Tuesday, November 16, 2004

Abercrombie Folds

Upscale retailer Abercrombie & Fitch has settled a class action federal discrimination lawsuit brought by black, Hispanic and Asian employees and job applicants, who alleged that the company promoted whites at the expense of minorities. The settlement will cost Abercrombie $40 million.
The settlement, approved Tuesday morning by U.S. District Court Judge Susan Illston, requires the company to adhere to a consent degree that calls for the implementation of new policies and programs to promote diversity and prevent discrimination in its workforce. Abercrombie & Fitch also must pay about $10 million to monitor compliance and cover attorneys' fees, although the agreement contains no admission of wrongdoing by the company.
Abercrombie's chairman and CEO, Mike Jeffries, denied the accusations of discrimination and said the company settled to avoid "a long, drawn out dispute" that would have hurt the company. This sort of comment usually means the company determined that it would likely lose in court and didn't want to face potentially larger damage awards.

But the suits brought against Abercrombie & Fitch reveal a larger cultural agenda than a simple virtuous stand against racial discrimination in employment:
The lawsuit originally was filed last June in San Francisco by Hispanic and Asian groups charging that Abercrombie & Fitch, known for its "classic casual American" clothing styles, hires a disproportionately white sales force, puts minorities in less-visible jobs and cultivates a virtually all-white image in its catalogues and elsewhere.
This raises serious questions about the over-reach of federal anti-discrimination law. If Abercrombie & Fitch has determined that its products strongly appeal to a particular ethnic demographic and thus targets its marketing and branding to cater to that demographic, should that be illegal? Is it inherently racist? Apparently, if that market demographic happens to be college-aged whites, the answer to both questions is yes. Note that Abercrombie's marketing campaigns have long raised the ire of social conservative and religious groups, which considered them too explicit, but have consistently proven highly successful for the company and its overpriced wares.

Laws prohibiting racial discrimination in employment practices may have seemed reasonable and fair, despite the infringement on property rights, but if those laws are now to be used as a means to tell companies which demographics they may target, or dictate the content of marketing campaigns, then perhaps the time has come for Americans to reconsider those laws and the motives behind them. It is improper for the courts or the federal government to force companies to alter their corporate "image" for the benefit of any government endorsed cultural objective. The marketplace should be the ultimate guide and arbiter of corporate strategies.

And what about companies, who discover that their products are most consumed by different ethnic market segments. Are they to be prevented from adjusting their marketing and corporate image to cater to those segments? Has anyone sued "hip-hop" magazines and clothing producers, arguing that their urban black image they cultivate is equally racist? What about catalogues that sell products designed to appeal to specific ethnic groups? Will the U.S. Equal Employment Opportunity Commission (EEOC) file suit against these companies, demanding they adopt "diversity" programs and alter their advertising campaigns to reflect consumers who do not purchase their products? One doubts it.
"This agreement promises to tranform this company, whose distinctiveness will no longer stem from an all-white image and workforce," said Thomas A. Saenz, vice president of litigation at the Mexican American Legal Defense and Educational Fund.
Mr. Saenz's remarks inadvertantly reveal the true goal of this suit. Employment discrimination merely served as the weapon with which Abercrombie & Fitch could be forced to change its "white" image. Apparently, the strategy worked. Expect to see more of these suits. Also expect to see Abercrombie's sales decline under its new diversity campaign.

Monday, November 15, 2004

Border Folly

Parapundit offers a trenchant and frightening breakdown of recent news reports of Middle Easterners crossing the US-Mexico border, and observes:
One thing is for sure: We are protected more by the limits of Al Qaeda's talents and resources than we are by US government policy toward our borders.
Sad, because it's true. Question: if the US suffers a terrorist attack on US soil, committed by Islamists who crossed the southern border undetected after 9/11, should US officials, including the president, face criminal charges for negligence?

Holland's Hobson's Choice

Arnaud de Borchgrave expertly sums up the horrible reality now dawning on the Dutch.
It was such Dutch tolerance, pragmatism and guilt about the country's colonial past that allowed hundreds of thousands of immigrants from Muslim Indonesia (a Dutch colony from the 17th century until World War II) to flood into tiny Holland. Today, Muslims are a majority among children under 14 in the Netherlands' four largest cities. There are 1 million Muslims (6 percent of the population) now living in Europe's most crowded small country. Some 30,000 new Muslims arrive every year. They tend to live among themselves, with their own schools, mosques and restaurants. Most are horrified by what they view as sacrilegious in their own religion. Their imams speak no Dutch and know nothing of the Netherlands' history and culture.
The consequence of Dutch immigration policy has been the wholesale import of a violent anti-Western fanaticism that can not be reasoned with or appeased. The men who murdered Theo van Gogh subscribe to the same Islamist totalitarian fantasy that inspired the 9/11 hijackers, the Bali bombers, and countless other Muslim terrorists around the world.
Europe's largest mosque is in Rotterdam, which is also Europe's busiest port. Half the people there are of foreign origin. Unemployment among the Muslims is high. And the Dutch live-and-let-live permissiveness made this nation, a quarter of it below sea level and protected by 1,500 dikes, ideal breeding grounds for Muslim fundamentalism and the kind of extremism that spawned one of Osama bin Laden's European fan clubs. But for years the government was in denial about Islamist extremism in what is otherwise a well-managed society.
Dutch Muslims, repelled by the freewheeling lifestyle, sought solace with radical imams in the mosques. There men outnumber women. And women are relegated to a part of the mosque where they can be neither seen nor heard.
Denial has been the primary reaction from European elites, who to this very day continue to try and blame Europeans racism for the crisis. The left-wing of the American intellectual establishment has adopted this exact line, most notably in the tired form of Noam Chomsky, for whom not a sparrow falls without a slap from America's fiendish hand.

Such nonsense merely gives the Islamist threat time to metastasize within European societies, fundamentally altering their character forever. Demography is destiny. European Muslim birthrates outstrip that of native European populations by a wide margin. As the years go by, there will more ever more Muslims, and ever fewer native Europeans in Europe.
Today, Muslims are a majority among children under 14 in the Netherlands' four largest cities.
Those expanding European Muslim populations have already demonstrated a refusal to assimilate European values and cultural attitudes. Well meaning programs to force them to do so will only stiffen that resolve. Thus Europe finds itself suddenly jarred awake to face a threat caused by its own intellectual failure - the failure to defend its culture and its soil. This is the price of the cowardly, guilt-ridden, anti-Western ideology that European intellectuals have embraced for decades. They convinced themselves that their culture was racist, imperialist and not worth preserving - so they didn't. Now they find themselves intellectually disarmed, while the enemy is already inside the door.

de Borchgrave wonders:
Could the Netherlands be a curtain-raiser for a wider clash of civilizations in the old Continent? Hundreds of thousands of young Muslims in Europe are potential jihadis, according to European intelligence chiefs speaking not for publication. They have been warning their political masters about the tinderboxes that many Muslim communities have become. Jihadi volunteers are known to have left for Iraq from a number of Muslim slums on the outskirts of major European cities.
Europe faces stark choices. If it continues a policy of denial, it will cease to be European. If it chooses to face the threat, it must shake itself free of the intellectual bankruptcy that led to this predicament and move boldly to excise the threat. For passive Europeans, so long taught to despise themselves, it's a tough choice.

Sunday, November 14, 2004

Wake Up Call on Border Security?

Time Magazine serves up more evidence that the US-Mexico border, and the Bush administration's adamant refusal to secure it, has become America's primary vulnerability. According to Time, Al Qaeda operatives have told US intelligence agents of plans to smuggle nuclear materials into the US by sending them to Mexico, where security remains lax, and then across the border (still unprotected three years after 9/11) into the continental US.
[the account of an Al Qaeda operative], though unproved, has added to already heightened U.S. concerns about Mexico. Homeland Security Secretary Tom Ridge met publicly with top Mexican officials last week to discuss border security and smuggling rings that could be used to slip al-Qaeda terrorists into the country. Weeks prior to Ridge's lightning visit, U.S. and Mexican intelligence conferred about reports from several al-Qaeda detainees indicating the potential use of Mexico as a staging area "to acquire end-stage chemical, biological, radiological and nuclear material." U.S. officials have begun to keep a closer eye on heavy-truck traffic across the border. The Mexicans will also focus on flight schools and aviation facilities on their side of the frontier. And another episode has some senior U.S. officials worried: the theft of a crop-duster aircraft south of San Diego, apparently by three men from southern Mexico who assaulted a watchman and then flew off in a southerly direction. Though the theft's connection to terrorism remains unclear, a senior U.S. law-enforcement official notes that crop dusters can be used to disperse toxic substances. The plane, stolen at night two weeks ago, has not been recovered.
Now, there are a number of caveats here. First, the Al Qaeda operative divulging this information has turned his back on Al Qaeda and wants American protection. To secure this he may simply by telling the US something he thinks will garner him that attention - not unlike the "intelligence" provided to the US by many Iraqi defectors during the late 1990's regarding Saddam Hussein's WMD programs, all of which seems to have been wildly inaccurate at best. Second, while reports of Al Qaeda's interest in nuclear weapons has been amply demonstrated, it remains very unlikely that the group has obtained actual nuclear weapons, which are not as easy to build or maintain as Hollywood movies might have you believe. A radiological bomb, which would feature a conventional explosive surrounded by radioactive waste, is somewhat more plausibly within Al Qaeda's grasp. Such a weapon would kill relatively few people, but could contaminate a substantial area, forcing an expensive clean up. The use of such a weapon, though causing little actaul destruction, would very likely have significant shock value, possibly prompting a panic in the affected area that could kill more than the weapon itself.

In any event, even if the Al Qaeda turncoat's information is inaccurate it does indicate that Islamist terror groups are well aware of the US-Mexico border's vulnerability and have at least considered the possibility of exploiting it. That alone should serve as a warning to Washington to act quickly to secure the border before a disaster happens. Don't hold your breath, however. President Bush seems whole-heartedly committed to admitting as many Mexican and Central America illegal immigrants as possible to the country with no apparent regard to the cultural or security consequences of such a policy. Once upon a time, the Dutch left their borders open too, now look at the crisis they face.

The Dollar Warning

In its first four years, the Bush administration paid little attention to fiscal responsibility, and the US dollar is paying the price.
Amid worries about bulging U.S. budget and trade deficits, the greenback dropped last week to a record low against the 5-year-old euro, a 12-year low against the Canadian dollar and a nine year low against an index of major currencies. Many analysts don't see anything that will stop the decline.
Plenty of supply-siders discount such talk, arguing that the budget deficit remains low as a percentage of GDP comparable to other countries, and that a weaker dollare will improve US exports. However, this fails to appreciate the extent to which the U.S. government's debt (caused by free-spending Republicans and Democrats) has been underwritten by foreign investors, especially China and Japan. Asian holdings in US government debt give these nations enormous potential leverage over the US, since the consequences of them selling their holdings would prove difficult for the US.
A cheaper dollare reduces the value of American securities, making them less attractive to foreign investors. That could eventually precipitate what [Sadakichi Robbins, head of global fixed-income trading at Bank Julius Baer] called "the doomsday scenario" - Japan and China not only refusing to buy U.S. bonds, but selling some of their $1.3 trillion in reserves.
The only way Uncle Sam could then find new customers for its IOUs would be by raising interest rates. And although higher rates are good for savers, they would be disastrous for a country weaned on cheap credit.
Such higher rates would drive up sharply the cost of borrowing money here in the U.S., slamming the brakes on an already fragile economic expansion and sending more US consumers - already strung out like heroin addicts on too-readily available, high interest credit card debt - straight into bankruptcy proceedings. Moreover, a lower dollar does not readily translate into stronger US exports since a substantial portion of the US trade deficit is with China, whose currency, the yuan, is pegged to the dollar. Thus, cheaper US dollars will not make US goods any less expensive to Chinese buyers. The US government has been pushing for the Chinese to decouple its currency from the dollar, without significant success (for obvious reasons).

But a weakened dollar may have a more troubling consequence. For most of the last century, US investment have been considered the gold standard of stability for foreign investors. A substantially and consistently weakened US currency could signal a change in that perceptions.
In August, the most recent period for which there's data, foreign private investors sold $2 billion more in U.S. stocks than they bought, the Treasury said. Meanwhile, they dumped $4 billion more in government bonds than they purchased.
"A run for the exits could happen any day now, that's for sure," said C. Fred Bergsten, author of "Dollar Overvaluation and the World Economy" and director of the Institute for International Economics, a Washington think tank.
Such a prospect creates a tricky balancing act for policy makers. As long as the dollar devalues in a slow and orderly way, and doesn't trigger panic selling of American securities, Bush administration officials appear to be comfortable with the fall. As they see it, the benefits of boosting the economy throught higher exports outweigh the drawbacks.
The administration approach could work out fine in the short run, economists say. But eventually the slide must stop. Few countries can maintain strong economies with a debased currency.
Indeed, if a weak currency was the prescription for long-run economic health, countries like Argentina and Mexico - which have suffered massive currency devaluations in the last decade - would be financial titans.
Ironic, considering that the Bush administration seems intent on importing a significant percentage of the Mexican population into the US.