27 July 2007

The Wörgl Experiment

Wörgl is a small town in Austria with 4000 inhabitants that introduced a local scrip during the Great Depression.

By 1932 unemployment in Wörgl had risen to 30%. The local government had amassed debts of 1.3 million Austrian schillings (AS) against cash reserves of AS 40,000. Local construction and civic maintenance had come to a standstill.

The local government printed 32,000 in labor certificates which carried a negative 1% monthly interest rate [I presume to get the currency circulating - you want to offload them. It is effectively inflation; note the relationship between low inflation and economic growth and deflation and economic stagnation - PH] and could be converted into schillings at 98% of face value. An equivalent amount in schillings was deposited in the local bank as cover for the certificates in case of mass redemption and earned interest for the government.

The certificates circulated so rapidly, that only 12,000 were ever actually put into circulation.

According to reports by the mayor and economists of the day who studied the experiment, the scrip was readily accepted by local merchants [Note: Who no doubt were the government and hence the issuers of the currency; one of the advantages of having a council dominated by local bigwigs. Note the benefits of their actions for the proletariat. So much for class warfare... - PH] and the local population. It utilized the scrip to carry out AS 100,000 in public works projects involving construction and repair of roads, bridges, tanks, drainage systems, factories and buildings. The scrip was also accepted as legal tender for payment of local taxes.

In the one year that the currency was in circulation, it circulated 13 times faster than the official shilling and served as a catalyst to the local economy. The heavy arrears in local tax collection declined dramatically. Local government revenue rose from AS 2,400 in 1931 to AS 20,400 in 1932. Unemployment was eliminated, while it remained very high throughout the rest of the country. No increase in prices was observed. Based on the dramatic success of the Wörgl experiment, several other communities introduced similar scrips.

In spite of the tangible benefits of the program, it met with stiff opposition from the regional socialist party [See my note above - the cynical bastards] and from the Austrian central bank [the Priesthood], which opposed the local currency as an infringement on its powers over the currency [in a depression, that's really the central issue, isn't it?]. As a result the program was suspended, unemployment rose and the local economy soon degenerated to the level of other communities in the country.


26 July 2007

The Case for State-Base

The United States should make more use of "de facto hired" troops from "allied" States, and it should get Japan and Germany to chip in for them.

Since the Second World War, the United States in its foreign adventures has always laboured under the difficulty of the political liability of troops losses, a difficulty not borne (to the same extent) by other actors, other powers, or even its pre-WWII self. Baathist Iraq was prepared to lose troops, al-Qaeda is prepared to lose troops, Iraqi insurgents are prepared to lose troops. The American Civil War, while engendering much political controversy, cost 600,000 lives - far more than the 3,500 so far in Iraq and from a much smaller political base. This handicap of the sensitivity of troops losses (see The Utility of Force) ties the United States' hands; worse, its enemies deliberately formulate their strategies and tactics to take advantage of this weakness by focussing on "body-count" (oddly mirroring the US military's own obsession with industrial-style counting of bodies).

United States forces would perform better if they could take advantage of lives and bodies that are not so politically sensitive. These could be out-and-out mercenaries (itself a potential political liability), but any forces that are not United States forces would do. There are several options:
  • Private military contractors (PMCs). A good option. The death of a PMC who is a US citizen would add something to the mood in the US, but not as much as would the death of a US soldier. For instance, his death is not added to the official tally.
  • Mercenaries. With all the problems that that entails - see Machiavelli.
  • Foreign Legion. The US ought definitely create a Foreign Legion. France always seems to use its Foreign Legion for its foreign adventures.
  • Swiss style mercenaries (Reisläufer - "campaign-goers"). The focus of this paper.

Swiss-style Mercenaries

Everyone knows about Swiss mercenaries around the Renaissance period, but few realise how the system worked.

Ghurka troops are recruited by British recruiters in the lowland areas of Nepal under the terms of a treaty with the King of Nepal. Prospective Ghurkas travel to the lowlands to the recruiting stations. The whole process was facilitated by native middlemen called ghurkiwallah.

This is not the model by which Reisläufer were recruited. Reisläufer were recruited by a foreign power contracting with a canton to supply troops. (A "canton" is rather like a city-state, except that some cantons are city-states without a city - "valley-state" might be good description.) So the arrangemet was rather like a military alliance based on cash rather than on coinciding geostrategic interests, a marriage of convenience rather than a love-match. The advantage of this was that a canton would then supply a ready-made contingent rather than a mob or individuals yet to be formed into units or raw recruits yet to be trained.

To some extent the US already does this but a glance at the figures of forces in Iraq tells you not to a great extent.

The danger is that a contingent can be persuaded to go home by terrorism or money- viz Spain. Non-US, non-Western populations are more immune to the pressure of terror (because (a) they are more used to and less shocked by violence and death; (b) they are anonymous "others": their deaths are less shocking to the US public; and (c) Their governments do not need to take into account popular opinion to the same extent that the US government does. The rewards can be designed in such a way as (a) They are such that it is in the Reisläufer supplying country's interest to stay the course; (b) Pay-offs are gradual and over time; (c) Pay-offs can be withheld or revoked.