t claim to have known her well. But I spent enough time with her, and paid enough attention to her work, to know that obituaries that mostly stressed her satirical gifts missed the main point. Yes, she liked to poke fun at the powerful, and was very good at it. But her satire was only the means to an end: holding the powerful accountable.

She explained her philosophy in a stinging 1995 article in Mother Jones magazine about Rush Limbaugh. “Satire ... has historically been the weapon of powerless people aimed at the powerful,” she wrote. “When you use satire against powerless people ... it is like kicking a cripple.”

Molly never lost sight of two eternal truths: rulers lie, and the times when people are most afraid to challenge authority are also the times when it’s most important to do just that. And the fact that she remembered these truths explains something I haven’t seen pointed out in any of the tributes: her extraordinary prescience on the central political issue of our time.

I’ve been going through Molly’s columns from 2002 and 2003, the period when most of the wise men of the press cheered as Our Leader took us to war on false pretenses, then dismissed as “Bush haters” anyone who complained about the absence of W.M.D. or warned that the victory celebrations were premature. Here are a few selections:

Nov. 19, 2002: “The greatest risk for us in invading Iraq is probably not war itself, so much as: What happens after we win? ... There is a batty degree of triumphalism loose in this country right now.”

Jan. 16, 2003: “I assume we can defeat Hussein without great cost to our side (God forgive me if that is hubris). The problem is what happens after we win. The country is 20 percent Kurd, 20 percent Sunni and 60 percent Shiite. Can you say, ‘Horrible three-way civil war?’ ”

July 14, 2003: “I opposed the war in Iraq because I thought it would lead to the peace from hell, but I’d rather not see my prediction come true and I don’t think we have much time left to avert it. That the occupation is not going well is apparent to everyone but Donald Rumsfeld. ... We don’t need people with credentials as right-wing ideologues and corporate privatizers — we need people who know how to fix water and power plants.”

Oct. 7, 2003: “Good thing we won the war, because the peace sure looks like a quagmire. ...

“I’ve got an even-money bet out that says more Americans will be killed in the peace than in the war, and more Iraqis will be killed by Americans in the peace than in the war. Not the first time I’ve had a bet out that I hoped I’d lose.”

So Molly Ivins — who didn’t mingle with the great and famous, didn’t have sources high in the administration, and never claimed special expertise on national security or the Middle East — got almost everything right. Meanwhile, how did those who did have all those credentials do?

With very few exceptions, they got everything wrong. They bought the obviously cooked case for war — or found their own reasons to endorse the invasion. They didn’t see the folly of the venture, which was almost as obvious in prospect as it is with the benefit of hindsight. And they took years to realize that everything we were being told about progress in Iraq was a lie.

Was Molly smarter than all the experts? No, she was just braver. The administration’s exploitation of 9/11 created an environment in which it took a lot of courage to see and say the obvious.

Molly had that courage; not enough others can say the same.

And it’s not over. Many of those who failed the big test in 2002 and 2003 are now making excuses for the “surge.” Meanwhile, the same techniques of allegation and innuendo that were used to promote war with Iraq are being used to ratchet up tensions with Iran.

Now, more than ever, we need people who will stand up against the follies and lies of the powerful. And Molly Ivins, who devoted her life to questioning authority, will be sorely missed.

0 Comments:

Post a Comment

<< Home