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 tothedaily@umich.edu ROBERT SOAVE COURTNEY RATKOWIAK EDITORIAL PAGE EDITOR MANAGING EDITOR GARY GRACA EDITOR IN CHIEF 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. ELAINE MORTON A E-MAIL ELAINE AT EMORT@UMICH.EDU !+jSProven ./f Teeet a n O a 5 to study ibDaa yA * *uru h 4Kl b 6 a i M 3 aa a( ap g [g 4g Fo 6 _ 4 4 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. A I LETTERS TO THE EDITOR: 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. SEND LETTERS TO: TOTHEDAILY@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 JASON MAHAKIAN E-MAIL JASON AT MAHAKIAJ@UMICH.EDU NLY'IF yA 00 O i // s f5 . rz 4 I 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. E-MAIL YOUR IDEAS TO ROBERT SOAVE AT RSOAVE@UMICH.EDU. STUDENTS ALLIED FOR FREEDOM AND EQUALITY| PI 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 freedom. 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.