The last refuge

No one doubts that something has to be done, but what and to whom?

   “Patriotism is the last refuge of a scoundrel.” So said Dr. Samuel Johnson a couple of hundred years ago, although he was not averse to waving the flag of England when it suited him.

   And patriotism was much in evidence last week as Americans started coming to terms with the horrific attack on the World Trade Center in New York. In many ways it was a simple patriotism necessary to help a stunned nation find its collective voice and it was a patriotism urgently needed to help talk up beleaguered markets not just in the United States but around the world.

   Initially, the logistics of just getting Wall Street open was worthy of patriotic sound bites. But despite the early share buybacks and the interest-rate cuts from central banks around the world, the market started to slide later in the week as analysts assumed the worst about consumption expenditure in the United States and Europe. Corporate earnings forecasts were mostly filled with gloom.

   President George W. Bush’s pledge of $40 billion in emergency spending relief will no doubt help rebuild New York’s shattered skyline and go some way to injecting money into IT and defense spending programs. But analysts are already worrying about the effects of this sudden splurge in spending on long-term growth with bond markets declining on the news of more debt sales, potentially pushing interest rates up and fueling inflation over the coming months.

   But, above all, the markets need stability and news of troop movements and grandiose speeches about war will not help anyone – businesses, markets or consumer confidence. Investors are already talking about a wait-and-see policy. Caution, rules and stock prices are slipping across the board. European companies had already announced almost 300,000 job cuts before the terriorists hit New York.

   What’s needed now is some clear political thinking in the White House. The United States must first decide on what any military action will achieve. No one doubts that something has to be done, but what and to whom? Bush has an ideal opportunity to seek justice and be applauded by the world for his cool head and political incisiveness. But sending an attack force against a country suspected of harboring terrorists will surely fan the flames of hatred even further. This could also have dangerous repercussions throughout the Middle East and South Asia. Radical Islamists are grinding axes in friendly as well as hostile states and popular revolts are always a possibility. Remember Iran. For Pakistan, with its nuclear arsenal, to be hijacked by militant thugs would be a catastrophe; likewise if popular opinion swung against the United States in oil-rich countries like Saudi Arabia.

   For the moment, Bush has the advantage. The enemy has to be identified and brought to justice. But despite the catastrophe in New York, vengeance is not an option and patriotism should not be exploited for such ends. It’s up to him to use the groundswell of patriotic fervor in America for the common good. Get American consumers to buy America. To spend more. Reduce taxes. Help the private sector get back on its feet. The United States, more than any other nation in the world, knows what it’s like to bluster headlong into a war from which it can’t extricate itself without suffering humiliation and defeat. It’s taken two decades for the country to get over the “Vietnam syndrome.” Don’t let an untidy and potentially unwinnable war be the last refuge of a patriot.