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February 17, 2009 - Image 4

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The Michigan Daily, 2009-02-17

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4 - Tuesday, February 17, 2009

The Michigan Daily - michigandaily.com

74L e Mc4t'*pan 43at*lg

Edited and managed by students at
the University of Michigan since 1890.
420 Maynard St.
Ann Arbor, MI 48109


Unsigned editorials reflect the official position of the Daily's editorial board. All other signed articles
and illustrations represent solelythe views of their authors.
Setting a trend
'U' should put an end to its dealings with Russell Athletic
W hen the University's Advisory Committee on Labor
Standards and Human Rights takes issue with your
business practices, you're probably doing something
wrong. Last Monday, the committee called for the University to
sever its ties to Russell Athletic, citing reports that the athletic
apparel company has been firing workers for trying to union-
ize at its facilities in Honduras. Such actions are a blatant viola-
tion of fair labor practices, and the committee's advice should be
promptly followed. Given the University's previous failings on
issues of labor standards, as well as the immense popularity of its
collegiate merchandise, the University can't afford to take a weak

To tell you the truth, my cold medicine
was having a big effect."
- Shoichi Nakagawa, Japanese finance minister, countering claims that he was
intoxicated at a Group of Seven meeting, as reported on Sunday by Reuters.
!+jSProven ./f Teeet a n O a 5
to study ibDaa
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Afree market solution

stance on fair labor standards.
Russell fired 1,800 workers when it closed
one of its plants in Honduras. The work-
ers claim that they were fired for trying
to unionize and that the company ignored
their requests for higher wages, refusing
to negotiate. The company alleges that the
plant was closed due to declining demand
for its products. But a recent report from
the Worker Rights Consortium, an inde-
pendent monitoring agency, provided evi-
dence that the company's decision to close
the plant was made in response to work-
ers' attempts to organize. At an event last
week sponsored by Students Organizing
for Labor and Economic Equality, two of
the fired union leaders spoke of receiving
threats to their lives and families.
These allegations are deeply troubling.
Workers in Russell's Latin American facili-
ties already work for far less pay than U.S.
workers. Their right to organize should
be encouraged so that they can press for
improved working conditions and a decent
wage. Unfortunately, despite clear warn-
ings and an awareness of the potential
consequences, Russell has resorted to dra-
conian measures to suppress the demands
of its workers. These are hardly the sorts of
practices with which the University should

be affiliated.
Cutting ties with Russell would demon-
strate commitment to fair labor standards
and responsible corporate affiliations, espe-
cially in light of several previous University
blunders. The failure to sign onto the Desig-
nated Suppliers Program is just one example.
The University has repeatedly rejected this
plan, which would screen companies based
on their commitment to fair-labor practices
and require the University to sign only with
approved companies. Concerns have also
come up around other suppliers like Adidas
and the New Era Cap Company, and they've
hardly helped the University's image. Cut-
ting ties with Russell would begin to make
up for these incidents.
According to a recent report by the
College Licensing Company, Michigan
merchandise was the sixth best selling
university brand in the second quarter of
the 2008-09 fiscal year. These figures give
Michigan both great responsibility and
great leverage, and it's time for the Uni-
versity to exercise both. When the workers
toiling in faraway factories can't improve
working conditions on their own, strong
stances from influential institutions like
the University are needed to do the trick.

Pundits on CNBC often take
for granted that our current
economic crisis is part of the
traditional boom
and bust cycle of
capitalism. It is
treated as a natu-
ral blight, like
an earthquake -
or flood, which.
originates some-
where within the
capitalist system VINCENT
and must be com-
bated. But there PATSY
exists another
school of thought
that places the blame not on capital-
ism but rather on intervention into
the market by the federal govern-
ment. The Austrian Theory of the
Business Cycle not only explains the
current crisis more completely than
any other theory, it can also be used
to explain all other previous crises.
Every business cycle theory must
explain two facts. One, why is it that
entrepreneurs, who are trained in
understanding the market, are sud-
denly making a cluster of grave errors?
Two, why is it that goods used in pro-
duction (capital goods such as machine
tools, land, raw materials) rise in price
faster duringthe "boom" and fall faster
inthe"bust" relative toconsumergoods
(final products that are consumed in
usage, such as toys, computers, etc.)?
To think about the first question,
imagine a situation where for three
or four weeks, most National Foot-
ball League quarterbacks throw four
touchdown passes per game. Then,
for the next two or three weeks,
most quarterbacks suddenly throw
three interceptions per game. I do
not believe, and I think most people
would agree, that it would be accu-
rate to say that this cycle of many
touchdowns followed by many inter-
ceptions is a "product of the NFL sys-
tem" or somehow natural conditions
of the game would be a sufficient
explanation. It seems that the game
fluctuations would be caused not by

some mystical actions of the game of
football, but rather by rule variations
from an outside source like more or
fewer players allowed on defense or
outlawing of certain types of defens-
es. Placing the blame on the capitalist
system rather than outside interfer-
ence would be equally wrong.
The second fact with every busi-
ness cycle theory is that capital goods
(such as land, stocks, machine tools)
rise in price during the boom much
faster than consumer goods (bubble
gum and coffee). This is because
prices, whether the market is free
or not, are determined by supply
and demand. Whenever an institu-
tion sets a price above or below the
market price, there will be surpluses
or shortages. The more important
effect here is not the actual shortage
or surplus, but rather that resources
are being diverted away from where
the market wants. If a price ceiling is
imposed on wheat at $1 per bushel, for
example when wheat would normally
be sold at $2 per bushel, a shortage
would develop. Fewer people would
harvest wheat or become farmers.
Prices deliver information to inves-
tors and capitalists on the wishes of
society, when and where people want
to spend money. When the Federal
Reserve sets interest rates, it imposes
a price control. When it lowers the
interest rate below the market rate,
it sends signals to the market that do
not reflect the wishes of society. In
any other sector of the economy, this
would cause a shortage of funds avail-
able to invest. However, in the bank-
ing system, the Federal Reserve can
create money from thin air so that the
shortage is never noticed and certain
industries are given more loans.
Since saved funds lead to a lower
interest rate, this implies that a lower
interest rate reflects society's desire
to save more for the future. This
makes investments in capital goods
production (machine tools, land or
stocks) more profitable than they
were before, and thus these projects
are undertaken. But when the inter-

est rate is lowered by the Federal
Reserve and not by an increase in sav-
ings, the investments made in capital
goods are very unprofitable. So when
the Federal Reserve is forced to raise
interest rates and contract the supply
of credit, a recession begins.
If artificial credit expansion were
really the path to prosperity, we could
print money all day and not have to
worry about working - but, sadly,
it is not. The problem with lower-
ing interest rates is that society does
not want the goods being produced
with this newly-created credit. And
when the interest rate is raised, this
becomes starkly revealed as a waste
of resources and the price drops.
The Austrian
Theory's answer to
gov't interference.
How does this look in the real
world? Look at housing prices. The
Fed lowered interest rates to one per-
cent, causing an unsustainable boom
in housing and creating unprofitable
investments. Housing prices are fall-
ing not because there is some wicked
force out there causing failure. They
are falling because the Federal Gov-
ernmentand Federal Reserve,through
misguided policies, caused an unnatu-
ral rise in housing prices.
The business cycle is not caused by
some mystical problems in the capi-
talist system that can only be solved
by government, but rather are caused
by government and can only be solved
by free markets. If anyone is angry at
the current system and wondering
why it has failed, they should look
into the nearly irrefutable policies of
Austrian Economics.
- Vincent Patsy can be reached
at souljaboy@umich.edu.



Readers are encouraged to submit letters to the editor. Letters should be less than 300
words and must include the writer's full name and University affiliation. Letters are edited
for style, length, clarity and accuracy. All submissions become property of the Daily.
We do not print anonymous letters.
Send letters to tothedoily@umich.edu.
UJPZ ignores Israel's need in their charters that they will never recog-
nize the Jewish state of Israel. In fact, Hamas'
to defend its own existence charter states that "Israel will continue to exist
until Islam destroys it."
Clearly, it is impossible to negotiate with a
TO TH E DAILY: group of people who brainwash their children
With regard to yesterday's viewpoint (What from an early age to blow themselves up to kill
Israel's election means, 02/13/2009) the Union Jews. For reference, please see Gaza's hit chil-
of Progressive Zionists must not ignore his- dren's TV show, Pioneers of Tomorrow. UPZ's
tory. UPZ suggests that the only way to achieve members, like good left-wing robots, automati-
peace is through direct negotiations and the cally denounce anything the right-wing parties
surrendering of historically Jewish land to the have to say. However, history has demonstrat-
former Egyptians and Jordanians currently ed that negotiating with and surrendering land
called "Palestinians". to terrorists has failed. The only solution that
UPZ chooses to ignore the fact that Israel remains is to eliminate the threat to Israel's
already gave the "Palestinians" Gaza and left existence with military action, like that which
them with the resources to become a produc- occurred recently. UPZ can complain about it
tive sovereign nation. Instead, the Palestin- all they want, but in the end, this method will
ians squandered this opportunity and elected be shown to lead to the only peaceful and long-
Hamas, a group that is recognized as a terrorist lasting solution.
organization by the United States and the Euro-
pean Union, to launch rockets at Israeli civil- Dan Shuster
ians. Both Hamas and Fatah state specifically Alum
O i
s f5 .
rz 4


As the Michigan Student Assembly examines its future on campus, the Daily
would like students to voice their opinions on what
should be a part of its agenda.

The politics of intimidation

Tonight at 7:30 P.M., Students Allied for Freedom and
Equality is bringing political scientist and professor Nor-
man Finkelstein to the Rackham Amphitheatre to give a
lecture entitled "The Israel-Palestine Conflict: What We
Can Learn From Gandhi." Some members of campus may
be uncomfortable with having such a controversial speaker
on campus. But when considering Finkelstein, it's impor-
tant to look at the long history of academic censorship that
has followed his career and what it means for intellectual
Prior to being denied tenure at DePaul University in
June of 2007, Norman Finkelstein was no stranger to
intimidation. In 2000, Finkelstein wrote a book titled
"The Holocaust Industry:,Reflections on the Exploitation
of Jewish Suffering," in which he discussed how the Holo-
caust is often used as an excuse for Israel's maltreatment
and aggression toward the Palestinians. The book created
a stir amongst many Jews and non-Jews alike, and resulted
in vociferous criticism directed specifically at Finkelstein.
Since then, Finkelstein has written several other books that
focus more on Israel's treatment of the Palestinians and
the logical fallacies used by many in the pro-Israel com-
munity to justify Israel's forced dispossession and military
occupation of Palestinians since 1948.
Since "The Holocaust Industry" was published in 2000,
Finkelstein and Alan Dershowitz, an influential author and
professor of law at Harvard, have been locked in a seem-
ingly intractable war of words. Over the years, Dershowitz
has gone to great lengths to try and silence Finkelstein. In
one instance, Dershowitz made a personal phone call to
Governor Schwarzenegger of California in order to con-
vince the University of California not to publish one of Pro-
fessor Finkelstein's books entitled "Beyond Chutzpah: On
the Misuse of Anti-Semitism and the Abuse of History."
Most recently, it appears that Finkelstein was denied
tenure at DePaul University as a direct result of Dershow-
itz's meddling. Before leaving DePaul in 2007, Finkelstein
had been teaching there since 1991. In an April 12, 2007

New York Times article entitled "A Bitter Spat Over Ideas,
Israel and Tenure", Finkelstein said that he was optimistic
about his chances at securing tenure at DePaul. His annual.
reviews appeared to be going well, an implicit indicator
that he was on his way to the tenure track. But in 2005, Der-
showitz began a correspondence with DePaul's president,
Rev. Dennis Holtschneider, and the previous chairman of
DePaul's political science program, Patrick Callahan. Der-
showitz pressured the Arts and Sciences' Faculty Gover-
nance Council so much so that the 12-member board wrote
letters to the presidents of DePaul and Harvard complain-
ing about Dershowitz's behavior.
In the end, although Finkelstein's own department at
DePaul voted to award him with tenure, his bid was ulti-
mately denied by the University Board on Promotion and
Tenure. While DePaul has gone to great lengths to convince
the academic community that its decision to deny Finkel-
stein tenure was not influenced by Dershowitz or any other
outside forces, Finkelstein's failure to secure tenure in the
face of Dershowitz's shameless behavior demonstrates that
academic freedom cannot be taken for granted.
Finkelstein's writings may certainly be provocative and
controversial. At the same time, they are original, intellec-
tual, and the product of spurious scholarship and research. 4
To that extent, they should be subject to intellectual debate
and not written off as "hate speech" simply because they
recognize Palestinian suffering and question Israel's sys-
tem of discrimination. From President Carter to Joel
Kovel, it has long been the goal of many pro-Israel activists
to make criticism of Israel's policies taboo. As students at
an institution of higher learning, we have a fundamental
responsibility to grapple with ideas that may appear dia- 4
metrically opposed to our own. The need for this kind of
civil debate becomes increasingly important when it comes
to contentious issues like the Zionist-Palestinian impasse.
Andrew Dalack is a chair of Students
Allied for Freedom and Equality.

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