The United States is coming into 2009 having established one of the largest moves to socialization in the world. The prospects for the future do not provide any encouragement for this move to slow down!
The United States has moved into a new era…and who would have thought that it would be the Conservatives in America that created the environment for this to happen.
The Conservatives were always the people who believed in discipline…of not living beyond ones means and capabilities. Yet, it became the Conservatives that led the way to uncontrolled and irresponsible behavior…on the part of the government…and on the part of the private sector.
When did it start?
When Nixon claimed that “We are all Keynesians now!”?
Did this lead to the policies of Ronald Reagan who promoted Supply-Side tax cuts that led to large deficits that went on and on?
And this led to Bush 41 and Bush 43 and their undisciplined fiscal behavior?
The Republican Party…like most parties…is a conglomerate of groups with disparate or even conflicting positions. But, Nixon drew up the new boundaries of the party and created the new culture at the top. And, what were these new boundaries?
I would like to concentrate on three: making the Republican Party the party of the South and the religious conservative; the move to fiscal and monetary irresponsibility; and the emphasis upon loyalty to creed as the primary criteria for membership.
There is no question that the Nixon “Southern Strategy” became the foundation of the ‘new’ Republican Party. Lyndon Johnson basically disenfranchised the South with his policies on civil rights and welfare. These programs completed upset the social stratification of the South and caused many citizens of that part of the country to look for a new home.
Richard Nixon provided them with that new home. But, in doing so the Republican Party had to be open to two things…even if they were sublimated in all discussions concerning the party. These two things were, first, that the party had to accept the racist leanings of the Southerners that were brought in under the ‘big tent’, and, second, the party had to openly support a religious leaning that was more fundamentally orientated. Up until the late sixties, the Republican Party had been the home of the mainline Protestant denominations. That was to be no more…they were ‘too liberal’.
These two themes brought in the South and also appealed to more rural areas of the United States. This provided a background for ascending to the Presidency, but also to provide a strong bloc of support in both the Congress in Washington, D. C., and in state houses throughout the country. It also provided a funnel for future leaders of the Party.
The second boundary had to do with the economic policies of the Federal Government. Nixon was so paranoid about getting re-elected as President that he did whatever was necessary…the rest-of-the-world be damned. Consequently, the conservative policies of ‘hands off’, constraint, and discipline did not appeal to him. This made him susceptible to advisors around him…especially John Connolly…that led him in a totally different direction. That direction included ideas about ‘big government’, deficits in the budget, wage and price controls, and an easy monetary policy. And, the last item there was connected to the withdrawal of the United States from the gold standard that served as the basis for stable economic policies. Even Franklin D. Roosevelt did not dare get rid of this peg during the Great Depression.
Richard Nixon became a “Big Government” President opening the door for a succession of ‘Conservative’ big government presidents…like Ronald Reagan (a former Democrat), Bush 41, and Bush 43. And, “Big Government” for the Republicans included building up the military…for this was the patriotic thing to do. American was the leader of the free world and therefore it needed more and more resources for the military.
The problem with “Big Government” is that taxpayers in the United States will generally not support the taxes needed to run a big government so that the big government will have to be financed by selling bonds…or monetizing the debt. Nixon did both…but, to combat the possibility that inflation could get worse he also froze wages and prices in the economy.
Whoa ! ! !
The third boundary had to do with loyalty. Since the things discussed above became the ‘religious’ beliefs of the Republican leadership, adherence to the ‘religion’ became paramount…no matter how ridiculous the stance one had to take. Loyalty to the line became the most important criteria for membership in the leadership.
And, this loyalty transcended talent, ability, or experience. If you did not believe the way the Party did…you had no chance to help the Party regardless of how good or how successful you were. How else can we explain the incompetence of the Bush 43 administration? How else can we understand the ignoring of facts and of reality? How else can we explain the lies and the cover-ups?
In the past, the Conservatives were always the Party of reality, the Party of discipline, the Party of incremental movement.
I think that these Conservatives can now say…”We told you so!”
I think that these Conservatives can now say…”If you lose your discipline, you will eventually crash!”
I think that these Conservatives can now say…”Once you crash because you have lost your discipline, there are no good choices!”
I think that these Conservatives can now say…”There is only one way to ‘right the ship’ and that is by re-establishing your discipline!”
I think that these Conservatives can now say…”Re-establishing your discipline is VERY, VERY painful!”
Wednesday, January 7, 2009
Wednesday, October 29, 2008
The Split in America
Timothy Egan begins his Sunday Opinion column in the New York Times, “The Party of Yesterday”, http://www.nytimes.com/2008/10/26/opinion/26egan.html?scp=3&sq=timothy%20egan&st=cse, with the following description of the “nation’s brainiest cities…cities with the highest percentage of college graduates”: “These are vibrant, prosperous places where a knowledge economy and cool things to do after hours attract people from all over the country. Among the top 10 only two of those metro areas—Raleigh, N. C., and Lexington, Ky.—voted Republican in the 2004 presidential election.”
He continues, “This year, all 10 are likely to go Democratic. What’s more, with Colorado, New Hampshire and Virginia now trending blue, Republicans stand to lose the nation’s 10 best-educated states as well.” Going further he states that “Brainy cities have low divorce rates, low crime, high job creation, ethnic diversity and creative capitalism…They grow good people in smart cities.”
Although I don’t disagree with the conclusion that Egan reaches, that Republicans “blow off the smart cities” and the smart states which makes them “The Party of Yesterday”, I believe that there is a deeper cause behind this bifurcation. It seems to me that this separation is something that is being experienced worldwide and is connected with the spread of information.
Historically, we have seen that information spreads and its spread cannot be stopped. Nations and organizations and cultures can slow down the spread for a while but in the end the spread of information overcomes even the most restrictive of societies. The development of movable type allowed for the printing and dissemination of books and pamphlets to audiences never before reached and this resulted in societal upheavals like the Reformation, the Enlightenment, and Post-Modernity. As this and further innovations that allowed people to compare viewpoints and data that were kept isolated before, science grew and prospered along with many other fields of applied science and intellectual investigation. The Information Age is bringing the world to an even greater integration of thought as the spread of information reaches more and more corners of the globe.
Of course, this is not looked on favorably by many. The spread of information threatens ways of thinking, lifestyles, and people in power. The spread of information is disruptive and often brings with it an upheaval of ordinary life. The spread of information forces change!
Those in power that are threatened by the changes sense the danger of the “new” information and attempt to constrain its spread while at the same time engage in the defensive maneuver of requiring a stricter adherence to the “old” way of doing things. In this response there can be no openness to debate or dialogue for the leaders in power believe that they cannot give in an inch to different ways of thinking.
Beyond the leaders that are threatened by the “new” information, different people respond to this threat in different ways. Whereas some people welcome the change, even thrive on the “new”, others in various ways are wary of anything that is different or are just overwhelmed by the wave of the “new”. In one instance it is costly to change one’s life and thinking to accommodate the new information. In another instance the situation can be described as one of information overload: the new information is like “white noise” to people…they are inundated with too much information and are unable to process it. In either case, as well as others like it, many people resist what is happening because it alters what they know and are comfortable with.
This environment is making a major contribution to the separation that Egan describes in his column. Whereas he claims that the separation is occurring as the “brainy” areas of the country are divided from other areas of the country, I believe that the bifurcation is being exacerbated by the division between those that are receptive to the spread of information in the modern world and those that want to hold on to the old knowledge and the old ways of thinking.
The foundational “base” of the Republican Party is constructed more and more from just those that want to hold onto the “old way of thinking” and are resistant to the spread of information that is making the modern world such a dynamic place to live in. The objections that are being raised relate to the diversity of culture and of different cultures, the new discoveries in the biological and physical sciences, the innovations relating to information technology and the global application of this knowledge, the openness to alternative goals and objectives in the world, and the possibility that all worldviews, including theirs, could be fallible.
With the emergence of the modern Republican Party in the late 1960s, it became the common wisdom of the party that a candidate attempting to gain the nomination for President had to move to the right end of the political spectrum to get nominated. Once nominated, the candidate could then move toward the center in order to be elected. Early on, through the 1980s, the Republican Party had a sizeable portfolio of policies and programs that were sufficiently attractive to independents and other swing voters to attract them to vote for its presidential candidate. However, the Party had exhausted their portfolio of policies and programs by the late 1980s and into the 1990s.
Therefore, something new had to be tried. A young Karl Rove was able to resolve this dilemma. In the two Bush (43) elections, the Republican candidate for President stayed to the right in order to cement the base of the party. However, since the party had little or nothing to offer those in the center of the political spectrum Rove resorted to fear tactics in order to obtain the votes of the independents and the swing voters. In the age of 9/11 and the war on terrorism, the strategy proved to be successful!
A similar strategy has been followed in the current run for the presidency. John McCain was supposedly an independent, a maverick that appealed to those in the center. What he didn’t have was an appeal to the foundational “base” of the Republican Party. The campaign strategists filled this gap in a very satisfactory fashion, to their way of thinking, by getting Sarah Palin nominated for the office of Vice President. The problem with the strategy was that Sarah Palin was not acceptable to the swing vote and the election started to slip away from the campaign. McCain’s “maverickism” could not hold the center. In desperation, the managers of the effort moved to the old standby of the previous two campaigns…demonize the opposing candidate and scare the independent voter into voting for McCain.
Not only did the strategy not work, it exposed the intellectual emptiness of the Republican Party. It exposed the Party as being the party that was resistant to the future. It exposed the Party as being an organization that was not only resistant to the spread of information but as the party that wanted to constrain thought and hold onto old prejudices. It exposed the Party as being reactionary.
This is the problem America has to face going forward. In past years we saw this problem as one we faced externally in a world. Now, we see it as also a problem we have to face internally. For whatever cause, people everywhere resist the spread of information. People fight wars to keep information from spreading. It is not a new battle, but one that has been rejuvenated as those impacted have become desperate as they feel the world they know slipping away.
History shows that the resisters never win…but they can put up an inconvenient and troublesome fight. Those that support the spread of information ultimately win the battle by example…by showing others that, as Egan implies, they are good people living in a good place with room for all to join them.
He continues, “This year, all 10 are likely to go Democratic. What’s more, with Colorado, New Hampshire and Virginia now trending blue, Republicans stand to lose the nation’s 10 best-educated states as well.” Going further he states that “Brainy cities have low divorce rates, low crime, high job creation, ethnic diversity and creative capitalism…They grow good people in smart cities.”
Although I don’t disagree with the conclusion that Egan reaches, that Republicans “blow off the smart cities” and the smart states which makes them “The Party of Yesterday”, I believe that there is a deeper cause behind this bifurcation. It seems to me that this separation is something that is being experienced worldwide and is connected with the spread of information.
Historically, we have seen that information spreads and its spread cannot be stopped. Nations and organizations and cultures can slow down the spread for a while but in the end the spread of information overcomes even the most restrictive of societies. The development of movable type allowed for the printing and dissemination of books and pamphlets to audiences never before reached and this resulted in societal upheavals like the Reformation, the Enlightenment, and Post-Modernity. As this and further innovations that allowed people to compare viewpoints and data that were kept isolated before, science grew and prospered along with many other fields of applied science and intellectual investigation. The Information Age is bringing the world to an even greater integration of thought as the spread of information reaches more and more corners of the globe.
Of course, this is not looked on favorably by many. The spread of information threatens ways of thinking, lifestyles, and people in power. The spread of information is disruptive and often brings with it an upheaval of ordinary life. The spread of information forces change!
Those in power that are threatened by the changes sense the danger of the “new” information and attempt to constrain its spread while at the same time engage in the defensive maneuver of requiring a stricter adherence to the “old” way of doing things. In this response there can be no openness to debate or dialogue for the leaders in power believe that they cannot give in an inch to different ways of thinking.
Beyond the leaders that are threatened by the “new” information, different people respond to this threat in different ways. Whereas some people welcome the change, even thrive on the “new”, others in various ways are wary of anything that is different or are just overwhelmed by the wave of the “new”. In one instance it is costly to change one’s life and thinking to accommodate the new information. In another instance the situation can be described as one of information overload: the new information is like “white noise” to people…they are inundated with too much information and are unable to process it. In either case, as well as others like it, many people resist what is happening because it alters what they know and are comfortable with.
This environment is making a major contribution to the separation that Egan describes in his column. Whereas he claims that the separation is occurring as the “brainy” areas of the country are divided from other areas of the country, I believe that the bifurcation is being exacerbated by the division between those that are receptive to the spread of information in the modern world and those that want to hold on to the old knowledge and the old ways of thinking.
The foundational “base” of the Republican Party is constructed more and more from just those that want to hold onto the “old way of thinking” and are resistant to the spread of information that is making the modern world such a dynamic place to live in. The objections that are being raised relate to the diversity of culture and of different cultures, the new discoveries in the biological and physical sciences, the innovations relating to information technology and the global application of this knowledge, the openness to alternative goals and objectives in the world, and the possibility that all worldviews, including theirs, could be fallible.
With the emergence of the modern Republican Party in the late 1960s, it became the common wisdom of the party that a candidate attempting to gain the nomination for President had to move to the right end of the political spectrum to get nominated. Once nominated, the candidate could then move toward the center in order to be elected. Early on, through the 1980s, the Republican Party had a sizeable portfolio of policies and programs that were sufficiently attractive to independents and other swing voters to attract them to vote for its presidential candidate. However, the Party had exhausted their portfolio of policies and programs by the late 1980s and into the 1990s.
Therefore, something new had to be tried. A young Karl Rove was able to resolve this dilemma. In the two Bush (43) elections, the Republican candidate for President stayed to the right in order to cement the base of the party. However, since the party had little or nothing to offer those in the center of the political spectrum Rove resorted to fear tactics in order to obtain the votes of the independents and the swing voters. In the age of 9/11 and the war on terrorism, the strategy proved to be successful!
A similar strategy has been followed in the current run for the presidency. John McCain was supposedly an independent, a maverick that appealed to those in the center. What he didn’t have was an appeal to the foundational “base” of the Republican Party. The campaign strategists filled this gap in a very satisfactory fashion, to their way of thinking, by getting Sarah Palin nominated for the office of Vice President. The problem with the strategy was that Sarah Palin was not acceptable to the swing vote and the election started to slip away from the campaign. McCain’s “maverickism” could not hold the center. In desperation, the managers of the effort moved to the old standby of the previous two campaigns…demonize the opposing candidate and scare the independent voter into voting for McCain.
Not only did the strategy not work, it exposed the intellectual emptiness of the Republican Party. It exposed the Party as being the party that was resistant to the future. It exposed the Party as being an organization that was not only resistant to the spread of information but as the party that wanted to constrain thought and hold onto old prejudices. It exposed the Party as being reactionary.
This is the problem America has to face going forward. In past years we saw this problem as one we faced externally in a world. Now, we see it as also a problem we have to face internally. For whatever cause, people everywhere resist the spread of information. People fight wars to keep information from spreading. It is not a new battle, but one that has been rejuvenated as those impacted have become desperate as they feel the world they know slipping away.
History shows that the resisters never win…but they can put up an inconvenient and troublesome fight. Those that support the spread of information ultimately win the battle by example…by showing others that, as Egan implies, they are good people living in a good place with room for all to join them.
Monday, October 27, 2008
Where McCain and the Republican Party now stand
This election has been a long road for me. Even though I left the Republican Party in the 1992 election, as the nominating season got underway in 2007 I was hopeful that there was at least one Republican candidate I could count on…possibly even two. I regretfully have to state…the Republican Party has definitely left me behind. I have never been so disappointed in people…Mitt Romney and John McCain in particular.
Last year as the political campaigns got under way I must admit to being particularly taken by Mitt Romney, former Governor of Massachusetts. I grew up in Michigan and was a big fan of Romney’s father…George Romney…and his mother…Lenore. I got the opportunity to work with George Romney in Washington, D. C. when he was the Secretary of Housing and Urban Development. I had and have a great deal of respect for the elder Romney and believe that he always had his heart and mind in the right place.
I thought Mitt would be like his father and his life story indicated that this might be true. He went from one success to another, Bain & Company and Bain Capital, the Winter Olympics, and his term as governor of Massachusetts. He seemed open minded and responsive to situations with strong moral character. He seemed to be a lot like his father. Thus, I supported him financially, as well as emotionally.
And, then he began his campaign. I could not have been more disappointed as I heard him in the early stages of the campaign…especially in Iowa. He seemed to be a different person, perhaps because he did not believe what he was saying…or perhaps because he had accepted views that he was just learning. Whatever, he was nothing like the strong pragmatic individual I had seen earlier, a person who had a firm moral structure within him. In addition, he was nothing like his father!
Let me digress here for a minute. In the last quarter of the twentieth century one of the major beliefs held within the Republican Party was that a person who wanted to receive the nomination to run for President at the head of the Republican Party had to move sharply toward the political right in the primaries before moving back to the center of the political spectrum for the general election.
Romney did this to an extreme. In Iowa, he didn’t sound anything like the person who had been Governor of Massachusetts. And then there was the Michael Hucklebee threat. Not only did Romney feel that he needed to move to the political right, because of Hucklebee, he believed he had to sound like a Christian fundamentalist! Adding to this was the fact that Romney, being a member of the Church of Jesus Christ of Latter Day Saints, being a Mormon, was a member of a religious body that was greatly distrusted by many of the evangelical Christians he was trying to attract. He even claimed Jesus Christ as his personal Lord and Savior and gave a ‘defining’ speech to lay out his religious beliefs. Romney sounded more and more like he really didn’t have any fundamental personal beliefs!
Romney lost the Iowa caucuses.
Worse than that…because of his pandering in Iowa he lost New Hampshire! At one time, Romney was well ahead of his competitors in New Hampshire. He was from neighboring Massachusetts and people in New Hampshire knew of him and liked him because of what he had done in Massachusetts.
And, at one time John McCain trailed Romney in New Hampshire polls by double digits and this was amazing because people in New Hampshire had always really liked McCain. But, McCain was basically ‘out-of-the-race’ because of his poor organization and the strained financial condition of his campaign. It seemed as McCain’s last try for the Presidency was dead on arrival.
Romney gave McCain his life back. Because of his pandering in Iowa, the people of New Hampshire turned against Romney. McCain re-organized and won the primary. McCain was back in business although still weak.
But, the other Republican candidates went on to self-destruct. Romney became less and less credible. Rudolph Giuliani followed a dreadful strategy which focused on Florida. And, in the end, the only one left standing was John McCain…the winner by default. A winner who was not trusted by the right-wing side of the Republican Party…who, at best, was received less-than-warmly by the evangelical Christian Right. McCain became the nominee of the Republican Party with only limited enthusiasm from the base of the party.
In order to explain the rest of this story let me just state up front that I believe that John McCain is one of the worst organizers I have ever seen at this high a level of ambition. The unfolding tale of his campaign is one of continual decisions that were questionable at their best and disastrous at their worst. But, the saddest part of this whole saga is that John McCain lost his direction and, in the process, lost his honor.
It seems to me that early on his campaign decided two things. First, McCain’s campaign managers believed that John McCain was loved by the center of the political spectrum for being a maverick and an independent thinker and the center would stay with him…especially if he were running against an extreme liberal. Second, his managers believed that it was important to command and energize the right side of the Republican Party, the side that was so lukewarm to McCain. The answer, they believed, was the choice of candidate for vice president…that person had to be someone of the political right that also appealed to the evangelical base. Furthermore, it would not hurt if that person were a woman…given that Hilary Clinton was not in the race anymore.
However, two things happened. First, the choice of the candidate for Vice President did fire up the right side of the Republican Party and its religious base, but, in so doing this individual over shadowed the candidate for President and dominated the news. Even worse, the vice presidential candidate seemed to drive away the independents and the people of the center that was the natural constituency of McCain, himself.
Here is where McCain’s political handlers hit the panic button. The choice of a vice presidential candidate held the political base of the Republican Party; but McCain was not supposed to lose his base in the process. Only half the plan was working.
The subsequent efforts of the McCain team represented a desperate effort to re-capture the center. And, how was this to be done? Demonize the Democratic candidate so that the center of the political spectrum would once again return to its preferred candidate…John McCain. This is the only way one can explain all the efforts the campaign to target Obama as a friend of terrorists, a socialist, a tax-and-spend liberal.
The problem was that the efforts to demonize the Democratic candidate didn’t work. In fact, if anything these efforts had the opposite effect and John McCain was now seen as a person who sold out to his right leaning handlers and had given up his honor and his dignity. He was not what we thought he was.
The right hand side of the Republican Party has come to dominate not only the primary season of the Party but also the Party in the general election. Unfortunately, it has swallowed up two men, who, in the past, seemed to be decent and capable individuals. It will continue to do this unless the Party loses badly in this election. But, more on this in another post.
Last year as the political campaigns got under way I must admit to being particularly taken by Mitt Romney, former Governor of Massachusetts. I grew up in Michigan and was a big fan of Romney’s father…George Romney…and his mother…Lenore. I got the opportunity to work with George Romney in Washington, D. C. when he was the Secretary of Housing and Urban Development. I had and have a great deal of respect for the elder Romney and believe that he always had his heart and mind in the right place.
I thought Mitt would be like his father and his life story indicated that this might be true. He went from one success to another, Bain & Company and Bain Capital, the Winter Olympics, and his term as governor of Massachusetts. He seemed open minded and responsive to situations with strong moral character. He seemed to be a lot like his father. Thus, I supported him financially, as well as emotionally.
And, then he began his campaign. I could not have been more disappointed as I heard him in the early stages of the campaign…especially in Iowa. He seemed to be a different person, perhaps because he did not believe what he was saying…or perhaps because he had accepted views that he was just learning. Whatever, he was nothing like the strong pragmatic individual I had seen earlier, a person who had a firm moral structure within him. In addition, he was nothing like his father!
Let me digress here for a minute. In the last quarter of the twentieth century one of the major beliefs held within the Republican Party was that a person who wanted to receive the nomination to run for President at the head of the Republican Party had to move sharply toward the political right in the primaries before moving back to the center of the political spectrum for the general election.
Romney did this to an extreme. In Iowa, he didn’t sound anything like the person who had been Governor of Massachusetts. And then there was the Michael Hucklebee threat. Not only did Romney feel that he needed to move to the political right, because of Hucklebee, he believed he had to sound like a Christian fundamentalist! Adding to this was the fact that Romney, being a member of the Church of Jesus Christ of Latter Day Saints, being a Mormon, was a member of a religious body that was greatly distrusted by many of the evangelical Christians he was trying to attract. He even claimed Jesus Christ as his personal Lord and Savior and gave a ‘defining’ speech to lay out his religious beliefs. Romney sounded more and more like he really didn’t have any fundamental personal beliefs!
Romney lost the Iowa caucuses.
Worse than that…because of his pandering in Iowa he lost New Hampshire! At one time, Romney was well ahead of his competitors in New Hampshire. He was from neighboring Massachusetts and people in New Hampshire knew of him and liked him because of what he had done in Massachusetts.
And, at one time John McCain trailed Romney in New Hampshire polls by double digits and this was amazing because people in New Hampshire had always really liked McCain. But, McCain was basically ‘out-of-the-race’ because of his poor organization and the strained financial condition of his campaign. It seemed as McCain’s last try for the Presidency was dead on arrival.
Romney gave McCain his life back. Because of his pandering in Iowa, the people of New Hampshire turned against Romney. McCain re-organized and won the primary. McCain was back in business although still weak.
But, the other Republican candidates went on to self-destruct. Romney became less and less credible. Rudolph Giuliani followed a dreadful strategy which focused on Florida. And, in the end, the only one left standing was John McCain…the winner by default. A winner who was not trusted by the right-wing side of the Republican Party…who, at best, was received less-than-warmly by the evangelical Christian Right. McCain became the nominee of the Republican Party with only limited enthusiasm from the base of the party.
In order to explain the rest of this story let me just state up front that I believe that John McCain is one of the worst organizers I have ever seen at this high a level of ambition. The unfolding tale of his campaign is one of continual decisions that were questionable at their best and disastrous at their worst. But, the saddest part of this whole saga is that John McCain lost his direction and, in the process, lost his honor.
It seems to me that early on his campaign decided two things. First, McCain’s campaign managers believed that John McCain was loved by the center of the political spectrum for being a maverick and an independent thinker and the center would stay with him…especially if he were running against an extreme liberal. Second, his managers believed that it was important to command and energize the right side of the Republican Party, the side that was so lukewarm to McCain. The answer, they believed, was the choice of candidate for vice president…that person had to be someone of the political right that also appealed to the evangelical base. Furthermore, it would not hurt if that person were a woman…given that Hilary Clinton was not in the race anymore.
However, two things happened. First, the choice of the candidate for Vice President did fire up the right side of the Republican Party and its religious base, but, in so doing this individual over shadowed the candidate for President and dominated the news. Even worse, the vice presidential candidate seemed to drive away the independents and the people of the center that was the natural constituency of McCain, himself.
Here is where McCain’s political handlers hit the panic button. The choice of a vice presidential candidate held the political base of the Republican Party; but McCain was not supposed to lose his base in the process. Only half the plan was working.
The subsequent efforts of the McCain team represented a desperate effort to re-capture the center. And, how was this to be done? Demonize the Democratic candidate so that the center of the political spectrum would once again return to its preferred candidate…John McCain. This is the only way one can explain all the efforts the campaign to target Obama as a friend of terrorists, a socialist, a tax-and-spend liberal.
The problem was that the efforts to demonize the Democratic candidate didn’t work. In fact, if anything these efforts had the opposite effect and John McCain was now seen as a person who sold out to his right leaning handlers and had given up his honor and his dignity. He was not what we thought he was.
The right hand side of the Republican Party has come to dominate not only the primary season of the Party but also the Party in the general election. Unfortunately, it has swallowed up two men, who, in the past, seemed to be decent and capable individuals. It will continue to do this unless the Party loses badly in this election. But, more on this in another post.
Wednesday, April 2, 2008
What is Possible in the next Four (Eight) years?
“What to do about a country that isn’t prepared to participate adequately in its own rescue?” Robert Rubin, writing about the Russia of 1998 in his book “In An Uncertain World”.
All of the candidates for President of the United States are out talking with the people and describing to them the policies and programs they would like to enact if they are elected this November. The basic question that follows this ‘dance’ is, “What are the chances that this person, if elected President, would be able to carry through and implement these policies and programs?”
Right now, my answer to this question is “Little or none!” Until the current financial dislocation resolves itself and the new administration really gets serious about the strength of the United States dollar, the hands of the new President will be tied in terms of enacting new programs and policies. The situation is similar to the one faced by Bill Clinton when he became President in 1992. The Republicans had had control of the White House for twenty of the previous twenty-four years and so Democrats were very anxious to get back into the White House and enact some programs and policies that were more consistent with their way of thinking. However, this was not to be.
Fortunately, for the United States, President Clinton listened to Bob Rubin who advised him that the Federal Budget had to be brought under control and then kept under control. The reason being, Rubin argued, was that any whiff of fiscal irresponsibility on the part of the Democratic administration would be jumped upon by the international financial markets and the dollar would suffer the consequences. New programs and policies would have to be limited while the administration brought their fiscal budget into balance.
The result of this was eight years of almost continuous prosperity and growth for the United States economy and strength for the value of the dollar. Granted that the Clinton administration had received the gift of a tax increase on the part of the George H. W. Bush administration, a gift that helped propel Clinton into the White House, but this gift set the stage for the eight good years that followed. [Clinton DID return a gift to Bush 43 reciprocating the gift that had been given him by Bush 41: the form of the gift was a balanced federal budget and, in general, a very robust economy. Bush 43 has not been so generous to the President that will follow him.] But, prudent fiscal discipline and management also made a major contributed to this period of growth and prosperity.
In one sense, however, the new President that will follow Bush 43 is in a similar situation to the one faced by Clinton. The dollar has been declining for about six years. The environment created by the Bush administration over the past seven years is one that includes a lack of discipline and prudence with respect to risk management and has left financial markets and institutions in disarray. One of the first items on the agenda of the new President will be to restore confidence in the United States government and the United States financial system. This agenda item will affect all else that the President does.
What about the war in Iraq? Well, no new President may be able to take the United States out of Iraq in the near term. However, anything that is done there…and in Afghanistan… is going to be severely limited by what can be done within the budget constraints that will need to be honored.
What about health care…universal or not? Again, budget constraints may not allow anything of consequence to be enacted.
What about….? Same story…
Well, if this is the case, how long must the budget constraints be imposed? It took President
Clinton almost his whole term to bring the Federal budget under control. And, what is very important along the way…the new administration must not only show its intent to bring the budget under control, everything it does must reinforce the image that it is moving in this direction. The international financial markets will not just respond positively to talk or weak actions on the part of the new leaders. ‘Tweaking’ won’t do it. The crucial thing here is the confidence the world has that the new President and the leaders within the new administration are firmly committed to successfully pursuing such a policy. This confidence is hard to come by and if it is abused at all, the confidence will go away and be just that much harder to re-establish.
The candidates for the Presidency must be very careful on this. They have at least two audiences. The first is, of course, the American public. These candidates must convince the electorate that they are capable of being the President and will bring to that office a vision that the American people can buy into. Second, however, the candidates are being closely scrutinized by the world community. In the past eight years, the Bush administration has followed a relatively unilateral economic policy (as well as a relatively unilateral foreign policy). This world community is trying to determine just how much these candidates, as a President, will play by the rules of the international financial markets. This is what will make it so hard on the candidates to conduct an honest, yet positive campaign into the fall.
What these two audiences want to hear are in many instances contradictory. The American public wants to know what the candidates would like to enact if they are elected President. The international financial community wants to know whether or not the new President will bring discipline and responsibility to the creation and management of economic policy. If I am right about the concern over the undisciplined fiscal and monetary policy of the United States government, this will mean that the American public will not get what it wants…at least for an extended period of time.
I just hope that the next President of the United States will surround him- or herself with advisors of the caliber and independence of Robert Rubin. Then I hope that this President will have the wisdom to listen to their arguments and then act in the best interest of all Americans. There are many times when pragmatism should win over ideology…this is one of them!
All of the candidates for President of the United States are out talking with the people and describing to them the policies and programs they would like to enact if they are elected this November. The basic question that follows this ‘dance’ is, “What are the chances that this person, if elected President, would be able to carry through and implement these policies and programs?”
Right now, my answer to this question is “Little or none!” Until the current financial dislocation resolves itself and the new administration really gets serious about the strength of the United States dollar, the hands of the new President will be tied in terms of enacting new programs and policies. The situation is similar to the one faced by Bill Clinton when he became President in 1992. The Republicans had had control of the White House for twenty of the previous twenty-four years and so Democrats were very anxious to get back into the White House and enact some programs and policies that were more consistent with their way of thinking. However, this was not to be.
Fortunately, for the United States, President Clinton listened to Bob Rubin who advised him that the Federal Budget had to be brought under control and then kept under control. The reason being, Rubin argued, was that any whiff of fiscal irresponsibility on the part of the Democratic administration would be jumped upon by the international financial markets and the dollar would suffer the consequences. New programs and policies would have to be limited while the administration brought their fiscal budget into balance.
The result of this was eight years of almost continuous prosperity and growth for the United States economy and strength for the value of the dollar. Granted that the Clinton administration had received the gift of a tax increase on the part of the George H. W. Bush administration, a gift that helped propel Clinton into the White House, but this gift set the stage for the eight good years that followed. [Clinton DID return a gift to Bush 43 reciprocating the gift that had been given him by Bush 41: the form of the gift was a balanced federal budget and, in general, a very robust economy. Bush 43 has not been so generous to the President that will follow him.] But, prudent fiscal discipline and management also made a major contributed to this period of growth and prosperity.
In one sense, however, the new President that will follow Bush 43 is in a similar situation to the one faced by Clinton. The dollar has been declining for about six years. The environment created by the Bush administration over the past seven years is one that includes a lack of discipline and prudence with respect to risk management and has left financial markets and institutions in disarray. One of the first items on the agenda of the new President will be to restore confidence in the United States government and the United States financial system. This agenda item will affect all else that the President does.
What about the war in Iraq? Well, no new President may be able to take the United States out of Iraq in the near term. However, anything that is done there…and in Afghanistan… is going to be severely limited by what can be done within the budget constraints that will need to be honored.
What about health care…universal or not? Again, budget constraints may not allow anything of consequence to be enacted.
What about….? Same story…
Well, if this is the case, how long must the budget constraints be imposed? It took President
Clinton almost his whole term to bring the Federal budget under control. And, what is very important along the way…the new administration must not only show its intent to bring the budget under control, everything it does must reinforce the image that it is moving in this direction. The international financial markets will not just respond positively to talk or weak actions on the part of the new leaders. ‘Tweaking’ won’t do it. The crucial thing here is the confidence the world has that the new President and the leaders within the new administration are firmly committed to successfully pursuing such a policy. This confidence is hard to come by and if it is abused at all, the confidence will go away and be just that much harder to re-establish.
The candidates for the Presidency must be very careful on this. They have at least two audiences. The first is, of course, the American public. These candidates must convince the electorate that they are capable of being the President and will bring to that office a vision that the American people can buy into. Second, however, the candidates are being closely scrutinized by the world community. In the past eight years, the Bush administration has followed a relatively unilateral economic policy (as well as a relatively unilateral foreign policy). This world community is trying to determine just how much these candidates, as a President, will play by the rules of the international financial markets. This is what will make it so hard on the candidates to conduct an honest, yet positive campaign into the fall.
What these two audiences want to hear are in many instances contradictory. The American public wants to know what the candidates would like to enact if they are elected President. The international financial community wants to know whether or not the new President will bring discipline and responsibility to the creation and management of economic policy. If I am right about the concern over the undisciplined fiscal and monetary policy of the United States government, this will mean that the American public will not get what it wants…at least for an extended period of time.
I just hope that the next President of the United States will surround him- or herself with advisors of the caliber and independence of Robert Rubin. Then I hope that this President will have the wisdom to listen to their arguments and then act in the best interest of all Americans. There are many times when pragmatism should win over ideology…this is one of them!
Wednesday, March 19, 2008
Establishing Discipline: Over Fundamentals or Over Ideology
The United States is facing a very difficult situation currently due to the economic policies the Bush Administration has followed over the past seven years or so. To begin with, the Bush Administration came into office with the Federal budget in surplus and with the Federal Reserve following a relatively disciplined monetary policy. In a sense, the fiscal and monetary house of the United States government was in order.
Basically, the new administration decided to go it alone. That is, it would conduct its economic policy independently of the rest of the world. This was not inconsistent with what the administration was doing in other areas, such as foreign policy. Its first major economic policy action was to construct and then get Congress to pass a substantial tax cut. This, of course, would throw the Federal budget into a deficit, but, the feeling was that this tax cut would stimulate the economy and create sufficient revenues in the future to reduce the deficit and make it manageable. Also, there was some talk about slowing down the growth, or even eliminating some expenditure programs and this would further help to eliminate the deficit. The tax bill was passed.
In devising its fiscal plans, the administration did not anticipate the events of September 11, 2001 and its aftermath. Not only did these events precipitate a ‘war of terror’, they also resulted in one war in Afghanistan and another in Iraq. The expenditure side of the budget grew very rapidly. Furthermore, all three ‘wars’ left open a future commitment to an unpaid bill that was enormous. Occurring at about the same time all this was happening, the Federal Reserve was setting its operating target for the Federal Funds rate at 2% or below for a period of over 3 years. Given the rate of inflation during this time, this meant that the real rate of interest on these short term loans was negative.
The value of the United States dollar began to drop in 2002. World markets were concerned about how the Bush Administration was acting independently of the rest of the world and that they were not playing by the ‘rules’ of international finance. The most basic rule of international finance is that one country cannot ‘inflate’ its economy for its own purposes without a consequent decline in the value of its own currency in foreign exchange markets. This is just a fundamental result of how markets work. But, in the past, the United States being as big and powerful as it was, could get away from acting independently of these rules. This is no longer the case.
As the value of the dollar declined in foreign exchange markets, the Bush Administration gave lip service to the fact that the dollar was falling in value, but did nothing about it. As a consequence, the dollar continued to decline, falling by about 7% a year against the Euro between 2001 and 2007. It also fell by over 5.5% per year against the British Pound. The day of reckoning has finally appeared.
Historically, all countries that once had significant economic and financial positions in the world, except the United States, faced a transition from being able to act relatively independently of the rest of the world and having to abide by the workings of international markets. As countries moved from the former position of relative independence to disciplined cooperation, they went through a period of learning. During this period, the country in question would find that as it attempted to act independently of world markets through the creation of budget deficits that were eventually monetized by its central bank, ‘international bankers,’ an ambiguous and anonymous clandestine group of money managers, would start selling their currency until the drop in value became significant enough that the government had to back off its fiscal and monetary policies and establish a sound and disciplined program going forward.
The United States now seems to be in this transition position. The world has changed and it is no longer the world power it used to be. Yes, it is still powerful and important but due to globalization and the reliance of the world on oil it is not as important as it once was. As a consequence, the rest of the world is now showing the United States that it must join the club, it must humble itself enough to be realize that it must work with others and not just act as it wishes.
This is the background of the point I would like to make about the working of governments. The Bush Administration constructed its economic policy on the basis of an ideology. This ideology came from the presidential administration of Ronald Reagan. It is founded upon the premise that it is always good to cut taxes. In the past, this premise was presented along with the idea that programs should be cut as well in order to maintain fiscal discipline and reduce the size of the government. However, this latter component fell to the wayside when the proponents of ‘small government’ found that it was not practical or feasible to cut programs from the budget. Thus, only the first part of the ideology remained. Cutting taxes is good!
‘Conservatives’ and the Bush Administration stuck to the ideology. It brought in people to work in the administration that were loyal to the ideology. And, they enacted their tax cut and everybody was happy…on the ‘conservative’ side of the aisle. Discipline was rampant, but the discipline was to enforce adherence to the ideology regardless of the consequences of the impact of its execution. Furthermore, we see this imposed discipline carrying through to the campaign to become the Republican nominee for President in the 2008 election. Candidates went through unbelievable loops to sound convincing that they would continue the Reagan policy of cutting taxes if they were elected President. All seemed intent on becoming the next Ronald Reagan and they fought over who was the most representative of the Reagan tradition.
The problem is that the times have changed. The fundamentals are different now than they were 15 years ago let alone 28 years ago. The United States is not in the position it once was and must respond to the new fundamentals. The market imposes discipline upon those that operate within the market system. There is now enough wealth and power held outside the United States so that the United States must respond to this discipline and impose the discipline upon itself. This is all a part of being just one among many. One must pay attention to the wishes and needs of others. Within such an environment one must conform to the rules and become a good citizen.
This insight applies more than just to the ‘most powerful nation in the world.’ It also applies to those who hold power locally or regionally. Yes, the United States has been arrogant in attempting to impose its will on the world, but others have also been arrogant in attempting to impose their will on their ‘limited’ worlds. The attempt to impose an ‘ideology’ on others and the discipline that is applied to establish or maintain an ‘ideology’ on others is doomed to failure over the longer run. The problem is that the attempt to enforce the ‘ideology’ in the short run can have many dire consequences. The ‘ideology’ of the Bush Administration was related to tax cuts. The ‘ideology’ of others relates to ‘political correctness.’ The ‘ideology’ of others relates to Islamic fundamentalism. And, we can go on, if needed, to identify many more ‘ideologies’ that are alive in the world today.
What I am more interested in is the discipline that is necessary to be aware of and respond to the ‘fundamentals’ that exist in the world. I am not a post modernist. I do not believe that any worldview works and it is just a matter of who is in power. In the case of the economic policy of the United States and the decline in the value of the dollar…markets do work, some better than others, but, they do work. As a consequence, people, governments, and other organizations must operate within the boundaries and limits of being in a world with other people, governments and other organizations. This takes discipline, but it is a discipline that responds to and operates within the ‘fundamentals’ of the world. Some things, some models, some worldviews do work better than others. We must discipline ourselves to achieve the goals and objectives that are dear to us but we must do this in concert with the way the world works.
Basically, the new administration decided to go it alone. That is, it would conduct its economic policy independently of the rest of the world. This was not inconsistent with what the administration was doing in other areas, such as foreign policy. Its first major economic policy action was to construct and then get Congress to pass a substantial tax cut. This, of course, would throw the Federal budget into a deficit, but, the feeling was that this tax cut would stimulate the economy and create sufficient revenues in the future to reduce the deficit and make it manageable. Also, there was some talk about slowing down the growth, or even eliminating some expenditure programs and this would further help to eliminate the deficit. The tax bill was passed.
In devising its fiscal plans, the administration did not anticipate the events of September 11, 2001 and its aftermath. Not only did these events precipitate a ‘war of terror’, they also resulted in one war in Afghanistan and another in Iraq. The expenditure side of the budget grew very rapidly. Furthermore, all three ‘wars’ left open a future commitment to an unpaid bill that was enormous. Occurring at about the same time all this was happening, the Federal Reserve was setting its operating target for the Federal Funds rate at 2% or below for a period of over 3 years. Given the rate of inflation during this time, this meant that the real rate of interest on these short term loans was negative.
The value of the United States dollar began to drop in 2002. World markets were concerned about how the Bush Administration was acting independently of the rest of the world and that they were not playing by the ‘rules’ of international finance. The most basic rule of international finance is that one country cannot ‘inflate’ its economy for its own purposes without a consequent decline in the value of its own currency in foreign exchange markets. This is just a fundamental result of how markets work. But, in the past, the United States being as big and powerful as it was, could get away from acting independently of these rules. This is no longer the case.
As the value of the dollar declined in foreign exchange markets, the Bush Administration gave lip service to the fact that the dollar was falling in value, but did nothing about it. As a consequence, the dollar continued to decline, falling by about 7% a year against the Euro between 2001 and 2007. It also fell by over 5.5% per year against the British Pound. The day of reckoning has finally appeared.
Historically, all countries that once had significant economic and financial positions in the world, except the United States, faced a transition from being able to act relatively independently of the rest of the world and having to abide by the workings of international markets. As countries moved from the former position of relative independence to disciplined cooperation, they went through a period of learning. During this period, the country in question would find that as it attempted to act independently of world markets through the creation of budget deficits that were eventually monetized by its central bank, ‘international bankers,’ an ambiguous and anonymous clandestine group of money managers, would start selling their currency until the drop in value became significant enough that the government had to back off its fiscal and monetary policies and establish a sound and disciplined program going forward.
The United States now seems to be in this transition position. The world has changed and it is no longer the world power it used to be. Yes, it is still powerful and important but due to globalization and the reliance of the world on oil it is not as important as it once was. As a consequence, the rest of the world is now showing the United States that it must join the club, it must humble itself enough to be realize that it must work with others and not just act as it wishes.
This is the background of the point I would like to make about the working of governments. The Bush Administration constructed its economic policy on the basis of an ideology. This ideology came from the presidential administration of Ronald Reagan. It is founded upon the premise that it is always good to cut taxes. In the past, this premise was presented along with the idea that programs should be cut as well in order to maintain fiscal discipline and reduce the size of the government. However, this latter component fell to the wayside when the proponents of ‘small government’ found that it was not practical or feasible to cut programs from the budget. Thus, only the first part of the ideology remained. Cutting taxes is good!
‘Conservatives’ and the Bush Administration stuck to the ideology. It brought in people to work in the administration that were loyal to the ideology. And, they enacted their tax cut and everybody was happy…on the ‘conservative’ side of the aisle. Discipline was rampant, but the discipline was to enforce adherence to the ideology regardless of the consequences of the impact of its execution. Furthermore, we see this imposed discipline carrying through to the campaign to become the Republican nominee for President in the 2008 election. Candidates went through unbelievable loops to sound convincing that they would continue the Reagan policy of cutting taxes if they were elected President. All seemed intent on becoming the next Ronald Reagan and they fought over who was the most representative of the Reagan tradition.
The problem is that the times have changed. The fundamentals are different now than they were 15 years ago let alone 28 years ago. The United States is not in the position it once was and must respond to the new fundamentals. The market imposes discipline upon those that operate within the market system. There is now enough wealth and power held outside the United States so that the United States must respond to this discipline and impose the discipline upon itself. This is all a part of being just one among many. One must pay attention to the wishes and needs of others. Within such an environment one must conform to the rules and become a good citizen.
This insight applies more than just to the ‘most powerful nation in the world.’ It also applies to those who hold power locally or regionally. Yes, the United States has been arrogant in attempting to impose its will on the world, but others have also been arrogant in attempting to impose their will on their ‘limited’ worlds. The attempt to impose an ‘ideology’ on others and the discipline that is applied to establish or maintain an ‘ideology’ on others is doomed to failure over the longer run. The problem is that the attempt to enforce the ‘ideology’ in the short run can have many dire consequences. The ‘ideology’ of the Bush Administration was related to tax cuts. The ‘ideology’ of others relates to ‘political correctness.’ The ‘ideology’ of others relates to Islamic fundamentalism. And, we can go on, if needed, to identify many more ‘ideologies’ that are alive in the world today.
What I am more interested in is the discipline that is necessary to be aware of and respond to the ‘fundamentals’ that exist in the world. I am not a post modernist. I do not believe that any worldview works and it is just a matter of who is in power. In the case of the economic policy of the United States and the decline in the value of the dollar…markets do work, some better than others, but, they do work. As a consequence, people, governments, and other organizations must operate within the boundaries and limits of being in a world with other people, governments and other organizations. This takes discipline, but it is a discipline that responds to and operates within the ‘fundamentals’ of the world. Some things, some models, some worldviews do work better than others. We must discipline ourselves to achieve the goals and objectives that are dear to us but we must do this in concert with the way the world works.
Wednesday, March 12, 2008
The Purpose of Government--2
In the post of March 5, 2008, I took a look at a definition of the purpose of government attributed to the economist John Maynard Keynes. I focused on this definition because the work of Keynes has been the backbone and rationale for many of the programs and policies of the ‘Liberal’ intellectual in the latter half of the twentieth century, spilling over into the twenty-first century. His biographer, Robert Skidelsky presented the definition in this way: “The purpose of government is to secure the contentment of the people as constrained by the principle of equity.” (John Maynard Keynes, Volume 2, The Economist as Savior, 1920-1837 published by Viking Adult in 1994, page 62.) Skidelsky goes on to explain that by ‘contentment’ Keynes meant ‘physical calm’ and ‘material comfort.’ He also states that ‘equity’ can be defined as “the absence in law or policy of ‘artificial’ discrimination in regards to individuals or to classes.”
Last week I wrote about the first part of this statement of purpose, the securing of “the contentment of the people” as an objective of government. I argued that this concerned itself with outcomes and not processes. I further stated that the Hamiltonian approach to government focuses more on processes rather than outcomes because in a world of incomplete information one does not always succeed in obtaining the outcomes one wants. By focusing upon processes, the government helps to create the systems of a society (the rules and regulations of the society) and also helps the members of the society to obtain the skills and knowledge necessary to operate successfully within such these systems.
This week, I would like to discuss the second part of the definition, the part that deals with “the principle of equity.” Keynes was particularly concerned with this element because of his connection with the Bloomsbury group of artists and intellectuals who were, socially and culturally, on the fringe of English society at the beginning of the twentieth century. This group included individuals like Virginia Woolf, Vanessa Bell, Duncan Grant, E. M. Forster, Lytton Strachey, as well as Keynes, himself. It is apparent in Skidelsky’s biography of Keynes that Keynes was very concerned with protecting this group because of their ‘advanced’ ideas on such things as feminism, pacifism, and sexuality.
Historically, in the nineteenth century, as well as in the twentieth century, Europe and Great Britain were experiencing movements in society that resulted in the formation of more and more ‘little societies’ like the Bloomsbury group. Historians have linked these individuals and groups together within the framework of what is called “Modernism”, a movement they contend succeeded the Enlightenment and which served as the forerunner of “Post-Modernism.” To me, the Enlightenment and Modernism were a part of one whole and just represented an extension of how human beings, once they took on an attitude of skepticism towards authority and once they started exploring things inductively, began to extend knowledge and behavior in many different directions.
This development, I believe, can be related to the spread of information which really began in earnest following the evolution of printing that occurred in the fifteenth century. And, this spread of information continues today at an ever accelerating pace, leading to almost continuous change within the world as well as almost continuous resistance in some areas, the middle east for example. New information is threatening and causes change. Some individuals that receive new information, in whatever form, end up, sooner or later, comparing this new information with the old information generated by the models and schema currently used to solve problems and make decisions. If the new information conflicts with the old information, the seemingly natural thing for a person to do is to try and find out why the difference exists and then modify their models or schema so as to be able to make better predictions in order to solve more difficult problems or make better decisions.
New information is threatening in the sense that the modified models and schema may not be consistent with the assumptions behind the existing models and schema. These conflicts can be observed in religion, politics, culture, and other areas of society that have established belief systems. These existing systems maintain themselves through indoctrination, training, repression, power, and other forms of control and reductionism. Every society, organization, or group exerts such efforts in order to maintain the coherence and stability of their society, organization, or group. Some, however, have processes by which change can be accommodated from within, such as by means of a democratic process. Others require revolution to achieve change, but there are all grades of means between these two extremes.
Earlier in history, societies tended to be more homogeneous in their makeup. Thus, they did not face the threat of alternative world views as much as we do in the modern world. If alternative world views did arise, the individuals involved were either disposed of or, if innocuous, were ignored. However, as information began to spread more rapidly and the number of alternative world views grew, societies began to experience the presence of a real threat. This movement really accelerated during the period referred to as the Reformation and became even more prevalent during the Enlightenment. In the Reformation we saw many religious sects develop and this resulted in a massive, violent at times, change in society. In the Enlightenment, more and more was challenged and, of especial importance, Copernicus, Galileo, Francis Bacon and others developed the methodology and process of science.
Modernism, it seems to me, is just an extension of the inductive method applied to other areas of human interest, like those we would call the humanities, areas like art, literature, music, and architecture. What differentiates these areas from the areas discussed earlier? It is not the methodology of approach or the process of investigation. To me it is that the subject matter under review is much more complex and is much less capable of being isolated through experiment or reductive study. Whereas in science, the models or schema used can be the result of a reductive exercise that isolates the process being studied, allows it to be studied through tightly controlled experiment, and then presented in a formal, many times a mathematical, way. The models and schema used in art, literature, and so forth, often come in the form of stories and narratives, fables, proverbs, folk lore, and so forth. This is because of the complexity of the situations being studied, that is the process being studied cannot be reduced to just a few important variables, and because the models and schema cannot be tested by means of tightly controlled experiments which result in a rejection or confirmation of the proposition being examined. Dealing with human issues is a more difficult thing to do and is subject to much more questioning and debate.
Peter Gay, in his most recent work “Modernism: The Lure of Heresy” writes that “The creative individual was little regarded until the age of the Enlightenment.” But, the emphasis on the work of the individual grew and “The claim of being first and alone in the field became a central feature in the competitive modernist enterprise, which conjured up the figure of the inventive spirit who neither wants nor needs ancestors or company…” (pages 42-43) The Bloomsbury group evolved out of this new, modern attitude.
But, Keynes feared for his friends. Bloomsbury was different and it was not only threatening to the existing social structure, it directly challenged it. Keynes was concerned that Bloomsbury, and other similar movements, would be subject to ‘artificial discrimination’ because of their beliefs and living arrangements. Thus, he argued that a government should not create laws or policies that would be harmful to such groups. Of course, these groups should not harm the ‘physical calm’ or ‘material comfort’ of others, but he would argue strenuously that those, like the Bloomsbury group, would do no such thing.
The Hamiltonian approach to government, I believe, should be a strong advocate of this constraint on government. The spread of information is going to take place on an even larger scale in the future. Likewise, new groups and sects are going to evolve out of this spread in a similar way. A society that places a high premium on innovation and change in science and technology is going to have to accept the pressure for innovation and change in other areas of the society. These other individuals and groups should not be subject to ‘artificial discrimination.’ They are all responding to the same incentives.
Last week I wrote about the first part of this statement of purpose, the securing of “the contentment of the people” as an objective of government. I argued that this concerned itself with outcomes and not processes. I further stated that the Hamiltonian approach to government focuses more on processes rather than outcomes because in a world of incomplete information one does not always succeed in obtaining the outcomes one wants. By focusing upon processes, the government helps to create the systems of a society (the rules and regulations of the society) and also helps the members of the society to obtain the skills and knowledge necessary to operate successfully within such these systems.
This week, I would like to discuss the second part of the definition, the part that deals with “the principle of equity.” Keynes was particularly concerned with this element because of his connection with the Bloomsbury group of artists and intellectuals who were, socially and culturally, on the fringe of English society at the beginning of the twentieth century. This group included individuals like Virginia Woolf, Vanessa Bell, Duncan Grant, E. M. Forster, Lytton Strachey, as well as Keynes, himself. It is apparent in Skidelsky’s biography of Keynes that Keynes was very concerned with protecting this group because of their ‘advanced’ ideas on such things as feminism, pacifism, and sexuality.
Historically, in the nineteenth century, as well as in the twentieth century, Europe and Great Britain were experiencing movements in society that resulted in the formation of more and more ‘little societies’ like the Bloomsbury group. Historians have linked these individuals and groups together within the framework of what is called “Modernism”, a movement they contend succeeded the Enlightenment and which served as the forerunner of “Post-Modernism.” To me, the Enlightenment and Modernism were a part of one whole and just represented an extension of how human beings, once they took on an attitude of skepticism towards authority and once they started exploring things inductively, began to extend knowledge and behavior in many different directions.
This development, I believe, can be related to the spread of information which really began in earnest following the evolution of printing that occurred in the fifteenth century. And, this spread of information continues today at an ever accelerating pace, leading to almost continuous change within the world as well as almost continuous resistance in some areas, the middle east for example. New information is threatening and causes change. Some individuals that receive new information, in whatever form, end up, sooner or later, comparing this new information with the old information generated by the models and schema currently used to solve problems and make decisions. If the new information conflicts with the old information, the seemingly natural thing for a person to do is to try and find out why the difference exists and then modify their models or schema so as to be able to make better predictions in order to solve more difficult problems or make better decisions.
New information is threatening in the sense that the modified models and schema may not be consistent with the assumptions behind the existing models and schema. These conflicts can be observed in religion, politics, culture, and other areas of society that have established belief systems. These existing systems maintain themselves through indoctrination, training, repression, power, and other forms of control and reductionism. Every society, organization, or group exerts such efforts in order to maintain the coherence and stability of their society, organization, or group. Some, however, have processes by which change can be accommodated from within, such as by means of a democratic process. Others require revolution to achieve change, but there are all grades of means between these two extremes.
Earlier in history, societies tended to be more homogeneous in their makeup. Thus, they did not face the threat of alternative world views as much as we do in the modern world. If alternative world views did arise, the individuals involved were either disposed of or, if innocuous, were ignored. However, as information began to spread more rapidly and the number of alternative world views grew, societies began to experience the presence of a real threat. This movement really accelerated during the period referred to as the Reformation and became even more prevalent during the Enlightenment. In the Reformation we saw many religious sects develop and this resulted in a massive, violent at times, change in society. In the Enlightenment, more and more was challenged and, of especial importance, Copernicus, Galileo, Francis Bacon and others developed the methodology and process of science.
Modernism, it seems to me, is just an extension of the inductive method applied to other areas of human interest, like those we would call the humanities, areas like art, literature, music, and architecture. What differentiates these areas from the areas discussed earlier? It is not the methodology of approach or the process of investigation. To me it is that the subject matter under review is much more complex and is much less capable of being isolated through experiment or reductive study. Whereas in science, the models or schema used can be the result of a reductive exercise that isolates the process being studied, allows it to be studied through tightly controlled experiment, and then presented in a formal, many times a mathematical, way. The models and schema used in art, literature, and so forth, often come in the form of stories and narratives, fables, proverbs, folk lore, and so forth. This is because of the complexity of the situations being studied, that is the process being studied cannot be reduced to just a few important variables, and because the models and schema cannot be tested by means of tightly controlled experiments which result in a rejection or confirmation of the proposition being examined. Dealing with human issues is a more difficult thing to do and is subject to much more questioning and debate.
Peter Gay, in his most recent work “Modernism: The Lure of Heresy” writes that “The creative individual was little regarded until the age of the Enlightenment.” But, the emphasis on the work of the individual grew and “The claim of being first and alone in the field became a central feature in the competitive modernist enterprise, which conjured up the figure of the inventive spirit who neither wants nor needs ancestors or company…” (pages 42-43) The Bloomsbury group evolved out of this new, modern attitude.
But, Keynes feared for his friends. Bloomsbury was different and it was not only threatening to the existing social structure, it directly challenged it. Keynes was concerned that Bloomsbury, and other similar movements, would be subject to ‘artificial discrimination’ because of their beliefs and living arrangements. Thus, he argued that a government should not create laws or policies that would be harmful to such groups. Of course, these groups should not harm the ‘physical calm’ or ‘material comfort’ of others, but he would argue strenuously that those, like the Bloomsbury group, would do no such thing.
The Hamiltonian approach to government, I believe, should be a strong advocate of this constraint on government. The spread of information is going to take place on an even larger scale in the future. Likewise, new groups and sects are going to evolve out of this spread in a similar way. A society that places a high premium on innovation and change in science and technology is going to have to accept the pressure for innovation and change in other areas of the society. These other individuals and groups should not be subject to ‘artificial discrimination.’ They are all responding to the same incentives.
Wednesday, March 5, 2008
The Purpose of Government
Recently, I have been reading the magnificent biography of John Maynard Keynes written, in three volumes, by Robert J. A. Skidelsky. In both Volume 1 and Volume 2 of the trilogy, Skidelsky spends some time discussing how Keynes viewed the purpose of government and related his concept back to an essay that Keynes had written on Edmund Burke. This, of course, is very interesting in itself because Keynes is seen as one of the founding fathers of the ‘Liberal’ approach to how government can be used to maneuver the macro-economy and Burke is one of the reigning gods in the ‘Conservative’ pantheon of revelation. What I would like to start off discussing, however, is not the relationship between Keynes and Burke, but the purpose for government that Keynes supports intellectually.
Skidelsky reduces ideas of Keynes to this general statement: “The purpose of government is to secure the contentment of the people as constrained by the principle of equity.” (John Maynard Keynes, Volume 2, The Economist as Savior, 1920-1837 published by Viking Adult in 1994, page 62.) Skidelsky goes on to explain that by ‘contentment’ Keynes meant ‘physical calm’ and ‘material comfort.’ He also defines that ‘equity’ can be defined as “the absence in law or policy of ‘artificial’ discrimination in regards to individuals or to classes.” (page 62)
In other words, the purpose of government is to provide an environment in which individuals can achieve ‘good states of mind’ where one is allowed to achieve whatever ‘good state’ that he or she seeks. This is consistent with the philosophical atmosphere that Keynes was a part of coming from the work of G. E. Moore at Cambridge University (who wrote Principia Ethica (1903; revised edition, Cambridge University Press, 1993) and the Bloomsbury set of intellectuals (Virginia Woolf, Duncan Grant, E. M. Forster, Lytton Strachey and others) located in London. What Keynes was proposing was that everyone should be sufficiently well off and free of economic worries so that they could live the life they wanted, regardless of what others thought of that life.
Keynes, of course, is well known for his efforts to see that societies, especially ones like Great Britain, could attain the ‘physical calm’ and ‘material comfort’ needed for the achievement of such a goal. He was specifically interested in the ‘equity’ issue because his friends in Bloomsbury represented a leading avant garde community that exhibited advanced modern attitudes towards such things as feminism, pacifism, and sexuality. The Bloomsbury group, itself, was relatively well off as far as wealth was concerned and was also assisted over time by the financial support of Keynes; so that the first component of the ‘purpose of government’ was not a concern of theirs. However, Keynes recognized that the condition of ‘material comfort’ and ‘physical calm’ was necessary for the group to pursue its desired lifestyle. Thus, if others were to attain ‘good states of mind’ it was necessary for them to also experience ‘material comfort’ and ‘physical calm’. Hence, government needed to do something to achieve this end.
There was another matter that was important to Keynes in the 1920s and 1930s that fit into his definition of the ‘purpose of government.’ He was very concerned that if many in the country did not experience ‘physical calm’ and ‘material comfort’ they would revolt against the existing democratic governments that supported economic systems that were basically capitalistic in nature. Of course, there was the immediate experience of the Russian Revolution. This worry, however, permeated the Paris Peace talks that followed the Great War and carried over into the 1920s and beyond as real concern was expressed that the ‘masses’ might rise up if they were in a depressed state economically. Thus, a strong, vibrant economy was necessary, it was felt, in order that people could be free to follow the own path to achieving ‘good states of mind.’ The concern here related to the potential breakdown of the capitalistic system.
It is important to address this concept of ‘the purpose of government’ from the Hamiltonian point of view that we have been discussing in previous weeks. One cannot argue from the Hamiltonian standpoint that the goals set out by Keynes are undesirable. We cannot argue that ‘physical calm’ and ‘material comfort’ are good things and are good things for everyone in a society. Also, one cannot argue that there should not be discrimination about the choice of lifestyles, let alone discrimination based on race or any other physical distinction between people.
What one can disagree with this stated purpose from the Hamiltonian point of view is the ability of government to directly achieve specific outcomes. The problem, as I see it, is that this purpose is concerned with outcomes and not processes, a distinction that has been discussed in previous weeks. Outcomes are all fine and good, we argued in the last post, but it is next to impossible for a government to obtain the information necessary to create programs that will achieve the outcomes desired; it is next to impossible to create an incentive system that will accomplish such goal; and it is next to impossible to implement and then execute such programs and policies in a timely manner. In other words, attempting to achieve specific outcomes is a very, very hard thing to do.
It is difficult enough for people to achieve the results that they set out to reach and if they focus only on current specific outcomes they can easily despair. If it is that hard for an individual to achieve what they set out to do, just think how much harder it is for a government to achieve specific outcomes. Furthermore, setting up programs and policies to gain specific ends can become counterproductive in that the programs and policies create other outcomes that are not helpful. And, once programs and policies have been created they are almost never eliminated so that they eventually come to serve other purposes. This is why it is argued that individuals, as well as organizations and governments, should focus on setting up processes that can succeed over time and that provide the tools needed to succeed.
Life is uncertain and an individual or an organization is not going to succeed in every instance. That is why the focus on specific outcomes is not that productive. In baseball, a good hitter will get a hit in 1 out of every 3 times at bat. Or, that batter does not get a hit 2 times out of every three at bats. If we focus on the times the hitter does not get a hit, things look pretty bad. Yet if this person has developed a process, a technique that allows him, on average, to get a hit 1 out of 3 at bats, that person is going to be one of the better hitters in baseball. One is not locked into outcomes when one focuses on processes.
Governmental policies and programs that initiate processes can be leveraged by individuals and organizations to achieve desirable outcomes far beyond the scope and scale of what the government can achieve by itself. In terms of education, the government can support the creation and maintenance of an educational system that results in tremendous positive externalities throughout the society. In this way, the government is helping its citizens attain the tools that are of great benefit to individuals as well as to the society. In terms of capital markets, the government can provide the rules by which capital markets can work and the policing of these markets to oversee ‘fair play’ within the operation of the markets. In terms of a banking system, again the government can provide the rules by which the banking system operates; regulate the system to minimize the amount of abuse taking place; and then support a check clearing system and central banking facilities to support the efficient functioning of the banks.
In all these cases, the government is focusing more on enhancing the infrastructure of the society rather than on achieving specific outcomes. Yes, outcomes are going to vary over time, but even the existing infrastructure should be aimed at smoothing the variation in the outcomes and not offsetting them. Nothing is being said here about the size of government. In a modern, well-functioning capitalistic society, it is my feeling that a fairly sizeable government will be necessary. What is crucial, however, is not the size that the government achieves, but the role the government plays in letting the society determine itself. To me, Keynes was idealistic and not realistic about what a government could do.
Skidelsky reduces ideas of Keynes to this general statement: “The purpose of government is to secure the contentment of the people as constrained by the principle of equity.” (John Maynard Keynes, Volume 2, The Economist as Savior, 1920-1837 published by Viking Adult in 1994, page 62.) Skidelsky goes on to explain that by ‘contentment’ Keynes meant ‘physical calm’ and ‘material comfort.’ He also defines that ‘equity’ can be defined as “the absence in law or policy of ‘artificial’ discrimination in regards to individuals or to classes.” (page 62)
In other words, the purpose of government is to provide an environment in which individuals can achieve ‘good states of mind’ where one is allowed to achieve whatever ‘good state’ that he or she seeks. This is consistent with the philosophical atmosphere that Keynes was a part of coming from the work of G. E. Moore at Cambridge University (who wrote Principia Ethica (1903; revised edition, Cambridge University Press, 1993) and the Bloomsbury set of intellectuals (Virginia Woolf, Duncan Grant, E. M. Forster, Lytton Strachey and others) located in London. What Keynes was proposing was that everyone should be sufficiently well off and free of economic worries so that they could live the life they wanted, regardless of what others thought of that life.
Keynes, of course, is well known for his efforts to see that societies, especially ones like Great Britain, could attain the ‘physical calm’ and ‘material comfort’ needed for the achievement of such a goal. He was specifically interested in the ‘equity’ issue because his friends in Bloomsbury represented a leading avant garde community that exhibited advanced modern attitudes towards such things as feminism, pacifism, and sexuality. The Bloomsbury group, itself, was relatively well off as far as wealth was concerned and was also assisted over time by the financial support of Keynes; so that the first component of the ‘purpose of government’ was not a concern of theirs. However, Keynes recognized that the condition of ‘material comfort’ and ‘physical calm’ was necessary for the group to pursue its desired lifestyle. Thus, if others were to attain ‘good states of mind’ it was necessary for them to also experience ‘material comfort’ and ‘physical calm’. Hence, government needed to do something to achieve this end.
There was another matter that was important to Keynes in the 1920s and 1930s that fit into his definition of the ‘purpose of government.’ He was very concerned that if many in the country did not experience ‘physical calm’ and ‘material comfort’ they would revolt against the existing democratic governments that supported economic systems that were basically capitalistic in nature. Of course, there was the immediate experience of the Russian Revolution. This worry, however, permeated the Paris Peace talks that followed the Great War and carried over into the 1920s and beyond as real concern was expressed that the ‘masses’ might rise up if they were in a depressed state economically. Thus, a strong, vibrant economy was necessary, it was felt, in order that people could be free to follow the own path to achieving ‘good states of mind.’ The concern here related to the potential breakdown of the capitalistic system.
It is important to address this concept of ‘the purpose of government’ from the Hamiltonian point of view that we have been discussing in previous weeks. One cannot argue from the Hamiltonian standpoint that the goals set out by Keynes are undesirable. We cannot argue that ‘physical calm’ and ‘material comfort’ are good things and are good things for everyone in a society. Also, one cannot argue that there should not be discrimination about the choice of lifestyles, let alone discrimination based on race or any other physical distinction between people.
What one can disagree with this stated purpose from the Hamiltonian point of view is the ability of government to directly achieve specific outcomes. The problem, as I see it, is that this purpose is concerned with outcomes and not processes, a distinction that has been discussed in previous weeks. Outcomes are all fine and good, we argued in the last post, but it is next to impossible for a government to obtain the information necessary to create programs that will achieve the outcomes desired; it is next to impossible to create an incentive system that will accomplish such goal; and it is next to impossible to implement and then execute such programs and policies in a timely manner. In other words, attempting to achieve specific outcomes is a very, very hard thing to do.
It is difficult enough for people to achieve the results that they set out to reach and if they focus only on current specific outcomes they can easily despair. If it is that hard for an individual to achieve what they set out to do, just think how much harder it is for a government to achieve specific outcomes. Furthermore, setting up programs and policies to gain specific ends can become counterproductive in that the programs and policies create other outcomes that are not helpful. And, once programs and policies have been created they are almost never eliminated so that they eventually come to serve other purposes. This is why it is argued that individuals, as well as organizations and governments, should focus on setting up processes that can succeed over time and that provide the tools needed to succeed.
Life is uncertain and an individual or an organization is not going to succeed in every instance. That is why the focus on specific outcomes is not that productive. In baseball, a good hitter will get a hit in 1 out of every 3 times at bat. Or, that batter does not get a hit 2 times out of every three at bats. If we focus on the times the hitter does not get a hit, things look pretty bad. Yet if this person has developed a process, a technique that allows him, on average, to get a hit 1 out of 3 at bats, that person is going to be one of the better hitters in baseball. One is not locked into outcomes when one focuses on processes.
Governmental policies and programs that initiate processes can be leveraged by individuals and organizations to achieve desirable outcomes far beyond the scope and scale of what the government can achieve by itself. In terms of education, the government can support the creation and maintenance of an educational system that results in tremendous positive externalities throughout the society. In this way, the government is helping its citizens attain the tools that are of great benefit to individuals as well as to the society. In terms of capital markets, the government can provide the rules by which capital markets can work and the policing of these markets to oversee ‘fair play’ within the operation of the markets. In terms of a banking system, again the government can provide the rules by which the banking system operates; regulate the system to minimize the amount of abuse taking place; and then support a check clearing system and central banking facilities to support the efficient functioning of the banks.
In all these cases, the government is focusing more on enhancing the infrastructure of the society rather than on achieving specific outcomes. Yes, outcomes are going to vary over time, but even the existing infrastructure should be aimed at smoothing the variation in the outcomes and not offsetting them. Nothing is being said here about the size of government. In a modern, well-functioning capitalistic society, it is my feeling that a fairly sizeable government will be necessary. What is crucial, however, is not the size that the government achieves, but the role the government plays in letting the society determine itself. To me, Keynes was idealistic and not realistic about what a government could do.
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