After the Future

Now We're Getting Serious

I was wondering what was taking so long for this kind of approach to be tried:

Protect Insurance Companies PSA from Will Ferrell

What's been lacking is imagination and creative thinking in promoting most Progressive initiatives. Where's the Uncle Tom's Cabin for healthcare reform?

Quote of the Day: Michael Lind

On who really creates wealth:

the true creator of wealth is, ultimately, the commonwealth – not only the political community, but the civilization that it shares with other nations. No technical invention or business innovation is a creation of something from nothing. All depend on the intellectual capital that the human race has accumulated since the Paleolithic period. The argument for property rights then becomes a utilitarian one – which set of property rights will spur individuals and groups and whole societies to engage in useful innovation? (Not all innovation is necessarily useful, as we have seen in the case of financial innovation.)

The commonwealth theory defines wealth broadly, as everything that conduces to the well-being of a community. Material production is only one of many activities that enrich a society. Public goods like safety and utilities and infrastructure and parks are part of the wealth that we share in common. So are many private goods that sometimes are best provided by the public, like public education and inexpensive healthcare.

By all means, then, let us celebrate virtuous capital owners and visionary investors as "wealth creators" on Labor Day. And let us celebrate as well as the other creators of private wealth, on the assembly line and in the office cubicle and in the janitorial closet, and the creators of public wealth in the form of roads and subways and parks, and the police officers and soldiers without whom a high level of public and private wealth could neither be created nor preserved. There are criminals and parasites among all classes of society, but most of us are wealth creators, and we deserve to be recognized as such. (Source)

Seems obvious to me. But in America, is there any idea harder to sell?

For the success culture of the American economic right, whose constituents in most cases vastly overestimate their own individual contributions to their own wealth and success, there is either independence or dependence.  It's a false dichotomy--inter-dependence is also a possibility--in fact, it's the only healthful possibility.

Self-reliance--yes.  We have to stand on our own two feet. Our dignity as humans depends on it. But self-reliance cannot be understood as healthful unless situated in an inter-dependent context. Inter-dependence means that we are all responsible,free agents as individuals, but that also we are all in this business of making a life together. We need one another, and cooperation is as important a value as competition in producing prosperity. 

And some times we're in a position to help, and sometimes we're in a position in which we need help, and it shouldn't be extraordinary to give it or shameful to ask for it.

Good Luck with That (Updated)

From today's WaPo:

Roger T. Cole, the central bank's head of banking supervision, told Congress two weeks ago that one lesson among many is that regulators must no longer be lulled by good times or put off by industry arguments.

"When bankers are particularly confident, when the industry and others are especially vocal about the costs of regulatory burden and international competitiveness, and when supervisors cannot yet cite recognized losses or write-downs," Cole said, "we must have even firmer resolve to hold firms accountable for prudent risk management."

Easy to say now when it's too late. The rest of the article talks about Geithner's feeble attempts to do just that when he was head of the New York Federal Reserve. 

Everybody knows that real life in the mainstream America is just an extension of high school, and Geithner is like the nerd appointed monitor with the task to make the jocks on the football team behave during homeroom. Not gonna happen. Powerful people get what they want unless people with more power stop them.

It seems that for this Wall Street crowd you need people with a police or prosecutor's mentality to play the regulator's role--not some chummy wannabe. I suppose there are people who are the financial regulator equivalents of a Patrick Fitzgerald, but they would never get appointed during a Republican administration.  Let's see if Obama finally changes things up so that it's not just the rules that are tough, but also the people who are appointed to enforce them.

***

UPDATE: As if in answer to my question where is the Patrick Fitzgerald for the financial industry,  Moyers interviews William K. Black, who is that guy. He strongly indicts both the fraudulent behavior of America's elite bankers and the Obama administration for covering up their fraud. If a sledgehammer is what is needed to take down the corrupted Wall Street system, he's one guy we should all call upon to swing it.

If Not Geithner, Who?

What can be realistically expected in a society as complex as ours run by elites, including most Democrats, who since Reagan, if not before, have lost any vestigial sense of what the common good is? What can be expected of a class of people who have got to the positions that they hold by caring about more than anything else their own narrowly defined careerist self interest? What can we expect from a class for which principle and service are just b.s. concepts one pays lip service to, and where savvy and being a player count for everything? Even if you are one of the few who cares about doing the right thing, who's there for you to work with?

Let's assume Obama wants to do the right thing, that he even knows what the right thing is regarding the financial meltdown--what is the set of people from which he can choose which actually understands how the system was built and how it works?  Who is he going to call upon if not people from Wall Street?  Left-leaning academics?  But what do they know about the real guts of how Wall Street works? And what makes any of us think that they wouldn't make a bigger mess of things with unintended consequences?

Missing It and Battlestar Gallactica Farewell

I've not been writing because I've been busy with other things, and I am very much in this slack water mode.  It seems as though events outrace anything I or anyone else has to say about them with any hope of writing anything truly insightful or helpful. Almost everything I read seems idiotic or at best to be quasi interesting but "not it," instead "missing it" because our eyes haven't adjusted yet to enable us to see meaningful patterns.  And so, I suppose, I'm reluctant to write anything I know for sure is "not it". I'm not a professional blogger, and I don't have to write for my paycheck. I pity those who do. My basic assumption is that nobody knows what they're doing or what they're talking about because we're in a new situation nobody understands.

I know.  People have ideas and theories about what ought to be done, and there is a course of action that is in fact the best possible course of action, and maybe someone is proposing it. But the fact is that whatever might be the best thing to do, there's no political constituency to back it, because whoever knows what the best thing to do is has no political power. Most of us wouldn't recognize the best thing to do if we heard it especially if it would cause too much short term pain, And so we have our opinions and as with all opinions some are better than others, but no one really knows.  Even the guy who is proposing what would in fact turn out to be the best course of action doesn't know beforehand if it would work or not. Nobody knows anything for sure.

And so we can vent and shake our fists all we want, but it all comes down to the politics--who has the power and how will they use it. And the people with the power are the people who created or enabled the disaster in the first place.  In a radio interview I heard (I think) Joe Nocera describe their power as that of people who have rigged the system with ticking bombs, and they demand to be paid their exorbitant because they are the only ones who know how to disarm the bomb, and if you don't let them do it them handle this crisis the way only they know how to do it because they are the ones who set the bombs in the first place, they'll let the whole system collapse. So so then let's keep paying them billions, and they'll fix the problem, maybe. And so the rest of us keep paying because, even if they don't know how to disarm the bomb or don't want to, we don't know what else to do.

So sure, there's a part of me that wants Summers and Geithner fired and which would prefer someone like Joseph Stiglitz managing the crisis, but how does the guy with the explosives strapped to his chest respond to someone who will read him the riot act?  It's never about doing whatever might seem to be the right thing in the abstract--even if we know what that is--but about doing what's possible given the political realities.

***

Which is my segue into my sayonara to Battlestar Galactica.  The finale was for me a disappointment, but I want to give the writers credit for reaching for something even if they missed it. The show was more sure footed when it got us to identify with the good guys Roslin and Adama in their authoritarianism because we saw that the democratic process was being abused by the bad guys Zarek and Baltar. Neither side was unambiguously good or evil, but was Battlestar a clever right-wing propaganda vehicle for its taking the side of the benevolent dictators? Isn't that really how Cheney justifies his behavior?  "Hey, I'm just like Laura Roslin doing what I have to do for the common good. You may not like it, but you don't understand what's really going on. You have to trust me." 

And while most of us with any claim to good sense would never trust a guy like Cheney, we find ourselves trusting Roslin and Adama, and wishing even that they had taken care of Baltar when they had the chance. So what does that say about our commitment to democracy and the rule of law?  I don't think the goal was to make Cheney's argument, but rather to make us experience our own ambivalence about things we think superficially with certainty, and that a good thing.  We are most of us Lee Adama, caught in the middle wanting the best choices to be made, and committed to the process that often prevents them from being made. Or was it designed to be a challenge to our complacent assumptions about democracy? Are we to side with process and the rule of law or with the leader with dictatorial powers whom we believe has the common good as his/her primary motivator?

Battlestar was also interesting because of its metaphysical ambitions, but for me at least they were not realized, and the finale was a deep disappointment in that regard.  It just came off a contrived and not well thought through. (I fear I will have the same reaction to Lost, which is similarly ambitious.) I suspected from the moment the quest for earth theme was introduced that the fleet would find our earth thousands of years ago and that the writers would try to tie it in with theories that human civilization was brought to earth by aliens who also introduced monotheism through the Egyptians.  The writers knew that was the expectation, and that's why they upended it by the fleet's finding Earth 1 a nuclear wasteland. But they brought us to the green, unspoiled Earth II in the end.

And that's fine, so far as it goes, but in its other themes it was reaching for something that it really didn't know the answers for, and so the answers it gave were contrived and unsatisfactory. The business about resurrection was interesting, but while it made some sense with regard to the cylons in a reincarnational way, it didn't make much sense with regard to Kara Thrace. Why only her of all the people who died? I know, she's "special", but what kind of sense does it make to have a resurrection body and not know it, and then when she finally came to understand what had become of her, why didn't she explain it to Lee rather than just disappearing on him.  I know it's less dramatic, but it's also an easy way to deal with it. Just assert it no matter how little sense it makes and move on. It's better not to play with fire if you don't understand it.

And the Six and Baltar angels?  Let me get my eyes back down from where they're stuck toward the top of my skull. The whole nuclear destruction of Caprica and the other colonies was orchestrated by God through those two?  That was God's plan? So that, what, Hera could get to Earth II? 

Why should we care?  What sense in the end did that make? The assertion in the final minutes that she of all the people from the fleet who settled on Earth II was the mitochondrial Eve just seems silly. This was what the whole mission to find earth was designed to achieve? That earth evolution be directed by a species that is half human/half cylon? Why should it matter? What difference does that make since humans and cylons are in the end indistinguishable?

Who cares? Ask yourself what difference it would have made if fleet found its way to earth without Hera. Wouldn't one of the other women have been Eve? Couldn't Sharon and Helo or another human and cylon have babies on earth? Weren't they likely to? The whole idea that finding Hera was central to the human future made no sense unless every other human or cylon woman who landed would be infertile. Maybe there's something else intended here that I'm missing, but unless I am, I see no reason why anyone should have cared more about Hera than any other little girl in the fleet. 

I know, it's just TV, but this was supposed to be different and in its final episode it just seemed like TV.  I was hoping it could be more. I was hoping it could touch a mythopoetic chord that would resonate more deeply. It was satisfied with being merely clever. 

The Rich Are Different from You and Me

Because they have the resources to live in a bubble world of their own creation. Frank Rich today:

The once-lionized lifestyles of the rich and infamous were appallingly tacky. John Thain’s parchment trash can was merely the tip of the kitschy iceberg. The level of taste flaunted by America’s upper caste at the bubble’s height had less in common with the Medicis than, say, Uday and Qusay Hussein.

The cultural crash should have been a tip-off to the economic crash to come. Paul Greenwood and Stephen Walsh, money managers whose alleged $667 million fraud looted the endowments at the University of Pittsburgh and Carnegie Mellon, were fond of collecting Steiff stuffed animals, including an $80,000 teddy bear. Sir Robert Allen Stanford — a Texan who purchased that “Sir” by greasing palms in Antigua — poured some of his alleged $8 billion in ill-gotten gains into a castle, complete with moat, man-made cliff and pub. He later demolished it, no doubt out of boredom.

In a class apart is the genteel Walter Noel, whose family-staffed Fairfield Greenwich Group fed some $7 billion into Madoff’s maw. The Noels promoted themselves, their business and their countless homes by posing for Town & Country. Their firm took in at least $500 million in fees (since 2003 alone) for delivering sheep to the Madoff slaughterhouse. In exchange, Fairfield Greenwich claimed to apply “due diligence” to every portfolio transaction — though we now know Madoff didn’t actually trade a single stock or bond listed in his statements for at least the past 13 years.

Web of Interest

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."-- Henry Ford

Simon Johnson has been getting a lot of exposure lately. In addition to the TPM blog posts from which I quote in and Update to my last post, he was also interviewed on TPM  and then last night on Moyers.

The Moyers interview is particularly strong in confirming my pessimism about the the bank bailout and the stimulus plan:

BILL MOYERS: Both the "Wall Street Journal" and "The New York Times" reported this week that Obama's top two political aides, Rahm Emanuel and David Axelrod, have pushed for tougher action against the banks. But they didn't prevail. Obama apparently sided with Geithner and the Treasury Department in using a velvet glove.

SIMON JOHNSON: What I read from that is that there is an unnecessary and excessive deference to the experts, or the supposed experts.

And I think the view that a lot of people have in Washington - I live in Washington, I follow this very closely - the view is that you need to rely on the technocrats. And the technocrats are saying, "This is the way to go, and you mustn't be too tough on because banks, because that will have adverse consequences for credits, and for the economy, and for unemployment," and so on and so forth. Those technocrats, if that's what they're saying, are wrong. That is not the right way to deal with this crisis.

There are many fine professionals at Treasury with great experience, who have spent their lives working on important issues related to the United States. What we face right now is not a typical U.S. issue. We face a crisis, and the president said this on Monday night, the president said, President Obama said, "We've never seen anything like this since the Great Depression."

Therefore, nobody working now, you know, has any firsthand experience. And he also said, "We may face what we call a lost decade." We've never seen that anywhere other than Japan in the 1990s, right?

And something for Treasury officials to really understand, and to really understand the alternatives - they're not, I mean, with all due respect to them, they're not the ultimate authority. I don't think they're the right people.

The correct people you should be asking this question to are people at the IMF. And I can tell you what they're saying is the policy that we seem to be perusing, of being nice to the banks, is a mistake. The powerful people are the insiders. They're the CEOs of these banks. They're the people who run these banks. They're the people who pay themselves the massive bonuses at the end of the last year. Now, those bonuses are not the essence of the problem, but they are a symptom of an arrogance, and a feeling of invincibility, that tells you a lot about the culture of those organizations, and the attitudes of the people who lead them.

BILL MOYERS: Geithner has hired as his chief-of-staff, the lobbyist from Goldman Sachs. The new deputy secretary of state was, until last year, a CEO of Citigroup. Another CFO from Citigroup is now assistant to the president, and deputy national security advisor for International Economic Affairs. And one of his deputies also came from Citigroup. One new member of the president's Economic Recovery Advisory Board comes from UBS, which is being investigated for helping rich clients evade taxes.

You're probably too young to remember that old song, "Sounds like the Mack the Knife is back in town." I mean, is that what you're talking about with this web of relationships?

SIMON JOHNSON: Absolutely. I don't think you have enough time on your show to go through the full list of people and all the positions they've taken. I'm sure these are good people. Don't get me wrong. These are fine upstanding citizens who have a certain perspective, and a certain kind of interest, and they see the world a certain way.

And it's exactly a web of interest, I think, is what you said. And that's exactly the right way to think about it. That web of interest is not my interest, or your interest, or the interest of the taxpayer. It's the interest, first and foremost, of the financial industry in this country.

BILL MOYERS: Do you think that Obama understands how these guys play the game? Let me play you the recording of a conference call "Huffington Post" released this week. One of the top officials of Morgan Stanley is speaking to his colleagues. Here it is.

JAMES GORMAN: I'm going to turn to a topic that I suspect is near and dear to everybody's hearts, which is retention. There will be a retention award. Please do not call it a bonus, it is not a bonus it is an award. The award will be based on '08 full year production. Clearly it would have been cheaper to do it off '09 but we think it's the right thing to do and we've made that decision.

SIMON JOHNSON: What he's basically saying is business as usual. Go about your daily lives. Get the bonuses. Re-brand them as awards. But it really shows you the arrogance, and I think these people think that they've won. They think it's over. They think it's won. They think that we're going to pay out ten or 20 percent of GDP to basically make them whole. It's astonishing.

BILL MOYERS: Why wouldn't they believe that? I mean, when I watched the eight CEOs testify before Congress at the House Financial Services Committee earlier this week, I had just finished reading a report that almost every member of that Committee had received contributions from those banks last year. I mean in a way that's like paying the cop on the beat not to arrest you, right?

SIMON JOHNSON: I called up one of my friends on Capitol Hill after that testimony, and that session. I said, "What happened? This was your moment. Why did they pull their punches like that?" And my friend said, "They, the Committee members, know the bankers too well."

Geithner and his cronies are not going to fix the problem.They are too deeply soaked in a mentality that prevents them from seeing possibilities outside of the web of interest that structures the world in which they have built their careers and their reputation for success. They are not going to operate outside the world in which they feel comfortable.  Even if you give them the benefit of the doubt and ascribe to them the best motivations, the real solution is beyond their imaginations and capabilities. 

The most positive spin I can put on this is the one I put on it in my last post--it's part of the change curve. It's just part of the typical pattern in which things have to get worse before they get better. Even if he wants to do something radically different, it's politically impossible for Obama to do anything until the oligarchs are proved decisively wrong. You and I could argue that they have been proved wrong because they created the mess to begin with, but that's not how it works. If Joe Gibbs wants to coach the Washington Redskins, you give him the job because of his trackrecord and reputation.  You don't fire him until it's proved that the game has passed him by.

I don't expect you'll see Johnson on CNN or the network news shows (but maybe on MSNBC ), but it's encouraging to know that his critique is out there on the mainstream blogs and on shows like Moyers.

What's Going On? (Updated)

Michael Cohen at TPM Cafe:

Republicans seem to be basing their political aspirations on the hope that the stimulus package fails and the economy worsens. But there is an obvious flip side: what if it works? What if widespread deficit spending is seen as the solution to America's economic woes? Not only will Obama have won a short-term policy battle, he may win the political war as well.

Sixteen years ago, a young Democratic President with control of both houses of Congress, proposed a stimulus package of a mere $19 billion - and was stymied by intractable GOP opposition. Today, a new Democrat President, with the support of a mere three Republicans, is about to pass an $820 billion stimulus plan that represents the most radical transformation of government in 30 years, potentially even 75. Times have most certainly changed. It's about time both left and right woke up to this new political reality.

Two things:  First, yes we are in a completely different reality economically and poltically.  Second, that's why this stimulus bill probably isn't going to work.  Does anybody deep down believe that this stimulus package will?  Does anybody believe that we have people in place who understand this new reality and know what they are doing? I don't because nobody understands it. My sense is that if it does work, it will be pure dumb luck.

I think this stimulus bill or something like it had to be passed, but it's just the first step in learning what isn't going to work. I'm glad that Obama is at the helm, because I suspect among all major political figures on the scene, he is the one who has the intelligence and flexibility of mind to learn from mistakes and to adapt, to recognize what doesn't work and to move on.

For better or for worse, we're going into uncharted territory and we will be gradually learning that what may have worked in the past no longer works now. This stimulus package is an attempt to try something that worked in the old reality for want of knowing what to do in the new. So would it be better to do nothing? I hear the arguments of those who think that all we're doing is postponing the pain and that it would be better to bite the bullet,  let the whole thing collapse and start over. But that isn't going to happen; it's politically impossible to do nothing, so better to have have an experimental attitude rather than a rigid orthodox one. Passivity is the enemy in times like these; we have to be mentally active, alert, open to new possibilities, willing to find new ways to do things.  And the idea that innovation and effective solutions will come from the private sector is nonsense so long as that sector is dominated by the John Thains of the world.

The thought of a country-club fossil like John McCain as president now just sends shivers down my spine. Apart from his world-historical cluelessness, had he won, the John Thains of the world would be in control of both the private and public sectors. You could argue that the Geithners and Summers aren't much different, but the political reality is that Obama has to start with the establishment types until they are proven wrong, and then he'll have the freedom to move forward with people who are savvier about the new reality. I think he is capable of firing these guys and moving on, but we'll see. It's not going to be pretty in the short run, but that's just the way it is.

UPDATE: Simon Johnson, also at TPM Cafe, talks about the kind of thing that probably needs to be done, but won't be done until banking establishment types like Geithner are proved wrong:

What they [IMF personnel] say is this. The right thing to do is reboot the financial system. Find out immediately which banks are insolvent, using market prices. Allow private owners to fully recapitalize, if they can. Have the FDIC take over all banks that cannot raise enough private capital. Try to re-privatize those banks quickly, while making sure the taxpayer has strong partcipation in the upside. The difficulty with this approach is not, in the US or elsewhere, anything technical - it is really quite straightforward. The problem here and everywhere else that has faced a serious financial crisis is: the power of the banking lobby.

If the IMF experts are right and Treasury is wrong, does that help resolve the dilemma?

But who knows if that would work? We're all flying by the seat of our pants.

Quote of the Day: Douthat

Now fiscal responsibility is generally a good thing, and so a centrism mindlessly focused on tweaking legislation away from deficit spending has its uses. But what Nelson, Collins, Specter and Co. have done isn't a new kind of politics. It's the definition of politics as usual. And in this particular case, there's a reasonable argument that it's actively pernicious - that if you can't shrink the stimulus package much more substantially than the centrists have done, you shouldn't shrink it at all. There's a case to be made for a stimulus that's radically different than the one we have now; there's a case to be made for a stimulus that's like the one we have now, but a great deal smaller and more targeted; and there's a case to be made for a stimulus that's absolutely gargantuan. But thanks to the centrists, we're getting the cheapskate version of the gargantuan version: They've done absolutely nothing to widen the terms of debate about what should go into the bill, and they've shaved off just enough money to reduce its effectiveness if Paul Krugman is right - but not nearly enough to make it fiscally prudent if the stimulus skeptics are right. 

This means that if the damn thing doesn't work, we won't even know whom to blame. But it wouldn't be crazy to start by blaming the centrists. Read more.

Lagaan & Game Theory

I've given up on the idea that anybody really knows what they're doing regarding this economic crisis, so for me figuring out the best course to take is a question of gaming the possibilities. I see Obama as in a similar position to Bhuvan, the hero of the terrific Bollywood film Lagaan--it's among other things IMO one of the greatest sports movies of all time, even though it's about Cricket in 19th-century British-occupied India. Bhuvan is a young village leader who commits his village to a high-risk wager on a cricket match. He must pit his village beginners against the crack players from the local occupying British regiment. The stakes: The Brits have just doubled the tax, or lagaan, on the villagers, who can barely pay the existing tax. The Brits offer the villagers the possibility of paying no taxes for three years if the villagers win, but if they lose, they will have to pay triple tax.

So Bhuvan accepts the wager on behalf of the villagers who freak out at the prospect of paying triple tax, as seems pretty likely--none of the villagers has the slightest idea how the game is played. But Bhuvan seems to be an instinctive game theorist. The country is in drought, and the villagers can't pay the already onerous tax imposed by the Brits, much less the new double tax, so what difference does it make if they triple it? They can't pay the double tax, so neither can they pay the triple tax, so it's disaster either way. Better to take the wager, for at least there's some upside, even if it's low percentage. To do nothing guarantees disaster; to accept the wager is to choose at least a small possibility of a positive outcome.

So the analogy here is obvious. Standing pat regarding spending, as GOP ideology requires, is the same as the villagers just accepting the disastrous imposition of the the double tax. Going ahead with the spending bill is like Bhuvan's wager. Let's assume that spending unimaginable sums of money in an attempt to pull us out of this nose dive has a low-percentage chance of success--at least it will buy us some bridges and schools. So if both no-spending or spending strategies fail, at least with the spending strategy we add needed assets to the commonweal and put some people to work, even if for only a couple of years.  So that in itself is a positive outcome. If we collapse, the world comes with us, and we are in a new game altogether.

But then it just might work--crazy spending could very well be the thing that pulls us out of the nose dive. To me investing a lot of money in the country's infrastructure seems to be the only smart strategy. The crisis calls for bold action, not GOP ideological government passivity. And besides, the idea that anything Republicans say should be taken seriously is absurd. They have zero credibility, and would be afforded none if it were not for the conventions and biases of the establishment media. 

Quote of the Day: Michael Lind

In Salon in which he talks about the South's strategy to reduce the country to its primitive, neo-feudal level of doing things:

I can hear the objections already: "We agree that the South's beggar-thy-neighbor and race-to-the-bottom strategies should be thwarted -- but the methods that you suggest, a high national minimum wage, greater equalization of state and local public spending by increased federal revenue-sharing, and a national economic development framework built to align the existing state economic development systems are politically too difficult to achieve." That may be true. But if it is true, then the neo-Confederates and their strategy of turning first the South and then the entire U.S. into a low-wage export platform for the outsourced industries of advanced industrial societies in Asia and Europe will prevail. If a non-Southern majority, controlling the White House and Congress, with the support of at least some moderate Republicans in other regions, along with the support of Southern populists and progressives, is too timid to take on a Southern oligarchy that is willing to wreck the national economy to promote their local economic empires, then the neo-Confederates have already prevailed.

The choice is simple -- the reconstruction of the South, or the deconstruction of the U.S. economy.

Or as I wrote in May:

But what happened during the Nixon administration was the beginning of the southernization of the GOP, which reached its culmination in the Bush administration.  As the viciousness of converted southern Democrats joined forces with the viciousness of corporate interests, a new  GOP was created for which crony capitalism is its animating principle. If the GOP is allowed to stay in power, it would turn the country into a kind of corporate plantation society, for which Wal-Mart is the pioneer. Everything the GOP does can be understood according to the logic of promoting its crony capitalist agenda. The cultural wedge issues are simply a tactic to keep low-information Main Streeters on the GOP bus in a 50% +1 electoral  strategy.

And for these southerners, it doesn't even matter if the corporations are American.  That they are serving the interests of the Japanese auto industry to the detriment of the American industry doesn't seem to bother them in the least.  They know where their loyalties lie, and they are all dutifully wearing they're American flag lapel pins, I'm sure.

The Anti-Majoritarians

Jonathan Chait in TNR:

In February 2006, the conservative journal Policy Review published an essay that was shockingly heretical, though perhaps unintentionally so. In it, Carles Boix of the University of Chicago argued that there is a link between democracy and economic equality:

In an unequal society, the majority resents its diminished status. It harbors the expectation of employing elections to drastically overturn its condition. In turn, the wealthy minority fears the outcome that may follow from free elections and the assertion of majority rule. As a result, it resorts to authoritarian institutions to guarantee its social and economic advantage.

Of the many taboos that prevail among conservatives, the one forbidding any serious discussion of inequality is perhaps the strictest. Any forthright examination of this topic will lead one quickly to the realization that American society has been spreading apart rapidly for three decades and that Republican economic policies have without a doubt contributed mightily to this gulf. So conservatives usually ignore the subject of inequality, except perhaps to minimize its scale or importance.

Why, then, did Policy Review, which is published by the staunchly conservative Hoover Institution, open its pages to such apostasy? Well, it didn't intend to. Boix's essay (which was brilliant and widely discussed) concerned the inculcation of democracy abroad and did not deal directly with the United States. And the circumstances Boix envisioned--mainly, developing countries attempting a transition to democracy--are different from those in an advanced democracy. Americans, fortunately, do not have to worry about kleptocrats, political violence, and massive vote fraud.

Redfining the American Dream

"The income gap between the rich and the rest of the U.S. population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself," then-Federal Reserve Chairman Alan Greenspan said in 2005.  WaPo

Obama's appeal to the middle class is an appeal to the "the proletariat," as an infamous philosopher once described it, about which a mythology has been created. Rather than pursue the American Dream, he insists that the American Dream has arbitrary limits, limits Obama would set for the rest of us — today it's $250,000 for businesses and even less for individuals. If the individual dares to succeed beyond the limits set by Obama, he is punished for he's now officially "rich." The value of his physical and intellectual labor must be confiscated in greater amounts for the good of the proletariat (the middle class). And so it is that the middle class, the birth-child of capitalism, is both celebrated and enslaved — for its own good and the greater good. The "hope" Obama represents, therefore, is not hope at all. It is the misery of his utopianism imposed on the individual. Mark Levin @ the Corner

Is the American Dream only about getting rich?  Isn't it really about promoting a nation in which there is a flourishing, economically stable, culturally creative, technically innovative, self-reliant middle class? Why is it assumed that some upper limit on wealth acquisition is transgressive of some sacred American taboo? Prosperity, yes--and the more broadly dispersed the better. Concentrations of wealth, no.  As Greenspan says, it threatens the "stability of American capitalism itself."

And isn't it true that the ideologically rigid laissez-faire capitalism Levin extols promotes the aggregation of wealth and power by the few, the destruction of stable, traditional communities and traditional mores, and the impoverishment and political disengagement of the middle class?  Doesn't a mixed economy like the one we got during the New Deal work effectively to protect and promote a flourishing middle class?  Which model, Obama's New Deal version 2 or Levin's Social Darwinism version 2, promotes the American Dream you think is healthiest for America?

The crudity of people like Levin's thinking is impossible to take seriously, but I think there are legitimate concerns about top-down statism that I want to talk about going forward.  We are in a very interesting transition period, and it's important that Dems don't screw it up to leave room for the Levin types to make a comeback.  

The polarizing NRO types will be screaming socialism when the healthcare issue becomes the topic du jour. The one thing Obama has going for him is that corporate America, as Wal-Mart has shown, has no problem using the government dole if it lowers its overhead. And corporate America is sick of paying outrageously volatile insurance premiums. Corporate America's desire for a solution is far more important for getting things done than what the ideologues at National Review think. 

The trick will be to avoid a debate dominated by polarized thinking and to find a way to live in the tension between the local, free individual and the massive presence of the postmodern state. It's not either/or, and finding the middle way is the only way forward. I still have hopes that Obama might be the man of the hour in helping us finding that way.

Quote of the Day: Daniel Larison

It is easy to talk about principle when there is no crisis happening and no risk attached to standing on principle.  The real test comes when holding fast may actually cost something.  Holding to a principle, if it means anything, means that you value it more than mere self-interest, satisfaction or comfort.  A lot of Americans want to have it all–the pretense that they are free, with none of the responsibilities or dangers that go with it.  In reality, you can either have the latter and remain free, or you can cease being free and then be kept free (temporarily) from responsibility and danger. 

More here in a piece he wrote criticizing the bailout.

As a subsidiarist, I disagree with Larison's strict, Ron-Pauline, Libertarian principles, but I respect his consistency and the rigor of his thinking. His conservative principles have led him to see the dangers to Liberty posed by the GOP and Dem collaboration to be as serious as I see them.

For what it's worth, as a subsidiarist, I am not in principle opposed to federal intervention in the financial markets. We have good reason to be suspicious about whether this intervention is necessary, and if it is necessary whether it will be effective. I am quite sympathetic to what Larison in the above excerpted from post says here:

Few on the right are more hostile to the perverse appeal to “creative destruction” than I am when it is used to justify de-industrialization, the displacement of people, the transformation of local communities or demographic upheaval through mass immigration, but what we are faced with this week is the victory of Hamiltonian collusion between finance and government to use the latter’s apparatus of power to shore up the former’s wealth.  Central government is robbing the people to prop up concentrated wealth, and claiming in the process that it is doing us a favor.  Never mind that the government’s alarmism may well be wrong.

But by no means do I think that the only alternative is to simply let the markets  play themselves out. It's one thing if the the people gaming the market system are punished by the folly of their risk-taking; it's quite another if there is a serious risk that the rest of us must suffer because of their folly.

So that's where Larison and I part company. This situation would never have got to this point if there were prudent, federally imposed rules limiting the risks these players can take insofar as they might do harm to the commonweal. I'm all for risk-taking where the risk-taker reaps the rewards as well as the liabilities, but not when such risk-taking has the potential to punish people who have no stake in the reaping the rewards. This debacle should never have been allowed to happen in the first place. That's just common sense, but common sense that Libertarian principles obstruct one who has them from embracing.

And whether one is hostile to appeals to it or not, isn't creative destruction  concomitant with strict libertarianism? I know that the great Whig Burke looking forward from his perch in 1800 embraced laissez-faire, but I wonder if having seen the destruction it wrought in the ensuing century he would have still done so from the perspective of 1900.  I don't know, but I do know that anybody who is a free-market capitalist and someone who values the preservation of stable community life, with its traditional values and mores is living an unresolvable contradiction.

Wall Street Week

I don't have a lot to say about the momentous events taking place this week with regard to American financial markets except to repeat some things I've said frequently before. It's a complicated mess--and of course some kind of government intervention is necessary--but it boils down to some fundamental ideas. One is that the people who are responsible will not be held responsible. The system is rigged in their favor; their cronies in government will cover their butts, and the best the rest of us can hope for is that there will be some impetus to make sure this kind of thing won't happen again--at least for a little while. (Or perhaps as Rick Perlstein points out, this crisis could be an opportunity like the one Roosevelt took in 1935.  That or course depends on Obama getting elected and his choosing to seize the opportunity.)

But it will happen again. We never learn from our mistakes. There are always clever rationalizations to describe why this situation is not like previous situations.  Remember how we were all instructed that Iraq is not Vietnam? In many respects it was not, but in the most important ways it was. And with regard to this financial markets meltdown it was completely predictable on the basis of knowing  the consequences that follow from the rejection of the New Deal principles of social democracy and the embracing of economic Libertarianism. I've written time and time again in this space that what is now embraced as Libertarian economic approach is no different from the philosophy of the 19th Century Social Darwinians, and we're seeing that play out now.

There are, I'm sure, some principled Libertarians who are outraged that the government is stepping in to socialize the financial markets. But what did they expect? Do they really believe that the people who run these and other huge corporations have espoused Libertarian ideas about taxes and deregulation for any other reason than to remove restraints so they can do as they please?  Do they also think that these same people ever considered that they should bear the consequences of their recklessness?

Of course not; they've been gaming the system all along using Libertarian jargon as their cover story. It's always been for these people maximum reward and minimum risk. Or to put it more bluntly--maximum reward for them knowing that the public would be forced to accept the risks and the negative consequences when they over-reached. And why shouldn't they over-reach if they knew that there would be no negative consequences to them?

I don't think there is anything on the American scene more foolish than a principled Libertarian. Principled Libertarians have been duped, and as I've written before (here and here) they are the unwitting enablers of tyranny.  It's an iron-clad law of history, and you don't have to be a genius to understand it, just clearheaded enough to see what's right before your eyes: When you lift the restraints from the powerful, they aggregate power and wealth to themselves, and with that aggregated power and wealth they dominate the markets and the political system.  When the markets deliver disaster, as they have in the last eighteen months, then their domination of the political system insures they will get bailed out and the rest of us foot the bill because the rest of us haven't power enough to insist on any other outcome.

Principled Libertarians can complain all they want that the power elites are not following the Libertarian principles, but it's the Libertarian script that gave the power elites the means to dominate the system so that there's no possibility of enforcing Libertarian principle.  Libertarian philosophy is like a storeowner giving thieves the keys to his store but only on the condition that they promise not to rob him, and then when they do, the he is shocked, just shocked.