June 2010: Suburban spy capers, those elusive high tech jobs, and other observations

A tip of the sun visor to the late, great New York newspaper columnist Jimmy Cannon for borrowing his signature phrase: nobody asked me, but…

THE NEWS THAT THE FBI HAD ARRESTED RUSSIAN SLEEPER SPIES HAD A COLD WAR “RETRO” FEEL TO IT. Much of the media coverage focused on the incongruity of international espionage being conducted in the suburbs, as several of the 12 agents had established their cover identities in comfortable leafy places like Cambridge, Massachusetts, Montclair, N.J., and Arlington, Virginia. The New York Times quoted a young neighbor of one of the Russian couples joking that: “They couldn’t have been spies. Look what she did with the hydrangeas.”

The mainstream media quickly concluded that foreign agents in suburbia couldn’t really pose a threat to national security; the entire episode was, therefore, treated as comic in nature (“Boris and Natasha at the mall”). That dismissive slant, however, ignored the reality that much of the country’s high technology is created and developed in suburban settings—the Route 128 corridor outside Boston, Silicon Valley, and Beltway communities in Maryland and Virginia.

Any spy service worth its salt seeking information about American advances in robotics, drones, nuclear weaponry, and other military technology recognizes that while Washington and New York may offer political intelligence, high technology secrets will be found in, well, the suburbs.

This decade-long deep cover spy operation has been portrayed as a clumsy and amateurish failure on the part of Russia’s Foreign Intelligence Service. Yet targeting the scientific and political elites responsible for the laboratories and think tanks where they live isn’t stupid or irrational. U.S. counterintelligence has been dealing with repeated Chinese attempts over the past decade to acquire (and steal) U.S. defense secrets and this espionage has been directed at American high tech workers.

Did the Russian spy ring succeed in collecting any vital information or in cultivating any valuable American sources? Are there more sleeper agents in place? Answers to those questions were lost in the hasty spy swap engineered by the Obama administration, a deal which appears to have been driven primarily by diplomatic concerns. Holding the agents for a longer period of time could have allowed a more comprehensive interrogation by U.S. counterintelligence. David J. Kramer, a former State Department official, raised a number of questions in a Moscow Times op-ed piece (“U.S. Acted Too Hastily in Spy Swap”
about the eagerness of the Russian government in agreeing to a deal:

… Was the Kremlin afraid the arrested Russians might spill the beans about some larger plot or implicate officials at the Russian Embassy in Washington or its mission to the United Nations? Were the 10 Russians or others not apprehended up to more than U.S. authorities accused them of?

For those who applaud the Obama adminstration’s “reset” foreign policy with Russia, it was all too easy to discount the sleeper program as overreaching by Russian intelligence officers nostalgic for the good old KGB days. Yet former Russian premier Vladimir Putin, a veteran of Soviet intelligence, would not have countenanced such a considerable and risky investment in a spy ring on American soil unless he was convinced of its value. The nagging question that remains: what does he know that we don’t?

FORMER INTEL FOUNDER ANDY GROVE NOW ARGUES THAT THE U.S. IS EXPORTING TWO MANY HIGH-TECH JOBS DURING THE “SCALE UP” TO MASS PRODUCTION. His Business Week article (““How America Can Create Jobs” challenges the idea that tech startups will produce enough domestic jobs in the future if emerging companies decide to outsource product manufacturing to Asia. Grove maintains that for every American high tech employee performing high value tasks, there are 10 outsourced manufacturing workers (most in China); he worries that this arrangement causes us not only to lose out on domestic jobs and but also to fail to reap the benefits of follow-on innovation.

Grove’s diagnosis also applies to startups designing new environmental technologies, which is why the promise of “clean, green jobs in America” may prove more of a political slogan than a reality if the outsourcing pattern continues. His solution—taxing tech products made overseas and creating a “Scaling Bank” to assist companies that will produce them domestically—would face strong opposition not only in Washington, but also in Beijing.

WHAT IS THE OPTIMAL PERCENTAGE OF GDP THAT SHOULD BE CONSUMED BY U.S. GOVERNMENT SPENDING? A recent Wall Street Journal editorial warned that the Obama administration is hoping to lock in such spending at 25%-30% of gross domestic Product (GDP) and finance it through raising tax rates or thorough a value added tax (VAT). Government spending as a percentage of U.S. GDP historically has been in the low 20% range, bumping up during wars and recessions.

A higher percentage represents more government control of the economy and a crowding out of private investment and, if taxes are not raised, a growing federal deficit. The fundamental dispute is over whether the U.S. should become more like the social democracies of Europe, which feature less economic inequality but higher tax rates. The congressional elections of 2010 will help determine that question, and it’s hard to envision a center-right electorate voting for expanded government.

IS NEOCOLONIALISM THE SOLUTION FOR BETTER GOVERNANCE IN THE THIRD WORLD? Economist Paul Romer is “trying to help the poorest countries grow rich—by convincing them to establish foreign-run ‘charter cities’ within their borders,” according to an Atlantic Monthly piece by Sebastian Mallaby (“ “The Politically Incorrect Guide to Ending Poverty.”

What Romer proposes appears unworkable because of the political instability in the countries involved, to say nothing of the nationalist opposition such a paternalistic approach will surface. Yet there are some failed nation-states where a United Nations-backed receivership would represent the best chance for building a stable and prosperous society.

LOOKING FOR A NEW ENGLAND SUMMER LUNCH OF A LOBSTER ROLL SANDWICH, WARM INDIAN PUDDING, AND AN ICE TEA? Try Popovers on the Square in Portsmouth, NH.

THIS MONTH’S WORDS OF WISDOM COME FROM EDWARD PLUNKETT, 18TH BARON OF DUNSANY (1878-1957): “A man is a very small thing, and the night is very large and full of wonders.”

Copyright © 2010 Jefferson Flanders
All rights reserved

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