June -- July 2010

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VAT: A European-style Tax That May be Coming to U.S.

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Called “Best and Worst of Taxes,” VAT is a Subtler Sales Tax. It Garners Big Revenue for Governments, but Can Dampen Consumption – and Stifle Economic Growth.

Is VAT – the “value-added tax“-- the miracle levy that can solve budget squeezes with minimal political pain?  Many people seem to think so.  It functions like a sales tax, but less obtrusively.  Both are paid by consumers at the cash register, but the VAT operates in a more complex manner that enables governments to manipulate rates more easily in accordance with their political agendas.

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"War" by Sebastian Junger

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Combat in Afghanistan has the Ferocious (and Horrific) Intensity of Bigger Wars: Searing Account of American Platoon Evokes Old Questions about Understanding Warfare

 

Editor’s Note - The war in Afghanistan has triggered a great deal of commentary to the effect, put simplistically that Americans still believe in war and Europeans have stopped believing it. Defense Secretary Robert Gates has publicly spoken about a “demilitarization of Europe.” In European Affairs, a book reviewer analyzed a recent study – its title is “Where Have All the Soldiers Gone?” – that traces the growth in revulsion at the concept of war in Europe in the last century. Afghanistan, after the Balkans and Iraq, has brought out clear the transatlantic divergences about “the use of force” – war. Broadly speaking, Europeans clearly feel that the war in Afghanistan is a pointless, blood-soaked campaign. On the other hand, Americans, who bear the brunt of the fighting in Afghanistan, still support the war. In the current European mood of pacifism (or passivity), how much can be explained by a lack of military muscle and means to prevail in modern conflict? How much can be traced back to Europe’s searing experience of war on its own soil, including the suffering of its civilian populations? In the U.S., attitudes may owe much to the fact that the Afghan conflict has had astonishingly low media attention, and has certainly not had the raw firsthand coverage that brought the Vietnam war into every household via the nightly television news. The book reviewed here powerfully delivers the literally awesome effect that combat has on soldiers in modern Western armies.

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"The End of the Free Market" by Ian Bremmer

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Scorned by the Failure of Communism, The State-Run Economy is Making a Comeback (Or Still Growing) in New Guises: Nowadays the State Wants to Compete with Market-Driven Companies — for Profit (And Power)

Ian Bremmer has written a timely and important book. Intelligently and comprehensively, he lays out the rise of an important new economic system -- state capitalism. This is a new version of the command economy in which the state has a monopoly in strategic sectors and uses its companies to take advantage of market forces in a globalizing world economy. This model has emerged with surprising speed as a serious rival to regulated free-market capitalism of the West.

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“A Little War That Shook the World: Georgia, Russia and the Future of the West” by Ronald D. Asmus

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Georgia has become the West’s “inconvenient truth.” Though he never quite says it this way, that is the message of Ronald Asmus’ masterful first version of the history of the Russian-Georgian War of 2008, “A Little War That Shook the World.”

Asmus documents a narrative of Russian behavior towards its southern neighbor that is dissonant with the Obama administration’s “Russia reset” policy. While Washington asserts that it is pursuing close cooperation with Moscow, but not at the expense of American friends like Georgia, Asmus’ book makes clear the lengths some in Moscow are willing to go to stop the westward tilt of countries in its so-called “privileged sphere of interest.” If this more aggressive stance has costs for Moscow in terms of upsetting closer cooperation with the West, the Kremlin showed in Georgia that it was willing to pay that price. And, in Georgia, the Kremlin also learned that it can defy the internationally-agreed rules of the road in dealing as it wants to with its non-NATO neighbors -- without risking much blow-back.

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Letter from Dublin: Irish Resigned To Working Through Hardship

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Feeling Guilty About Their Personal Profligacy, Irish Exasperated by Impunity of Bankers – and Taunts From Greek Streets.

This month Vincent Brown, a famously testy Irish television personality, took his show out to Tallaght, a Dublin working-class suburb, to assess the mood of the Irish working class. As the district with the highest “No” votes in the first Lisbon Treaty referendum, Tallaght became the research lab for visiting media struggling to explain Ireland’s antipathy. Like the rest of the country, it recanted in favor of “Yes” at the second vote in October 2009. So are Tallaght folk happy about their decision? The answer is a “no” that mixes frustration with bafflement. The mood was voiced succinctly by a local who told Brown: “They said we’d get jobs, but where are they?” In Tallaght’s situation, six months after a referendum campaign that urged them to “Vote Yes to Recovery; Yes to Jobs; Yes to Lisbon,”  they see only falling incomes, crashing employment, with 170,000 home-owners “under water” on their mortgages, “ghost” housing estates emptied of their occupants, withering main streets, ongoing threats to welfare benefits and little hope.

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