The New Humanism

By DAVID BROOKS
Over the course of my career, I’ve covered a number of policy failures. When the Soviet Union fell, we sent in teams of economists, oblivious to the lack of social trust that marred that society. While invading Iraq, the nation’s leaders were unprepared for the cultural complexities of the place and the psychological aftershocks of Saddam’s terror.

We had a financial regime based on the notion that bankers are rational creatures who wouldn’t do anything stupid en masse. For the past 30 years we’ve tried many different ways to restructure our educational system — trying big schools and little schools, charters and vouchers — that, for years, skirted the core issue: the relationship between a teacher and a student.

I’ve come to believe that these failures spring from a single failure: reliance on an overly simplistic view of human nature. We have a prevailing view in our society — not only in the policy world, but in many spheres — that we are divided creatures. Reason, which is trustworthy, is separate from the emotions, which are suspect. Society progresses to the extent that reason can suppress the passions.

This has created a distortion in our culture. We emphasize things that are rational and conscious and are inarticulate about the processes down below. We are really good at talking about material things but bad at talking about emotion.

When we raise our kids, we focus on the traits measured by grades and SAT scores. But when it comes to the most important things like character and how to build relationships, we often have nothing to say. Many of our public policies are proposed by experts who are comfortable only with correlations that can be measured, appropriated and quantified, and ignore everything else.

Yet while we are trapped within this amputated view of human nature, a richer and deeper view is coming back into view. It is being brought to us by researchers across an array of diverse fields: neuroscience, psychology, sociology, behavioral economics and so on.

This growing, dispersed body of research reminds us of a few key insights. First, the unconscious parts of the mind are most of the mind, where many of the most impressive feats of thinking take place. Second, emotion is not opposed to reason; our emotions assign value to things and are the basis of reason. Finally, we are not individuals who form relationships. We are social animals, deeply interpenetrated with one another, who emerge out of relationships.

This body of research suggests the French enlightenment view of human nature, which emphasized individualism and reason, was wrong. The British enlightenment, which emphasized social sentiments, was more accurate about who we are. It suggests we are not divided creatures. We don’t only progress as reason dominates the passions. We also thrive as we educate our emotions.

When you synthesize this research, you get different perspectives on everything from business to family to politics. You pay less attention to how people analyze the world but more to how they perceive and organize it in their minds. You pay a bit less attention to individual traits and more to the quality of relationships between people.

You get a different view of, say, human capital. Over the past few decades, we have tended to define human capital in the narrow way, emphasizing I.Q., degrees, and professional skills. Those are all important, obviously, but this research illuminates a range of deeper talents, which span reason and emotion and make a hash of both categories:

Attunement: the ability to enter other minds and learn what they have to offer.

Equipoise: the ability to serenely monitor the movements of one’s own mind and correct for biases and shortcomings.

Metis: the ability to see patterns in the world and derive a gist from complex situations.

Sympathy: the ability to fall into a rhythm with those around you and thrive in groups.

Limerence: This isn’t a talent as much as a motivation. The conscious mind hungers for money and success, but the unconscious mind hungers for those moments of transcendence when the skull line falls away and we are lost in love for another, the challenge of a task or the love of God. Some people seem to experience this drive more powerfully than others.

When Sigmund Freud came up with his view of the unconscious, it had a huge effect on society and literature. Now hundreds of thousands of researchers are coming up with a more accurate view of who we are. Their work is scientific, but it directs our attention toward a new humanism. It’s beginning to show how the emotional and the rational are intertwined.

I suspect their work will have a giant effect on the culture. It’ll change how we see ourselves. Who knows, it may even someday transform the way our policy makers see the world.

Huntington’s Clash Revisited
By DAVID BROOKS NY TIMES
Samuel Huntington was one of America’s greatest political scientists. In 1993, he published a sensational essay in Foreign Affairs called “The Clash of Civilizations?” The essay, which became a book, argued that the post-cold war would be marked by civilizational conflict.

Human beings, Huntington wrote, are divided along cultural lines — Western, Islamic, Hindu and so on. There is no universal civilization. Instead, there are these cultural blocks, each within its own distinct set of values.

The Islamic civilization, he wrote, is the most troublesome. People in the Arab world do not share the general suppositions of the Western world. Their primary attachment is to their religion, not to their nation-state. Their culture is inhospitable to certain liberal ideals, like pluralism, individualism and democracy.

Huntington correctly foresaw that the Arab strongman regimes were fragile and were threatened by the masses of unemployed young men. He thought these regimes could fall, but he did not believe that the nations would modernize in a Western direction. Amid the tumult of regime change, the rebels would selectively borrow tools from the West, but their borrowing would be refracted through their own beliefs. They would follow their own trajectory and not become more Western.

The Muslim world has bloody borders, he continued. There are wars and tensions where the Muslim world comes into conflict with other civilizations. Even if decrepit regimes fell, he suggested, there would still be a fundamental clash of civilizations between Islam and the West. The Western nations would do well to keep their distance from Muslim affairs. The more the two civilizations intermingle, the worse the tensions will be.

Huntington’s thesis set off a furious debate. But with the historic changes sweeping through the Arab world, it’s illuminating to go back and read his argument today.

In retrospect, I’d say that Huntington committed the Fundamental Attribution Error. That is, he ascribed to traits qualities that are actually determined by context.

He argued that people in Arab lands are intrinsically not nationalistic. He argued that they do not hunger for pluralism and democracy in the way these things are understood in the West. But it now appears as though they were simply living in circumstances that did not allow that patriotism or those spiritual hungers to come to the surface.

It now appears that people in these nations, like people in all nations, have multiple authentic selves. In some circumstances, one set of identities manifests itself, but when those circumstances change, other equally authentic identities and desires get activated.

For most of the past few decades, people in Arab nations were living under regimes that rule by fear. In these circumstances, most people shared the conspiracy mongering and the political passivity that these regimes encouraged. But when the fear lessened, and the opportunity for change arose, different aspirations were energized. Over the past weeks, we’ve seen Arab people ferociously attached to their national identities. We’ve seen them willing to risk their lives for pluralism, openness and democracy.

I’d say Huntington was also wrong in the way he defined culture.

In some ways, each of us is like every person on earth; in some ways, each of us is like the members of our culture and group; and, in some ways, each of us is unique. Huntington minimized the power of universal political values and exaggerated the influence of distinct cultural values. It’s easy to see why he did this. He was arguing against global elites who sometimes refuse to acknowledge the power of culture at all.

But it seems clear that many people in Arab nations do share a universal hunger for liberty. They feel the presence of universal human rights and feel insulted when they are not accorded them.

Culture is important, but underneath cultural differences there are these universal aspirations for dignity, for political systems that listen to, respond to and respect the will of the people.

Finally, I’d say Huntington misunderstood the nature of historical change. In his book, he describes transformations that move along linear, projectable trajectories. But that’s not how things work in times of tumult. Instead, one person moves a step. Then the next person moves a step. Pretty soon, millions are caught up in a contagion, activating passions they had but dimly perceived just weeks before. They get swept up in momentums that have no central authority and that, nonetheless, exercise a sweeping influence on those caught up in their tides.

I write all this not to denigrate the great Huntington. He may still be proved right. The Arab world may modernize on its own separate path. But his mistakes illuminate useful truths: that all people share certain aspirations and that history is wide open. The tumult of events can transform the traits and qualities that seemed, even to great experts, etched in stone.

Market Crash 2011: It will hit by Christmas
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — Politicians lie. Bankers lie. Yes, they’re liars. But they’re not bad, it’s in their genes, inherited. Their brains are wired that way, warn scientists. Like addicts, they can’t help themselves. They want to sell stuff, get rich.

We want to believe they’re telling us the truth. Silly, huh? Both trapped in this eternal “dance of death” controlled by programs hidden deep in our brains, telling us what to do, telling us to ignore facts to the contrary — till it’s too late, till a new crisis crushes all of us.


Dow ends at 2 1/2-year highJoe Bel Bruno explains why stocks climbed to 21/2-year highs and extended their winning streak to a third consecutive week.
Psychology offers us a powerful lesson: Our collective brain is destined to trigger a crash before Christmas 2011. Why? We’re gullible, keep searching for a truth-teller in a world of liars. And they’re so clever, we let them manipulate us into acting against our best interests.

In fact, behavioral science tells us that bankers and politicians are lying to us 93% of the time. It’s 13 times more likely Wall Street is telling you a lie than the truth. That’s why they win. Why we lose. Because our brains are preprogrammed to cooperate in their con game. Yes, we believe most of their lies.

One of America’s leading behavioral finance gurus, University of Chicago Prof. Richard Thaler, explains: “Think of the human brain as a personal computer with a very slow processor and a memory system that is small and unreliable.” Thaler even admits: “The PC I carry between my ears has more disk failures than I care to think about.” Easy to manipulate.

Eternal love story: Your brain’s in love with Wall Street’s brain
Thaler’s a quant, speaks mostly in cryptic algorithmics. So if you really want to know how Wall Street’s con game works on you, Barry Ritholtz, the financial genius behind “Bailout Nation,” recently summarized it in the Washington Post: “Humans make all the same mistakes, over and over again. It’s how we are wired, the net result of evolution. That flight-or-fight response might have helped your ancestors deal with hungry saber-toothed tigers and territorial Cro Magnons, but it drives investors to make costly emotional decisions.”

Humans have something “akin to brain damage,” says Ritholtz. “To neurophysiologists, who research cognitive functions, the emotionally driven appear to suffer from cognitive deficits that mimic certain types of brain injuries. … Anyone with an intense emotional interest in a subject loses the ability to observe it objectively: You selectively perceive events. You ignore data and facts that disagree with your main philosophy. Even your memory works to fool you, as you selectively retain what you believe in, and subtly mask any memories that might conflict.”

Worse, there’s no cure.

Your brain needs to believe lies; Wall Street loves telling lies
Examples: USA Today headline: “Average Bull is 3.8 years: We’re not at 2 yet.” More upside. Wall Street loves it. The Wall Street Journal: “Stock recovery in high gear … S&P500 now speeding toward its next landmark,” double its March 2009 bottom.

Other lies: Inflation and rate rises won’t push China and America over the edge into a new bear recession. That one’s real popular in Wall Street’s echo chamber. Wall Street also cheers every time cable pundits and journalists repeat their favorite statistic: That stocks rally in the third year of a presidency, often more than 20%. Yes, Wall Street loves those 93% lies.

Biggest lie? Wharton’s perennial bull, Jeremy Siegel, of “Stocks for the Long Run” fame, recently told a TD Ameritrade Institutional Conference, “There’s nothing but upside to come …the next several years are going to be good for stocks.”

Yes, one of Wall Street’s favorite co-conspirators is hypnotizing thousands of our best money managers and advisers into believing the lie that this bull market will roar indefinitely. Worse, they’ll use that message to sell naive investors on buying whatever junk Wall Street is selling.

Get the picture? A little conspiracy begins in your head, a conspiracy between your gullible brain and Wall Street’s con men selling hype, hoopla and happy-talk. Listen and you’ll lose.

Warning: This little conspiracy is a retirement killer. Remember: It’s odds-on you’re being lied to. So for a few moments, listen to some highly respected contrarians. They’re short-selling this conspiracy, betting that 2011 will hit headwinds before Christmas, turn a cyclical bull rally into a cyclical bear market.

Our brains never learned 2008’s lessons, will fail again in 2011
Remember, we can’t help it. Our brains are defective, biased, manipulated by unseen forces 93% of the time. So blame all the lies, lying and liars on our brain wiring. A perfect excuse. Sure, political dogma and insatiable greed factor into our bizarre mental equations. But your brain is as susceptible to the “great con” as Ben Bernanke, Henry Paulson, Bernie Madoff.

Go back a few years: The subprime credit meltdown was widely predicted years in advance. For example, back in 2007, the IMF’s Chief Economist, Raghuram Rajan, “delivered a stark warning to the world’s top bankers: Financial markets were headed for doom. They laughed it off,” said the Toronto Star. Both Alan Greenspan and Larry Summers were there.

In April 2007, Jeremy Grantham, whose firm manages $107 billion, also warned investors: “The First Truly Global Bubble: From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips; it’s bubble time. … Everyone, everywhere is reinforcing one another. … Bursting of the bubble will be across all countries and all assets … no similar global event has occurred before.”

We knew a crash was coming, Wall Street laughed.

Call it denial, or lying, or just a brain defect, late that summer as the meltdown spread like wildfire, shutting down the economy, our manipulative Treasury Secretary Hank Paulson, a former Goldman Sachs CEO, told Fortune “this is far and away the strongest global economy I’ve seen in my business lifetime.” And Fed boss Bernanke was telling us the subprime crisis was “contained.” Alan Greenspan agreed. He was on tour, making millions hustling his new book of excuses, delusions and lies, “The Age of Turbulence.”

Today, just three years later, the market’s just a shade above its 2000 peak. Adjusted for inflation, Wall Street stocks have lost roughly 20% of your retirement money the past decade. Get it? Wall Street’s a big loser the past decade. And they’ll lose another 20% by 2020. Why? Because 93% of what comes from Wall Street is suspect, can’t be trusted.

Warning: Cyclical bull ends in 2011, new cyclical bear roars back
At the beginning of 2011 USA Today reported a contrarian forecast. Ned Davis Research says the S&P 500 will make a run at the 2007 high of 1,565, but hit a “midyear peak.” Then it will crash as interest rates rise. Davis concludes: “The midyear peak could mark the end of the cyclical bull market that began in March 2009 and the start of a new cyclical bear market.”

Warning, even though your brain doesn’t want to hear it, there is a high probability a new cyclical bear market will begin this summer … and overshadow the 2012 elections.

The Journal’s also warning: “Inflation jitters spread through emerging markets, prompting China’s central bank to raise interest rate for the third time in four months amid worries that a drought threatening the country’s wheat crop will put further pressure on global food prices.”

Wake up America: With commodity prices rising rapidly, all the bizarre rationalizations Wall Street uses to keep Bernanke’s interest rates low are rapidly vaporizing. Yes, Ned Davis’ prediction of a bear will soon be a painful reality.

S&P 500 inflated, worth just 910, get out before it tops 1,500
Grantham also sees inflation and rising interest rates killing the lies, popping the bubble and ending the rally: “As a simple rule, the market will tend to rise as long as short rates are kept low. This seems likely to be the case for eight more months and, therefore, we have to be prepared for the market to rise and to have a risky bias.”

With $107 billion at stake Grantham better be concerned. He predicted the 2008 meltdown, now sees a repeat dead ahead: “Be prepared for a strong market and continued outperformance of everything risky, but be aware that you are living on borrowed time as a bull.”

Yes, the bubble will pop this year says Grantham: “If the S&P rises to 1,500, it would officially be the latest in the series of true bubbles. All of the famous bubbles broke, but only after short rates had started to rise.”

So keep a close watch on those two tipping points in your planning, interest rates breaking to the upside and the S&P closing near 1,500. When inflation pushes interest rates up they’ll choke off this bull market. If you’re active, better stop chasing higher returns, especially emerging markets.

Bottom line: In what sounds like a direct shot at super-bull Jeremy Siegel, Grantham says that GMO’s research warns that “the market is worth about 910 on the S&P 500, substantially less than current levels” just above 1,300.

Then Grantham throws his fast ball right down the middle: “The speed with which you should pull back from the market as it advances into dangerously overpriced territory this year is more of an art than a science, but by October 1 you should probably be thinking much more conservatively.”

Translation: Get the heck out of Wall Street’s stock market casino soon, maybe as early as July 4th, and definitely get out by Christmas, because soon all the lies, lying and liars will stop working.
Copyright © 2011 MarketWatch, Inc. All rights reserved.

A Dazzling Show Inside a Laser, but a Vacuum of Light Outside
By HENRY FOUNTAIN NY TIMES
In an elegant melding of theoretical and experimental physics, scientists at Yale University have taken the basic function of a laser and flipped it around — producing a device that absorbs, rather than emits, a beam of light.

The device, which the scientists call a “coherent perfect absorber” or, more popularly, an anti-laser, may lead to the development of new kinds of switches, filters and other components that could be useful in hybrid optical-electronic computers under development, among other applications.

A. Douglas Stone, a theoretical physicist at Yale, developed the concept of a backward-running laser in a paper in Physical Review Letters last spring. The actual device, described in a paper published last week in Science, was created in the laboratory of a laser physicist, Hui Cao.

In a laser, energy is pumped into a medium — which can be a solid, liquid or gas — between two mirrors, stimulating the emission of photons that are coherent, or of the same frequency and phase. The photons reflect back and forth between the mirrors, resulting in amplification of the light.

“You put energy into it, and some of that energy gets converted into that beautiful coherent light beam,” Dr. Stone said.

In his theoretical work, Dr. Stone said, he made use of the fact that the equations that describe how a laser works have certain symmetrical properties.

“If you can make a laser of a certain type, the equations say you can make a reverse device as well,” he said.

An anti-laser uses mirrors, too, but the other components are the reverse of a laser. The medium that provides amplification is replaced with one that provides absorption, and the outgoing light beam is replaced with an incoming one. (This light needs to be coherent, so it takes a laser to make an anti-laser.)

The incoming beam is split in two, and hits the medium from two sides. The photons bounce around between the mirrors and interfere with one another, eventually wiping themselves out in a flurry of electrons and heat.

The experimental device absorbed about 99.4 percent of the light. In theory, an anti-laser should be able to absorb 100 percent. “It’s a one-way trap for light,” Dr. Stone said.

Dr. Cao said the device they built was relatively simple, using silicon as the absorptive medium and a couple of “bad” mirrors.

“But we should be able to get coherent perfect absorption in more complicated systems,” she said. Eventually it may even be possible to make an “anti” version of a so-called random laser, in which the medium is highly disordered and there are no mirrors.

The experimental device works in the near-infrared, outside of the visible spectrum. But Dr. Stone said that in principle anti-lasers would not be limited in terms of frequency.

“We could move it into the visible, or the farther infrared,” he said. “It’s definitely possible to engineer this across the whole range.”

Stefano Longhi, a physicist at the Polytechnic Institute of Milan in Italy who was not involved in the work, said the anti-laser was an “important achievement” that was “exciting and surprising to the scientific community.”

He said one important characteristic of the device is that the absorption could be turned on or off. This might make anti-lasers extremely useful as optical switching devices.

A device that absorbs light perfectly might be considered ideal for solar energy applications, but Dr. Longhi said this is not the case. Sunlight is not coherent, and an anti-laser will not work with incoherent light, he said.

A physicist would describe the device as a “time-reversed” laser, since the symmetrical properties are related to the concept of time reversal.

But Dr. Stone said he thought the term anti-laser was a better description for nonscientists, so that no one would think the device had anything to do with time travel.

But even “anti-laser” is problematic, he noted. “I don’t want people to think this is some kind of laser shield,” he said. “If R2-D2 had our anti-lasers, it would be melted into a puddle.”

Revolts threaten to shake the world
Greg Sheridan, Foreign editor From: The Australian

THERE is one key respect in which tiny Bahrain is more important than Egypt. The island kingdom just off Saudi Arabia's east coast hosts the headquarters of the US Navy's Fifth Fleet and the naval elements of US Central Command.
It is not exactly the Middle East's Okinawa, but in the unlikely event the Bahrain monarchy is overthrown or becomes so oppressive Washington has to distance itself from the tiny kingdom, this could have profound consequences for the US military position in the whole Middle East.

Because the Fifth Fleet protects the Gulf states from Iran. If the US facilities were ever forced out of Bahrain, there would be pressure against important US military facilities in Kuwait, Qatar, Oman and the United Arab Emirates.

This demonstrates the difficulty of making any geo-strategic sense out of the roiling instability sweeping the Arab world. The violent crackdown on the demonstrators in Bahrain's capital, Manama, has been followed by some quiet. In the wake of the Egyptian uprising, Western analysts ranked Bahrain, along with Yemen, Algeria and Libya, as highly vulnerable to instability.
Each case is different. Although an international wave is sweeping the region, accelerated by Facebook, Twitter and the internet generally, each country is unique. Bahrain was susceptible for several reasons. One is that it is ruled by a Sunni royal family, and Sunnis dominate all senior official positions, but it is the only Gulf state with a Shia majority.

And it is located just across a narrow strip of water from eastern Saudi Arabia, where the big, disaffected and closely watched Saudi Shia minority enjoys a local majority status.

Furthermore, Bahrain's oil reserves are exhausted. It exists on Saudi largesse and US assistance.

Yemen's case is different. It is dirt-poor, its rulers have been in power for decades, it has a history of internal instability and strife between its different regions, and it has been increasingly penetrated by Islamist extremists.

Libya is the most fascinating case. Its leader, Muammar Gaddafi, is the Kim Jong-il of the Arab world. He does not keep his people as destitute as the North Korean dictator does, but he is an absolute dictator. His cult of personality is bizarre and dominates all of Libyan life. His family are treated as being a combination of royalty and divinity.

Libyan politics occurs when two of Gaddafi's sons disagree with each other and move up or down in their father's favour.

Astonishingly, even in Libya there are serious anti-government demonstrations and people dying on the streets for liberty. Nonetheless, it's hard to see the Gaddafi dictatorship being toppled in the current wave of unrest.

The gold medal with oak leaf cluster for hypocrisy in the face of the Egyptian revolt goes to Iran. Its leaders have praised the noble demonstrators in Cairo, and attempted to portray them as heirs to the 1979 Iranian Revolution. But even while saying this, the regime has brutally suppressed relatively small attempts within Iran to recreate the protest movement of 2009. It is executing protesters and opposition activists at a rate unknown anywhere else on the planet - it has been executing roughly two people a day. Nearly 70 people were executed in Iran last month, most ostensibly on trumped-up charges, but in reality for opposing the regime.

I think it was Christopher Hitchens who coined the term Islamo-fascism. I have always thought this an inelegant and confusing term, which obscures more than it reveals. But surely the Iranian rulers are genuine Islamo-Stalinists.

There have been demonstrations in Algeria and Jordan. So far the most stable country in the region is Morocco, which has a reasonable standard of living, a respected monarchy, a relatively liberal press, and a more or less democratic parliament. But big demonstrations are planned for Morocco this weekend.

Saudi Arabia looks calm for the moment, and any demonstrations or protests there would be ruthlessly dealt with.

So the explosion that began in Tunisia has become a bushfire running all over Muslim North Africa and the Gulf Arab states, and even to Persian Iran.

What does all this mean, and what will its long-term consequences be?

Of course it's too early to answer those questions. For a start, we still really have no idea where even one of these recent rebellions will end.

And there are several key distinctions between the countries. The monarchies seem generally a bit more stable than the republics. The republics, after all, must claim some kind of democracy or common good for their legitimacy. The monarchies can rely on tradition, the ancient mixture of religion and crown, and the often extensive co-opting process that shrewd royal families engage in to keep in touch with their populations and to keep large sections of their society on side.

Another key variable is the economy, and this often, although not always, boils down to whether a nation has oil. The Saudi royal family remains powerful partly because it can dispense so much oil largesse.

Several Gulf countries have oil. But Egypt, Bahrain, Yemen - they don't have oil.

Then there is the twin question of whether the nations already have semi-functioning, semi-democratic parliaments, such as Morocco and Kuwait, or no real process of broad political public consultation and participation. Several years ago, the Australian scholar Harold Crouch wrote an important book about Malaysian politics. He classified Malaysia and Singapore as repressive responsive regimes. They had elements of authoritarianism but they had formal electoral contests that were clean, in the sense that ballots were not stuffed, and they had many other, often elaborate, effective means by which their populations could participate in discussion about government policies. And the governments were responsive to feedback from their populations. This model, Crouch argued, could be sustained more or less indefinitely.

None of the Arab states is a real democracy, but some have more sophisticated methods of consulting their populations.

The economy matters in another way, both as cause and effect. One of the precipitating factors of the Egyptian protests was simply the rise in food prices. The instability throughout the region has seen oil prices rise to a 2 1/2-year high, going well above $US100 ($98.70) a barrel. This helps the oil producers but it hurts everyone else.

The long-term consequences of the uprisings depend on the outcome of a duel between two models. Is the Egyptian revolt going to look like the 1979 fall of the shah in Iran, in which a liberal society with a broad-based opposition to an undemocratic ruler was hoodwinked by Muslim extremists and ended up under the totalitarian rule of the mullahs?

Or will it look like eastern Europe after 1989, with the fall of one dictatorship after another, replaced by democracies that have struggled to consolidate themselves since, but which have generally preserved democratic freedoms and led to better overall economic development?

Other analysts suggest a different parallel. What about 1848, a year when democratic revolutions swept across Europe? But they were short-lived. They were replaced in a few years by nationalist and militarist regimes, and decades of internal conflict and war.

Authoritarian regimes still have a lot of arrows in their quiver - most commonly some combination of limited reform, removal of unpopular leaders, renewed military clampdowns and the co-opting of key social groups. It is far too early to conclude that these regimes are all dead or doomed.

From Australia's point of view, the worst outcome would be the radicalisation of the Middle East and the decline of US influence. This would hurt us in many ways. It would certainly lead to an intensified terrorist threat. It would also lead to the continued outflow of embittered populations from the Middle East, some of whom would find their way to Australia.

A seriously destabilised Middle East would lead to much higher energy prices and greater instability in the global economy. It would probably feed into a new dynamic of nuclear proliferation. Once Iran gets nuclear weapons, or the ability to produce them at short notice, Middle East regimes, even possibly democratic ones, will feel increasingly unstable. If they can rely less on the reassurance of the US military presence, they will be much more likely to seek the security guarantee of nuclear weapons.

Then there is this. Because Arab political culture has been totally undemocratic, it has exaggerated the Islamic tendency to paranoia and conspiracy theory. For some time at least, this may well mean that more democratic societies in the Middle East are prone to more radical and confrontational foreign policies.

US diplomacy in the Middle East has traditionally had five main aims: promoting stability, promoting democracy, providing military security (initially against Iraq, and more recently against Iran) to Arab allies in the Gulf, ensuring the flow of oil critical to the global economy, and providing for the security of its closest regional ally, Israel.

Rather obviously, there is often tension among these aims. Stability can be the enemy of democracy. And democracy requires a gradual cultural build-up of autonomous institutions, a disinterested judiciary, a culture of compromise, a security establishment that does not interfere in electoral processes but robustly maintains the state monopoly of force. Without at least the evolving presence of these factors, elections alone may not constitute, or even lead to, genuine democracy, or a democracy that can be sustained.

Similarly, democracy in Egypt could lead to the breaking of the Egypt-Israel peace treaty, the single greatest force for stability and moderation in the region.

The US can still offer its friends economic aid and trade, human resources, military reassurance. These are huge assets. But given the paranoid style of Arab politics, it is more difficult for the US to offer democratic legitimacy, meaningful international approval or domestic political advantage.

All the equations are changing. Everything is in play. In a year's time, the Middle East could be utterly transformed. On the other hand, having withstood these storms, it could look much the same as it did a few months ago, but with a few names changed at the top. Seldom has so much been at stake in such utterly uncertain processes.

Weber Derails Merkel's Unity Express
By IRWIN STELZER Times of London
The bond market, says Dr. Holger Schmieding, chief economist at Germany's Berenberg Bank, has given Europe a wake-up call. That is certainly true. And the euro zone will emerge "stronger and more coherent from the crisis."

That remains to be seen. We don't yet know whether the eurocracy awoke from its policy slumber or merely pushed the snooze button, to rest up for another round of meetings, these to resume on March 11 and 24-25.

Developments in Germany are less promising than they seemed a few weeks ago, when Chancellor Angela Merkel discovered her inner European, and prepared to sign on to a grand bargain, with French President Nicolas Sarkozy cheering her on. Germany will take on the burden of funding the euro-zone periphery, and in return the financially strapped nations would institute substantial reforms and accept significant German control over their fiscal affairs.
Angela Merkel can no longer assure her voters over who will head the ECB.

One reason Ms. Merkel felt she could sell that to her very reluctant electorate was that the presidency of the European Central Bank would pass to an inflation-fighting German when Jean-Claude Trichet's term comes to an end. And she had the perfect German in mind: Axel Weber, head of the Bundesbank and reassuringly opposed to any policies that might trigger inflation. But Mr. Weber decided that his anti-bailout views could not command majority support at the ECB or among euro-zone governments, and to Ms. Merkel's fury stepped down from the Bundesbank, effectively withdrawing as a candidate for the ECB job.

It is now highly unlikely that a new German candidate of Mr. Weber's stature will emerge to contest, among others, Bank of Italy Governor Mario Draghi, for the crucial ECB job. No one doubts Mr. Draghi's qualifications, but he carries two bits of baggage—his former employment as vice chairman of Goldman Sachs, widely believed to have helped Greece plumb the depths of fiscal irresponsibility, and Prime Minister Silvio Berlusconi, not currently at the peak of his prestige in eurowide circles. Besides, the ECB vice-presidency is held by Portugal's Vítor Constâncio, and there is a disinclination, especially now, to have two executives from the south of Europe.

Although some consider Germany's Klaus Regling, head of the European Financial Stability Facility (EFSF, or bailout fund), a potential candidate, most observers see him a very dark horse indeed. With the ECB job most likely out of reach— "Germany has never insisted that the next ECB president be a German," Finance Minister Wolfgang Schäuble now says—Ms. Merkel can no longer assure her voters that an anti-inflation hawk will head the ECB. So her only hope of selling her voters on the idea of Germany as the financier of last resort for profligate countries is to show that these nations have forsaken their past ways, and are becoming more German in their attitudes towards economic management. That she hopes to do by having them sign on to a "competitiveness pact."

Which raises two very important problems. The first is that the countries in need of further bailouts are not reliable signatories to the deal, and other countries have expressed no enthusiasm for the labor market and entitlement reforms that form a key part of the pact. Greece, which just received approval for another tranche of the bailout cash, already requires more time than initially agreed to repay the bailout loans it has received, and a reduction in the interest rate it is being charged. The Economist reports that Greece has missed deadlines for cost-cutting and revenue-raising, and is dragging its feet on pension and labor market reforms. It is also moving with less than alacrity on promised privatizations. With an economy that could shrink by 3.5% this year after contracting 4.2% last year, and an unemployment rate headed towards 15%, Greece might some day benefit from some of Ms. Merkel's reforms, but not before it restructures its sovereign debt, the nightmare German aid is designed to prevent.

Spain, with unemployment running at 20.3%, can only aspire to Greece's woeful 15% jobless rate. Nevertheless, the wage deals cut in January call for increases of very close to 3%, well above last year's average of 1.3%. Citigroup notes that these "reaccelerating wages are likely to delay further any real attempt at job creation and hope of stabilization of the unemployment rate."

Meanwhile, Ireland, another country already living on bailout funds, is now guessing that the money it has received will not cover the remaining losses of its banks, and its incoming government will undoubtedly ask for better terms for the loans it has received and the additional funds it will request.

The situation in Portugal is no more promising. Interest rates demanded by buyers of its 10-year bonds are now above 7%, a level most analysts feel is unsu-stainable. The economy has not grown in years. A recent Central Intelligence Agency survey notes that Portugal's GDP per capita is two-thirds of the EU average, the educational system is poor, the labor market rigid, its growth prospects low and public debt high.

Little wonder that private sector investors are reluctant to make funds available, or that Ms. Merkel has a long way to go to persuade her voters to yoke their fortunes—based on hard work to achieve global competitiveness— to those of Portugal.

The proposed competitiveness pact addresses none, or at best a very few, of these near-term problems, and, with provisions calling for an end to tax competition, might just make the long-term situation worse. Ms. Merkel might want to rethink just what she is asking her voters to endorse.

—Irwin Stelzer is a director of economic-policy studies at the Hudson Institute in Washington.

Shy U.S. Intellectual Created Playbook Used in a Revolution
By SHERYL GAY STOLBERG NY TIMES
BOSTON — Halfway around the world from Tahrir Square in Cairo, an aging American intellectual shuffles about his cluttered brick row house in a working-class neighborhood here. His name is Gene Sharp. Stoop-shouldered and white-haired at 83, he grows orchids, has yet to master the Internet and hardly seems like a dangerous man.

But for the world’s despots, his ideas can be fatal.

Few Americans have heard of Mr. Sharp. But for decades, his practical writings on nonviolent revolution — most notably “From Dictatorship to Democracy,” a 93-page guide to toppling autocrats, available for download in 24 languages — have inspired dissidents around the world, including in Burma, Bosnia, Estonia and Zimbabwe, and now Tunisia and Egypt.

When Egypt’s April 6 Youth Movement was struggling to recover from a failed effort in 2005, its leaders tossed around “crazy ideas” about bringing down the government, said Ahmed Maher, a leading strategist. They stumbled on Mr. Sharp while examining the Serbian movement Otpor, which he had influenced.

When the nonpartisan International Center on Nonviolent Conflict, which trains democracy activists, slipped into Cairo several years ago to conduct a workshop, among the papers it distributed was Mr. Sharp’s “198 Methods of Nonviolent Action,” a list of tactics that range from hunger strikes to “protest disrobing” to “disclosing identities of secret agents.”

Dalia Ziada, an Egyptian blogger and activist who attended the workshop and later organized similar sessions on her own, said trainees were active in both the Tunisia and Egypt revolts. She said that some activists translated excerpts of Mr. Sharp’s work into Arabic, and that his message of “attacking weaknesses of dictators” stuck with them.

Peter Ackerman, a onetime student of Mr. Sharp who founded the nonviolence center and ran the Cairo workshop, cites his former mentor as proof that “ideas have power.”

Mr. Sharp, hard-nosed yet exceedingly shy, is careful not to take credit. He is more thinker than revolutionary, though as a young man he participated in lunch-counter sit-ins and spent nine months in a federal prison in Danbury, Conn., as a conscientious objector during the Korean War. He has had no contact with the Egyptian protesters, he said, although he recently learned that the Muslim Brotherhood had “From Dictatorship to Democracy” posted on its Web site.

While seeing the revolution that ousted Hosni Mubarak as a sign of “encouragement,” Mr. Sharp said, “The people of Egypt did that — not me.”

He has been watching events in Cairo unfold on CNN from his modest house in East Boston, which he bought in 1968 for $150 plus back taxes.

It doubles as the headquarters of the Albert Einstein Institution, an organization Mr. Sharp founded in 1983 while running seminars at Harvard and teaching political science at what is now the University of Massachusetts at Dartmouth. It consists of him; his assistant, Jamila Raquib, whose family fled Soviet oppression in Afghanistan when she was 5; a part-time office manager and a Golden Retriever mix named Sally. Their office wall sports a bumper sticker that reads “Gotov Je!” — Serbian for “He is finished!”

In this era of Twitter revolutionaries, the Internet holds little allure for Mr. Sharp. He is not on Facebook and does not venture onto the Einstein Web site. (“I should,” he said apologetically.) If he must send e-mail, he consults a handwritten note Ms. Raquib has taped to the doorjamb near his state-of-the-art Macintosh computer in a study overflowing with books and papers. “To open a blank e-mail,” it reads, “click once on icon that says ‘new’ at top of window.”

Some people suspect Mr. Sharp of being a closet peacenik and a lefty — in the 1950s, he wrote for a publication called “Peace News” and he once worked as personal secretary to A. J. Muste, a noted labor union activist and pacifist — but he insists that he outgrew his own early pacifism and describes himself as “trans-partisan.”

Based on studies of revolutionaries like Gandhi, nonviolent uprisings, civil rights struggles, economic boycotts and the like, he has concluded that advancing freedom takes careful strategy and meticulous planning, advice that Ms. Ziada said resonated among youth leaders in Egypt. Peaceful protest is best, he says — not for any moral reason, but because violence provokes autocrats to crack down. “If you fight with violence,” Mr. Sharp said, “you are fighting with your enemy’s best weapon, and you may be a brave but dead hero.”

Autocrats abhor Mr. Sharp. In 2007, President Hugo Chávez of Venezuela denounced him, and officials in Myanmar, according to diplomatic cables obtained by the anti-secrecy group WikiLeaks, accused him of being part of a conspiracy to set off demonstrations intended “to bring down the government.” (A year earlier, a cable from the United States Embassy in Damascus noted that Syrian dissidents had trained in nonviolence by reading Mr. Sharp’s writings.)

In 2008, Iran featured Mr. Sharp, along with Senator John McCain of Arizona and the Democratic financier George Soros, in an animated propaganda video that accused Mr. Sharp of being the C.I.A. agent “in charge of America’s infiltration into other countries,” an assertion his fellow scholars find ludicrous.

“He is generally considered the father of the whole field of the study of strategic nonviolent action,” said Stephen Zunes, an expert in that field at the University of San Francisco. “Some of these exaggerated stories of him going around the world and starting revolutions and leading mobs, what a joke. He’s much more into doing the research and the theoretical work than he is in disseminating it.”

That is not to say Mr. Sharp has not seen any action. In 1989, he flew to China to witness the uprising in Tiananmen Square. In the early 1990s, he sneaked into a rebel camp in Myanmar at the invitation of Robert L. Helvey, a retired Army colonel who advised the opposition there. They met when Colonel Helvey was on a fellowship at Harvard; the military man thought the professor had ideas that could avoid war. “Here we were in this jungle, reading Gene Sharp’s work by candlelight,” Colonel Helvey recalled. “This guy has tremendous insight into society and the dynamics of social power.”

Not everyone is so impressed. As’ad AbuKhalil, a Lebanese political scientist and founder of the Angry Arab News Service blog, was outraged by a passing mention of Mr. Sharp in The New York Times on Monday. He complained that Western journalists were looking for a “Lawrence of Arabia” to explain Egyptians’ success, in a colonialist attempt to deny credit to Egyptians.

Still, just as Mr. Sharp’s profile seems to be expanding, his institute is contracting.

Mr. Ackerman, who became wealthy as an investment banker after studying under Mr. Sharp, contributed millions of dollars and kept it afloat for years. But about a decade ago, Mr. Ackerman wanted to disseminate Mr. Sharp’s ideas more aggressively, as well as his own. He put his money into his own center, which also produces movies and even a video game to train dissidents. An annuity he purchased still helps pay Mr. Sharp’s salary.

In the twilight of his career, Mr. Sharp, who never married, is slowing down. His voice trembles and his blue eyes grow watery when he is tired; he gave up driving after a recent accident. He does his own grocery shopping; his assistant, Ms. Raquib, tries to follow him when it is icy. He does not like it.

He says his work is far from done. He has just submitted a manuscript for a new book, “Sharp’s Dictionary of Power and Struggle: Terminology of Civil Resistance in Conflicts,” to be published this fall by Oxford University Press. He would like readers to know he did not pick the title. “It’s a little immodest,” he said. He has another manuscript in the works about Einstein, whose own concerns about totalitarianism prompted Mr. Sharp to adopt the scientist’s name for his institution. (Einstein wrote the foreword to Mr. Sharp’s first book, about Gandhi.)

In the meantime, he is keeping a close eye on the Middle East. He was struck by the Egyptian protesters’ discipline in remaining peaceful, and especially by their lack of fear. “That is straight out of Gandhi,” Mr. Sharp said. “If people are not afraid of the dictatorship, that dictatorship is in big trouble.”


Andrew W. Lehren contributed reporting from New York, and David D. Kirkpatrick from Cairo.





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