Home and Abroad

I had an interesting couple of days back to back last week as I attended small gatherings to hear former Obama economic advisor Austan Goolsbee and Middle East scholar Dr. Daniel Pipes speak.

I first came across Daniel Pipes as an undergraduate at The University of Chicago.  Pipes taught World History with the great William H. McNeill (who recently passed away) and is the son of Richard Pipes (also recently deceased), Soviet expert and former Reagan advisor.  Daniel Pipes gained notoriety after 9/11 as he had been sounding the alarm bell over radical Islam long before.  Indeed, the person that introduced Pipes opined, “If the world had listened to Dr. Pipes, there may not have been a 9/11.”

Pipes is president of the Middle East Forum, an “activist” think tank, devoted largely to Middle East politics and social developments and Islamism.  Soft spoken, understated, and very academic, Pipes contrasts sharply with Goolsbee and probably gets less media attention as a result.  His quiet voice forces one to listen carefully and in our case, was even sometimes a little hard to hear over the clatter of the servers serving lunch.  

Here is a brief summary of Dr. Pipes’s insights:

• ·        The furor over the murder of journalist Khashoggi will die down and will have minimal effect on U.S. Saudi relations.  Saudi Arabia is a totalitarian regime and MBS is instituting reforms that will take time to implement.
• ·        Turkey is lost.   Pipes called it Iran 2.0 and said that he can travel to Iran without fear but if he traveled to Turkey, he would be immediately arrested.   Erdogan made some good decisions over the first 7 years of his tenure but has made mistake after mistake over the last 7.  He has completely shut down all freedom of speech in that country and schools have now become Islamist.
• ·       “No one is paying attention, but South Korea is falling apart, but that is a topic for another day.” Pipes dropped that bomb but did not elaborate.
• ·     While they need to improve, the former Eastern Bloc countries are “generally moving in the right direction.”  While the MSM has criticized those governments as anti-democratic and far right, Pipes refers to them as “civilizationist,” protecting their sovereignty and culture.
• ·       As to the Arab-Israeli conflict, Pipes asserts that the Islamic world is fractured in their approach to Israel.  As to the Israeli-Palestinian dispute, he believes Israel should adopt a “Israel wins, they lose” approach.  Wars end when one side stops the fighting, and not before.  He blames the Israeli security establishment for the current state of affairs as they are not willing to take the aggressive steps needed to end the conflict and win.  “They supply their enemies with food, electricity and fuel [during the fighting].  Who does that for an enemy?”
• ·        Pipes also noted that the left in America has become pro-Palestine while the right is pro-Israel.  This is causing problems among American Jews since they vote 80% Democratic.  Indeed the new Muslim congresswoman, celebrated by the MSM waived a Palestinian flag at her victory party and announced that she was representing the Palestinians.
• ·      The Middle East Forum has been attempting to bring Tommy Robinson to the U.S. to speak, and assisted in gaining his release from prison.  Robinson, it will be recalled, was jailed for speaking out in front of a British courtroom regarding the Muslim “grooming gang” members that were on trial.

As if on cue, just a couple of days later, the MSM criticized the Polish Independence Day parade as being too right wing and too nationalist and rockets began raining down on Israel from Gaza.

Goolsbee is almost a mirror image of Pipes, less scholarly, more flamboyant, and funny ----his timing is perfect.  Goolsbee was Obama’s economic advisor and is a regular on Sean Hannity’s show on Fox.  He is a perfect foil for Hannity and Hannity even lets him talk from time to time.

Goolbee is no fan of Trump’s but admitted that his forecast for growth was off.  He believes the growth spurt is temporary as the stimulative effect of the business tax cut and deficits run their course.

On politics, he believes that it is possible that Trump and the new Democratic House can work together to get an infrastructure bill done, but if the Democrats start to lawyer up and commence lawsuits and subpoenas, nothing will get done for two years.  The House also has the power to drag Trump’s agency heads in for endless hearings.

Perhaps Goolbee’s most interesting insights related to the Federal Reserve, the labor market and local conditions.  He said that the unwinding of the Federal Reserve’s balance sheet in addition to the rate increases will, at some point, become too much for the economy to handle.  Most recessions are caused by overly aggressive Federal Reserve rate increases and that the Fed unwinding adds 35 to 50 basis points to the already increasing rates.

As to the labor market, Goolsbee believes that the unemployment rate is outmoded and artificially low.  During the recession, record numbers of people simply exited the labor market and went on disability.  With a 3.7% unemployment rate, we should have started to see wage increases but we haven’t yet.  He posits that it is because workers are still “coming off the bench” back into the labor market.

Finally, on the local level, Goolsbee said that despite our debt, he did not believe that the U.S. has become Greece.   However, he said that “while the U.S. is not Greece, Illinois might be.” 

So, I had a fascinating view of the economy and the world, compacted into 24 hours from two excellent commentators that come from different ends of the political spectrum.  It was most gratifying to reconnect in person with Dr. Pipes after sitting in his class so long ago.