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Jack is a graduate of Rutgers University where he majored in history. His career in the life and health insurance industry involved medical risk selection and brokerage management. Retired in Florida for over two decades after many years in NJ and NY, he occasionally writes, paints, plays poker, participates in play readings and is catching up on Shakespeare, Melville and Joyce, etc.

Saturday, December 20, 2014

Retaliation for SONY Hacking and Some Random Political Thoughts

Political Thoughts

President Obama does not have to worry about running for re-election, so now, he can do what he feels he should be doing.  Prior to the 2014 elections, he was reluctant to do so because increased opposition to him would further weaken Democrats running in already precariously close House and Senate races, more so than it even eventually did.  So let’s look at what a free-swinging Chief Executive is now doing, challenging Congress to go along with him, oppose him, risk a veto, or whatever, and he no longer cares where the chips may fall! 

He is speaking his mind on Cuba, pointing out that a half century of isolation (which the rest of the world ignored) did nothing to change the regime in Havana.  Strident opposition to the Communist government of Cuba has always been worth votes in places in the United States where Americans with Cuban background live and among those who still think we are fighting the Cold War with the now extinct Soviet Union which we were fighting until a quarter of a century ago.  Those days, the President recognizes, are long gone.  Just as we are on more or less friendly terms with such Communist nations as China and Vietnam, there is no reason why we cannot live peacefully with and engage in trade with Cuba, our neighbor a few miles across the Florida Straight.  There still are issues to be ironed out but that is not a reason to do nothing.  Anyone who opposes such a rapproachment with Cuba should also oppose our relationships with Vietnam with whom we fought a bloody war and with one of our economy’s chief bankrollers, China, and this includes any Presidential aspirant, however hungry for Florida’s electoral votes they may be.

And in the Middle East, a similar drama is unfolding where the United States has one major Muslim nation fighting on its side in the battle to destroy the Islamic State, which declares that we are its enemy, along with Israel of course, in blocking its jihadist efforts to establish a world-wide Sunni Muslim Caliphate.

And that nation is Iran, the same Muslim nation which imprisoned our Embassy staff there in 1979, 35 years ago, and issued “fatwahs” demanding the death of author Salman Rushdie for insulting the Prophet Mohammed in his book, “Satanic Verses.”  Iran’s opposition to ISIS has a different basis than ours, but it puts us in the position of coordinating our air strikes with theirs.  (Shiite Iran opposes ISIS because it fears a militant Sunni ISIS state in Iraq just across its sandy Western border, and facing it across the Persian Gulf.)  War makes strange bedfellows. Remember that Hitler and Stalin were allies before they were opponents.  Yesterday’s enemies can become today’s friends.

There is some precedent in what is about to happen in Cuba for what may happen in Iran, with whom were already have been involved over the past year in nuclear negotiations balancing their centerfuges with our sanctions.  Of course, any change in the relationship between the United States and Iran would affect the relationship between the United States and Israel as well.  Somehow, the President is facing up to this.  I feel that a softening of the relationship between Israel and Iran will be a part of whatever relationship ultimately gels between Washington and Tehran.  Watch carefully the level of anti-Israel rhetoric coming out of Iran and the level of Israeli’s opposition to Iran’s nuclear development program, which the Iranians facetiously claim is purely for civilian purposes.  These are barometers of how well, or poorly, our relationship with Iran develops.  Success in this area may be the President’s greatest accomplishment.

Up to now, the President’s mark in history will be the making available of private (not government) health insurance for all Americans through the Affordable Care Act.  Now that the Republicans control both Houses of Congress, they will attempt to cripple the Act, which because of its broad acceptance, is virtually immune to repeal.   Such legislation, as well as Court decisions weakening the Act, will not be meekly accepted by President Obama.  He will wield his veto power and stretch the limits of executive power to the maximum in defending his landmark health care heritage.  There is no reason for him to do otherwise.

All of this presents a quandry for those who will be seeking the Presidency in 2016.  For Republicans, they probably would oppose whatever the accomplishments of the Barack Obama Presidency are, but this is thin ice to tread upon since those accomplishments, by 2016, may be shown to be beneficial to the nation, and viewed favorably by voters.  The economy is recovering and the stock market is healthy, so Trump-like diatribes about the President’s birthplace will no longer be taken seriously, even by the party’s right wing.  The G.O.P. may not have very much to attack so they better come up with something positive, a real challenge for them, or they may be filling the role of being “nattering nabobs of negativism,” a phrase made famous by former Vice-President Spiro Agnew, dumped in mid-term by Richard Nixon.

And the Democrats have the same worry.  Likely nominee Hillary Clinton must establish her own identity, as apart from that of President Obama, and what that identity will be is still really uncertain.  That is why Joe Biden and Elizabeth Warren are waiting quietly in the wings.
Jack Lippman


How to Retaliate for North Korean Hacking

So North Korea hacked the Sony website in retaliation for their forthcoming film, “The Interview,” which depicted a fictitious assassination of the North Korean Premier.  Hacking doesn’t kill anyone, but a lot of personal and business data was compromised, and North Korea promised more such hacking if the film were shown.  Sony has cancelled the film and to his credit, President Obama believes that was an incorrect decision.  He has, however, promised appropriate retaliation.  And here is how I suggest he retaliate.

A topic addressed in several of my blog postings over the past few years is the Kaesong Industrial District.  To bring you up to date, Kaesong comprises a large factory complex, employing over 50,000 workers, just north of the border between North and South Korea.  All of the workers there, except South Korean management personnel, are North Koreans, paid wages significantly lower than those paid in other Asia manufacturing countries including China, Bangladesh, India and Vietnam.  The employers there, however, are all South Korean companies and the District is managed by a subsidiary of Hyundai, a South Korean company, well known in the United States for its very competitively priced automobiles.  Supposedly, goods manufactured in these factories do not get the favorable tariff treatment which other goods from South Korean companies receive from the United States, but that is very difficult to determine since companies in the Kaesong District often produce components used in products later  assembled in South Korea.   

During tension between North and South Korea in 2013, the Kaesong Industrial District was closed for about five months, but is now reopened and operating.

 Kaesong Industrial District

Regardless of this however, two facts are important to note:
(1) the profitability of South Korean companies like Hyundai, which may subcontract to firms using cheap North Korean labor to produce, for example, automobile water pumps used in the cars they export to places like India, but not to the United States, is enhanced, enabling them to price their products competitively all over the world, including the United States, and

(2) all of the North Korean workers are paid in US dollars, paid by South Korean firms to North Korea's government, which skims off a large portion for taxes, health insurance, etc., before paying the workers a pittance in North Korean won, a highly devalued currency.  Because of the quantity of South Korean goods shipped to and sold in the United States, South Korean firms have plenty of dollars to spend in North Korea on plants and labor in the Zone in this manner.  (Although it is hard to pin down exact numbers, the Kaesong workers are reported to earn about $71 a month, which does not include overtime pay which can almost double that, but only after the government takes its share and converts the wages into North Korean won, resulting in the North Korean government ending up with all of the dollars.) 

It would be very simple for the United States to respond to North Korean hacking by making it impossible for South Korean firms to pay Kaesong’s workers in US dollars. While North Korea won’t accept South Korean currency, certainly something other than the currency of a nation they consider an enemy and have chosen to hack would be more appropriate.  I suggest bitcoin temporarily, and let the South Koreans figure out a way other than in dollars to pay North Korean slave wages.  Perhaps, even, they might spend those dollars in the United States, which is the whole reason for the favorable tariffs from which they benefit.

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