Tag: Ronald Reagan

Categories
Economics Financial Crisis Politics

Volker’s Paradox

[digg-reddit-me]In response to long-time commenter John Rose who asked for a link to some tangible data proving that profits for financial firms have increased markedly since deregulation began:

From the same paper as the above chart, comes the observation which prompted my post on how Wall Street’s enormous profits are evidence of a poorly functioning market:

In 1997, former Federal Reserve Board Chairman Paul Volker posed a question about the commercial banking system he said he could not answer. The industry was under more intense competitive pressure than at any time in living memory, Volcker noted, “yet at the same time, the industry never has been so profitable.” I refer to the seemingly strange coexistence of intense competition and historically high profit rates in commercial banking as Volcker’s Paradox.

Deregulation of the economy in general began in earnest under Jimmy Carter — but it wasn’t until the 1980s that the deregulation of the financial industry began to gain steam under Ronald Reagan. Then of course, in 1999 came the (in)famous Gramm-Leachley Act which seems to precede the sharpest rise in real profits of the financial sector.

[Chart from this paper by James Grotty (pdf) published by PERI.]

Categories
Barack Obama Health care National Security Politics The Opinionsphere

The Populist Right Isn’t a Political Movement. (cont.)

[digg-reddit-me]Thesis #1: There is a glaring discrepancy between:

  • the populist right’s rhetorical opposition to all domestic government action on the grounds that it is incompetent, ineffective, and a threat to liberty; and
  • the populist right’s support for apparently unlimited government power on national security and law enforcement matters on the grounds that it is highly competent, effective, and the defender of liberty.

(Initial post on the subject.)

———

These contradictory views of the state have been a part of the populist right since its modern inception — you can see it in Barry Goldwater, in Ronald Reagan, in George W. Bush. In fact, despite the rhetorical agitprop that has accompanied every surge in the populist right, it is impossible to understand the inflows of energy into and out of it, or to understand how it has acted when entrusted with power, while taking seriously the anti-government views it constantly invokes.

Thesis #2: Populist right wing movements have not been historically anti-government despite their rhetoric; they have been anti-minority. They have supported the expansion of government power to check the threats from minorities and opposed the expansion of government power to benefit any minorities.

———

Rather than opposing “government” as a whole, the populist right has gained its energy and support from opposing liberal government and especially from opposing liberal government support for the rights of individuals who are members of minority groups. They have also supported programs in which the government is seen to strongly take on the interests of individuals who are members of minority groups.

Given the rhetoric in recent days from Virgina Governor Bob McDonnell and the geographical concentration of the Republican Party and populist right in the Southern states that rebelled in the Civil War, it’s worth pointing out that that conflict was described by the Confederacy at the time, and by McDonnell today, in anti-government terms — as about “states’ rights” rather than slavery.

The populist right was decimated by Franklin Delano Roosevelt’s presidency but finally began to become energized in opposition to the Civil Rights Movement as the South quickly flipped to the Republican Party; it further was energized by the feminist revolution and the rise of the counterculture in the late 1960s. Then Nixon became president and the populist right quieted down as he expanded government in every direction and the Supreme Court legalized abortion. After 2 terms of Republican rule, a liberal became president, was accused of being weak and not loving America enough, and the pro-life movement began to gather strength; and once again, the party of limited government and cheery jingoism  made a comeback with evangelical fervor. Ronald Reagan also expanded government, but reduced it’s role in helping minorities and the middle class, reduced regulations on corporations, and lowered the tax burden on everyone a little and the rich a lot. Once again, the populist right was quiet. The first Bush was never comfortable with the populist right and a splinter group broke away from his electoral coalition causing him to lose the 1992 election to a young, fresh-faced liberal. Once again, the populist right was called to arms with the militia and white supremacist movements thriving (encouraged by Ron Paul who saw them as a necessary evil). With welfare reform, budget surpluses, tax cuts for the middle class, and a humming economy, Clinton managed to quiet the populist right’s rage at government. But the right wing elites still despised the man, convinced he was somehow not a legitimate president. They fostered various conspiracy theories about his murder of Vince Foster, about drug running in Arizona, and about hundreds of women. Later, a second Bush was elected and once again trimmed regulations protecting consumers but expanded government involvement in security, in education, in helping the elderly further — but the populist right rallied to him as he invoked mythical Democrats endorsing therapy for terrorists and expanded the government’s powers to go after terrorists.

The populist right finally broke with Bush when he tried to push through immigration reform in 2006. Meanwhile, a massive investment bubble was growing under the hands-off policy of Bush and as it popped in the late summer and early fall of 2008, with the election looming, he oversaw the first steps of the cleanup of the mess — the infamous bailouts. The populist right (along with the populist left, the populist center, and most everyone) was angered and invigorated by this bailout. The populist right was further motivated by a personal animus towards Obama, as they were told that he wasn’t American in the way the rest of us were, that he was foreign, that he would “stand with the Muslims,” that he was sympathetic to terrorists.

After a brief lull after their defeat in the election, the populist right was once again galvanized by the health care debate and Obama’s treatment of suspected terrorist detainees. After some early talk of the health care bill as a secret conspiracy to give reparations to black Americans for slavery (it wasn’t) and controversy over covering illegal immigrants (it doesn’t), the attacks on the bill from the populist right centered on the idea that it was a government takeover of 1/6th of the American economy (it isn’t). Meanwhile, regarding the treatment of detainees, Obama has largely continued Bush’s policies with some attempts to… Yet despite this, the populist right has rallied to the idea that  Obama is engaged in various treasonous activities and of endangering American lives.

What you see is a Republican Party that exists to expand and use government to benefit large corporations, the military-industrial complex, the rich, and the elderly at the expense of everyone else. At the same time, the populist right loudly objects to the government being used to benefit anyone but them. “Them,” meaning the elderly, the rich, the white Southerners. Which is why Republicans and the populist right are in favor of Medicare — and against Obamacare. Which is why they don’t mind when people that they would never be mistaken for are held without trial, tortured, or killed — and it’s why they are so outraged when people they might be mistaken for are. Which is why they rally when a liberal is in charge and are calm when a Republican is.

The populist right has been inherently about opposition — and about cultural alienation. It is about ressentiment and anger at how the world is changing. It has indisputably been invigorated by racial tensions — from opposition to the Civil Rights Movement to absurd claims of “welfare queens driving Cadillacs” to the militia movement of the 1990s. It is about feeling shafted by the powers that be. It is a very white movement, with resentment being driven against government rights and benefits being given to different groups that are stereotypically associated with minority groups: Latinos (illegal immigrants), blacks (criminals and welfare queens), and Muslims/Arabs (terrorists).

Conclusion: Resentment of minority groups (broadly construed) makes sense of the populist right’s contradictory views on government in ways that opposition to the government cannot and explains its historical rises and falls.

N.B. I am not claiming all right wingers are racist. Or Republicans or conservatives. I am merely pointing out the fact that the populist right has historically been empowered during times of racial tensions and that it’s positions are coherent and do make sense if understood in these terms while they do not if one interprets these rises and falls from an ideology opposed to big government.

[Image not subject to copyright.]

Categories
Barack Obama Criticism Economics Election 2012 Financial Crisis National Security New York City Palin Politics The Opinionsphere Videos

Must-Reads of the Week: Nukes, Inconsistencies, Graphing the Economic Crisis, Half-Hookers, Palin 2012, Mailer’s Wife, & Complex Business Models

1. Nukes. Jon Stewart and Andrew Sullivan both make the same point: Obama’s nuclear policy is the fulfillment of Ronald Reagan’s vision:

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
The Big Bang Treaty
www.thedailyshow.com

2. Inconsistencies. Matt Yglesias:

The main difference between left and right with regard to property rights is simply that the right is invested in a lot of rhetoric about markets and property rights and the left is invested in different historical and rhetorical tropes.

… Formally, the right is committed to ideas about free markets and the left is committed to ideas about economic equality. But in practice, political conflict much more commonly breaks down around “some stuff some businessmen want to do” vs “some stuff businessmen hate” rather than anything about markets or property rights per se…

Or if you look at the energy sector, you’ll see that businessmen want to push property rights for the stuff that’s in the ground (coal, oil, whatever) and a commons model for the stuff (particulates, CO2) that’s in the air. You can call that “inconsistent” if you like, but obviously it’s perfectly consistent with what coal and oil executives want! And those industries are the most loyal supporters of “right” politics around.

3. Graphing the Economic Crisis. Ezra Klein puts out some interesting graphs about the economic crisis and nascent recovery including this one:

Klein explains:

This graph is a political problem for the Obama administration (if not, in the short-term, an economic problem). But it is also necessary for all the other graphs. The bank rescue, which added temporarily to the deficit, stabilized the stock market and set the stage for its recovery. The stimulus, which also added to the deficit, helped moderate the job losses and and has contributed to recent gains. You could’ve made the lines on this graph better, but only by letting the lines on the other graphs get worse.

4. Half-hookers. Lisa Taddeo for New York magazine writes about the burgeoning half-hooker culture which exists in a bizarre alternate reality existing so close to our own where celebrities and finance guys get their women:

The general-admission crowds dance, and the table crowds dance a little more woodenly, a little more entitledly, with their finger pads on their tables. The promoters are dancing with the models and the waitresses are dancing with the bottles and everybody finds a place on the floor.

The floor people, they are just to fill the place up. The celebrities and the athletes and the tycoons are the ones for whom this world is zealously designed. A rung below in after-work pinstripes are the money guys, the Deutsche guys and the Goldman guys and the no-name hedge-fund guys—the “whales”—guys like that one over there in a Boss suit and John Lobb shoes, standing beside the table that cost him $3,000. Standing very close to it, like a Little Leaguer who wants to steal second but has never done it before. This gentleman’s not dancing, but he’s thinking about it.

There’s quite a lot to the article. A fascinating piece of reporting.

5. Palin 2012. Chris Bowers makes the argument for why Sarah will win if she runs.

6. Mailer’s Wife. Alex Witchell profiles Norris Church Mailer, Norman Mailer’s final wife, whose story moved me as I read of it:

John Buffalo Mailer [stepson of Norris:] “People are their best selves and worst selves intermittently,” he told me, “and the best marriages navigate that ride over the hurt, which I believe they did right to the end. They both had options, and at the end of the day the life they created together won out over infidelity, illness and hard times…”

7. Complex Business Models. Clay Shirsky:

One of the interesting questions about Tainter’s thesis is whether markets and democracy, the core mechanisms of the modern world, will let us avoid complexity-driven collapse, by keeping any one group of elites from seizing unbroken control. This is, as Tainter notes in his book, an open question. There is, however, one element of complex society into which neither markets nor democracy reach—bureaucracy.

Bureaucracies temporarily reverse the Second Law of Thermodynamics. In a bureaucracy, it’s easier to make a process more complex than to make it simpler, and easier to create a new burden than kill an old one.

Read the rest.

[Image by me.]

Categories
Barack Obama Conservativism Criticism Domestic issues Liberalism Libertarianism Political Philosophy Politics The Opinionsphere

Government Is Good!

[digg-reddit-me]Reagan’s deepest and most profound legacy to the right wing today, to the Tea Party, to the populist right is a selection of wry quips about the inefficacy and incompetence of government told with a grandfatherly charm. “In this present crisis, government is not the solution to our problem; government is the problem!” he said. “Government is the problem!” the placards at populist right wing gatherings now read.

This grotesque anti-government view regularly embraced and advocated by the populist right is incoherent, ignorant, and idiotic. It is the intellectual equivalent of blaming “The Man” or “Them” for all problems. While a (sometimes even paranoid) distrust of centralized power has always been part of American politics, the populist right today has elevated this sentiment to their core principle. It’s great efficiency as a rallying cry is that it papers over differences between the few but influential libertarian-minded who oppose government power on principle and the more numerous right wingers who see liberal government as an attack on their culture. What they both agree on (while a Democrat is in charge at least) is that the government is the problem.

This political coalition is animated primarily by anti-government rhetoric. While on some level it is a mere ideological trope, fervently believed only by the ignorant, used to rally the base to a revolutionary fervor and to create party unity, it has taken on the patina of truth in the eyes of so many it must be challenged.

Government is not inherently bad, inefficient, incompetent, destructive of liberty, or even liberal. Instead government is probably the single most influential force for good in our daily lives, acting in ways barely noticed even as its absence and failures would be and are noticed.

Friedrich Hayek, that great right wing theorist, said in his speech accepting the Nobel prize for economics, that the government had erred in attempting to engineer society. The proper role of government, Hayek believed, was that of a gardener tending her garden rather than of an engineer creating a machine. The populist right has bastardized this critique of Hayek’s and taken to demonizing the gardener while praising the garden as the greatest great thing since great things began to get greater (as Sean Hannity often says.)

What is lost in the populist right wing view is that our society, our economy, our nation, this greatest great thing ever, would not exist without the government tending it. I have been challenged – with apparent seriousness – to name anything the government ever did that was worthwhile.

In fact, the greatest product of the government is America itself – which, though like a garden has many individual parts, is given coherence by the gardener. The government has 4 main roles in shaping our nation:

1. Government acts as a check on corporations. Corporations exist to make profits – and as such externalize as many costs as they can; history has demonstrated that given the choice between doing the moral thing and doing the profitable thing, corporations will do the profitable one. This isn’t to say they are evil – it is merely to acknowledge their nature. Thus, given a choice between polluting the communal air and taking expensive steps to reduce that pollution, corporations have chosen to pollute. The costs of their actions are diffused while the benefits and profits are concentrated. Given the vibrancy of America’s market economy and the growing power of corporations, this is perhaps government’s most important role: to ensure that corporations have the incentive to make the moral choice. Most often this is accomplished with regulation, which though demonized by the populist right, is essential to America’s vibrant society and free market. Regulation is what allows us to open a can of beans without finding a human finger, to buy a standard mortgage and know our rights are still protected to some basic degree, to eat poultry without worrying too much over food poisoning, to buy a car and know it has met certain safety requirements, to breathe fresh air and to drink clean water. We can do all of this because of government regulation acting as a check on corporate greed.

2. Government underwrites social order. While the government is not present at every moment in our lives, it underwrites a certain type of order and undertakes to ensure that certain elements of a partially unspoken social bargain are upheld. For example, the government provides courts of law to resolve disputes and employs people to prosecute crimes. It has undertaken various steps to prevent terrorist attacks. It maintains regulations as above. When there is a crisis, the government assumes greater powers and responsibilities to protect the status quo and restore order.

3. Government makes long-term investments in the nation. While corporations and individuals control most investments, the government has, since its inception, funded various long-term projects from investments in infrastructure to space travel to education to medicine to military technology. These investments have led to everything from sending men to the moon to creating the internet.

4. Government provides certain services. From subsidies for the elderly (Social Security) to disability and unemployment benefits to disaster relief to cheap postage, to – soon – a transparent and standardized marketplace for health insurance – the government provides a selection of valuable services that are important yet under-served by the marketplace dominated by corporations looking for large, quick profits and non-profits that are often underfunded.

The internet itself is a great example of the role government plays in our lives. It was based on technology created by government scientists. It was enabled by government regulators who prevented AT&T from blocking access to their infrastructure which would have choked off the internet before it began. Access to the internet making it more widespread has been enabled by government programs as well as individual and corporate decisions. (For a neat list of how the government affects everyone on a daily basis, take a look at this article by Douglas J. Amy.)

This view of government is inherently liberal, even as the goods provided can be more broadly appreciated. Without government, there would be no rule of law, no free market, no corporations (which are government-created entities), no property, no freedom of speech or religion or assembly. Individuals without the protection of government have the freedom their power allows them to seize. With the careful use of government though, restrained and judicious, individuals can be empowered.

Liberalism, like the conservatism of William F. Buckley, Friedrich Hayek, Edmund Burke, Dwight Eisenhower, and even Ronald Reagan, is not about extending the role of government everywhere. It is the path between seizing the commanding heights of the economy and the anti-government hysteria of the populist right in which the government is used to empower individuals:

Liberalism in a market-state must exhibit a preference for the individual over the corporation and government and must empower individuals against bullying and coercive measures of these large institutions.

Sometimes that means the government must be constrained; and sometimes that means it must use its power to balance against other forces such as large corporations.

Government, used wisely, is good and the creator of free markets and the guardian of individual freedoms. This isn’t just a liberal idea or a conservative one. It is an American idea – indeed, the base of our American system.

[Image by Pittsford Patriot licensed under Creative Commons.]

*I have only been using the term, “government” here – but I mean, the federal government. I have used the terminology this way so it may better function as a response to the populist right which generally speaks of “the government” when they mean only the federal government.

Categories
Conservativism Health care Political Philosophy Politics The Bush Legacy

Real Fiscal Responsibility & Deficit Politics: Republicans

[digg-reddit-me]See Part 1: An Introduction here. Parts 3 and 4 discussing the Democratic approach and then lessons from this moment of “welfare scleroris/imperial overstretch” coming tomorrow and Friday.

Republicans have called themselves, and are once again trying to position themselves, as the party of fiscal responsibility. This is the pendulum swing of deficit politics in its second repetition – as Republicans run up massive deficits during their time in power and then attempt to pass off the blame for raising taxes or cutting programs onto the Democrats who succeed them in office.

The political challenge the Republicans face is intriguing. Their ideology holds the solution to the deficit is to shrink the size of the government. Yet the Republican base consists of corporate America, the military, and the elderly – the largest beneficiaries of current government spending. Given this, it’s not surprising that while in power Republicans have expanded rather than shrinking government. Bush expanded Medicare further than anyone since LBJ created it all while cutting taxes and engaging in two wars and allowing Congress to engorge itself with discretionary spending increases never before allowed. Bush was not an isolated example. Like his apparent role model, Ronald Reagan, he saw deficit spending as a way to win politically in the short term as you gave everyone what they wanted – and protected those interest groups who supported you – while in the long term the incredible irresponsibility would force government to shrink, and perhaps even discredit the idea of a competent or sustainable government program. In other words, deficits were the way to “starve the beast.”

Republicans did not jettison this approach along with Bush when they began to repudiate his legacy. John McCain – for all his talk of fiscal rectitude – offered more of the same in his campaign agenda. He proposed dramatic tax cuts without commensurate spending cuts (while masking this by proposing the elimination of pork barrel spending which represents a minuscule portion of the federal budget.) As an alternative to the stimulus, McCain and the Republicans attempted the same trick – attacking the plan for adding to the deficit with spending while proposing a plan that would add even more to the deficit through tax cuts (which the Congressional Budget Office determined was a less effective way to stimulate the economy.) For Republicans, increasing the deficit by cutting taxes is “fiscally responsible” – while increasing the deficit with spending is “generational theft.”

What’s tricky is how Republicans position themselves with regards to the looming fiscal crisis. The business conservatives who make up an influential portion of the Republican base tend to propose pragmatic but politically impossible solutions like cutting spending to the other core Republican constituencies – the elderly and the military, and sometimes, even the tax and other subsidies to big corporations. The other groups seem primarily concerned with ensuring that their own government dollars continuing to grow. The past two times a liberal has taken office following several terms of extreme fiscal irresponsibility by a Republican though, a semi-independent movement has sprung up, thus changing the political dynamics in the Republican party. This movement of citizens concerned about the size of government, of government debt, and especially of liberals being in charge of this government (which suddenly seems more intrusive now that it is in the control of those they don’t sympathize with) was incarnated in Ross Perot’s two presidential campaigns, the 1994 Republican Revolution, and today, the Tea Parties. In each instance, this movement has coalesced around an inchoate frustration with the way things are coupled with the remarkably fixed position of opposing everything the Democrats do, opposing tax increases, and supporting the reduction of the deficit. Though this logically must lead to cutting government programs, which programs will be cut always remains vague which works well enough until a Republican gets in power.

To balance and rally these constituencies while out of power – the anti-tax fiscal hawks, the elderly relying on government programs, the military reliant on government spending, and the corporations who profit from government favors – Republicans have adopted a framework whereby they condemn any new spending as “generational theft” while protecting the status quo. Within this framework, Republicans claim their protection of the status quo which is screwing over my generation is actually about protecting my generation. This language also comforts the elderly who don’t wish to see any reduction in their benefits. Under the Republican approach, the only elderly who will see a reduction in benefits under the Republican plan are the eventual elderly of the younger generations – as the government programs they are now paying for cease.

The challenge Obama has given to the Republicans though is to propose a solution to the looming fiscal crisis through health care reform. Republicans have responded by claiming that the plans will add to the deficit (contrary to the Congressional Budget Office) while at the same time they have been attacking any measures in the plan which might actually cut costs. For example, Senator Coburn has said, “If you’re a senior and you’re on Medicare, you better be afraid of this bill” – which is a difficult position to maintain while at the same time holding that any deficit spending today is “generational theft.” But it is of course, the only political answer they have.

The Republicans – for short term political expediency – are creating an interesting political dynamic (and an impossible situation for the country.) They are telling the elderly that any spending that adds to the deficit is stealing from their grandchildren and children – while telling them to be afraid of any cuts to the programs they like. Meanwhile, as they filibuster any attempts to alleviate the situation, they inculcate the belief among the younger generation that the government cannot do anything right – pointing to the approaching fiscal disaster as proof. The hope must be that if they are correct that this disaster cannot be averted, their obstruction of any attempt to avoid it will be forgiven, especially if the disaster itself discredits the government, thus bringing the younger generation ideologically closer to the Republican position.

Thus is the logic of deficit politics and starve-the-beast governance.

Categories
Health care Politics The Opinionsphere

Funding Health Care Through A Millionaires’ Tax or One on “Cadillac Plans” – Why Not Both?

The Politico has a piece about how the Democrats are “squabbling” over how to pay for health care reform. The article by Patrick O’Connor and Carrie Budoff Brown considers the two main revenue increases that have been proposed: the Baucus plan attempts to get funding from within the system by taxing “Cadillac” plans; and the House plans levy a “millionaire’s tax” on those making over a million dollars a year.

But given our fiscal situation – and the extent to which it is being driven by Medicare’s rising costs – and given the political landmine that is looming in our coming deficit crisis – why not include both? Take whichever measure is less popular, and use that to shore up the very popular Medicare program. And use the more popular measure to do the essential but less politically rewarding task of helping the uninsured.

What’s the downside of that? Let the Republicans oppose a revenue raising measure as busting the deficit!

The downside of course is that by increasing revenue and making our current level of government more sustainable, the Republicans and other right wingers will switch their criticism to focus on the fact that by running government well and responsibly, we are making more government possible. It’s rather incredible how the “starve the beast” strategy has become so essential to the Republican party’s political success since Ronald Reagan.

[Image not subject to copyright.]

Categories
Barack Obama Foreign Policy Iran Israel Latin America Politics

Explaining Obama’s “Double Standard” Regarding Iran and Honduras

[digg-reddit-me]A number of Obama’s critics have pointed out a disparity between Obama’s treatment of Iran on the one hand – and Israel and Honduras on the other.

In their view, Obama has refused to take a side in Iran even though he clearly should be on the side of the protesters if he values life, liberty, and the American way. In Israel, Obama has pressured the Israelis while giving free reign to the Palestinians who are really at fault. While in Honduras, Obama has clearly taken the side of the leftist friend of  Hugo Chavez who was removed from office with the endorsement of courts and Congress of Honduras as they sought to protect their democracy from the president’s power grab. In all of these cases, they claim, Obama has taken the side of anti-democratic forces – and only interfered with our “friends” – presumably because Obama is desperate for the approval of the European Union, which is in itself anti-democratic and leftist. This portrayal of Obama is based on their observation that in Iran Obama has reacted to major violations of the values he claims to hold with muted tones – but in Israel and Honduras he has reacted to minor violations with strident tones.

This caricature of Obama presumes he is acting in bad faith at all times, which is increasingly the sole item of agreement among the Republican opposition; and it attributes to Obama a nonsensical and inconsistent worldview. But you don’t have to be a right-winger to notice the sharp differences in tone between Obama’s cautious approach to Iran and his more aggressive approaches in Honduras and Israel.

David Rothkopf proposes one explanation – that frankly seems a bit too Beltway for me, but I’m sure is a factor in Obama’s change in tone between the Iranian coup d’etat and the Honduran one:

[A] reason for the swift action on Honduras is that old faithful of U.S. foreign policy: the law of the prior incident. This law states that whatever we did wrong (or took heat for) during a preceding event we will try to correct in the next one … regardless of whether or not the correction is appropriate. A particularly infamous instance of this was trying to avoid the on-the-ground disasters of the Somalia campaign by deciding not to intervene in Rwanda. Often this can mean tough with China on pirated t-shirts today, easy with them on WMD proliferation tomorrow, which is not a good thing. In any event, in this instance it produced: too slow on Iran yesterday, hair-trigger on Honduras today.

While I’m sure the law of prior incident played a role, it seems to me that there is a more basic explanation for this disparity – which likewise explains the difference between Obama’s approach towards Israel. The difference in how Obama dealt with these various crises comes from how Obama understands power in foreign relations. The President of the Council on Foreign Relations, Leslie H. Gelb, in Power Rules, defines it:

Power is getting people or groups to do something they don’t want to do. It is about manipulating one’s own resources and position to pressure and coerce psychologically and politically….And American leaders would do well to learn, finally, that power shrinks when it is wielded poorly. Failed or open-ended wars diminish power. Threats unfulfilled diminish power. Mistakes and continual changing of course also diminish power.

Teddy Roosevelt understood this implicitly when he said:

Speak softly and carry a big stick.

Alternatively, George W. Bush used grand language, made many threats:

From Egypt to Georgia, President Bush … wrote rhetorical checks he had no intention (or ability) to cash.

What Bush did not seem to realize – and what right-wingers today still do not seem to realize – is that it weakens the United States to declare, “We are all Georgians!” as Russia invades Georgia and we do nothing – as happened under Bush. Yet the rhetoric is not the problem – as it actually strengthened America when John F. Kennedy declared, “We are all Berliners” and the Soviet Union, given the lengths Presidents Truman and Eisenhower had gone already to protect West Berlin, believed the young president was willing to protect Berlin at high cost. Many right-wingers have cited Ronald Reagan’s challenge to Gorbachev to “Tear down this wall!” as a model for what Obama should say to Iran. But what made Reagan’s exhortation more than mere empty rhetoric and bluster was the personal relationship he had with Gorbachev after years of meeting with him. And when Reagan made this statement, he was not demanding it – he was rather challenging Gorbachev to live by the values he claimed he held. Reading the actual speech this challenge is prefaced by an “if.” This is a very different proposal than what right-wingers want Obama to say: which is to endorse one side in an internal conflict and refuse to negotiate with this member of the “Axis of Evil.” Reagan on the other hand negotiated with the “Evil Empire” and stayed out of internal Soviet politics – realizing that the endorsement of an enemy could be toxic.

What Obama has shown in the past several weeks is an impatience with hollow rhetoric which presumes conflicts in other countries are really about us. The striking oratory he does use always seems to have a specific purpose – to reach out to Muslims angered by what they see as a war against them, for example – or to call on Europeans to send more troops to Afghanistan. Obama sees words in foreign policy as tools to be used rather than ways of expressing our feelings about other nations. Thus, despite his apparent feelings about Iran – and his great sympathy for the Green Wave – he does not feel the need to express this publicly if he does not see what it will accomplish. With many Iranians publicly saying they did not want Obama to take the side of the protesters publicly as it would undermine them (for example, here and here), he had little reason to do so.  So far he had not been willing to undermine his and America’s power by using puffery and empty threats on Iran just to please his domestic audience, despite pressure from the right-wing.

But Obama did speak more forcefully on Israel and Honduras. Why? Because in these two places he has significant leverage – and his words can have an impact. Also – in neither of these places was America regularly called “The Great Satan.” (Imagine if Ahmadinjad had endorsed Obama in our election. Would that have helped Obama?) With regards to these nations, Obama can say what America wants and put pressure on those in control there for it to happen as America supplies significant funds to both nations – and has diplomatic, economic, and military alliances.

Speaking about Iran, on the other hand, Obama can only offer wish lists – which he would not be able to pressure Iran to fulfill – and when Iran ignored him, America would look weaker.

I also believe there is another factor at work. I have already stated that I believe the Obama Doctrine – that will and is guiding his foreign policy – is a focus on creating and maintaining states of consent. One of the basic principles which is necessary to create a state of consent is Rule of Law; another is the freedom of people to peacefully protest and speak freely. Obama has limited himself to condemning those actions which have violated the principles underpinning a state of consent. Not having direct knowledge of the election results in Iran, he remained quiet – though the administration raised questions. When confronted with evidence of the violent suppression of peaceful protests and attacks on free speech, he condemned these in strong terms – though he still refused to take a side, saying the battle was internal. In the case of Honduras, the State Department had been working with opponents of President Zelaya as he took illegal and unconstitutional actions to see how Zelaya could be checked. This is why they knew so quickly that the coup d’etat was a clear violation of the Rule of Law. The American State Department had been working with the Honduran Congress and other leaders to determine what the constitutional steps would be to remove Zelaya. At the same time, the intervention of the military set a bad precedent, undermining ability of the people to consent to their government. As Der Spiegel explained:

Anyone who sees the coup as some sort of effort to rescue democracy must ask themselves what version of democracy involves removing the elected leader of a country from office while holding a pistol to their head.

Obama has here still neglected to side with either party – instead insisting both parties follow their commitments to the law of their land, which the military violated. The American position is that Zelaya should resume his place as rightful president – and impeachment or other proceedings could then occur, although the deal being negotiated instead merely ties his hands to prevent him from any further dictatorial actions (demonstrating that the military actually weakened their hand in dealing with Zelaya in overreacting.)

In each of these cases, Obama displays a common goal – to maintain and allow the space for states of consent – free from military or other violent forms of coercion.

What right-wingers are declaring inconsistency is one of results – not goals. The differences in responses can be quite clearly explained by looking at what leverage Obama had and by a consistent moral demand that the nations of the world govern by consent and not force.

[The above image is a product of the United States government.]

Categories
Barack Obama Foreign Policy History National Security Politics

The Obama Doctrine

[digg-reddit-me]America has – since its inception – been a major influence on the world order, from the explosive idea of American democracy that reverbrated through Europe in the 18th century – to Woodrow Wilson’s 14 points and FDR’s dismantling of the colonial empires and George W. Bush’s calls for elections to drain the swamps of tyranny. Since the 20th century, American presidents have been judged in a large part by how they affected the world order. Which is why today it is worth speculating what impact Barack Obama’s young presidency will have – and what vision of a world order Obama has already sought to articulate. I predict – and propose – that Obama’s vision will be of a world order grounded in the proposal that each nation must obtain the free consent of it’s people to govern. This idea is an interesting variation on the themes of American presidents since Woodrow Wilson, and indeed since America’s founding.

Since the beginning of the 20th Century, American presidents have had an outsize role on the world stage, especially in shaping the world order by laying out standards for the moral legitimacy of nations. The world order at the turn of the 19th century would be turned on it’s head by American interventions. At that point, colonialism was accepted; the right of a people to govern themselves was not; and most rules related to international warfare – from standards for treating prisoners to a respect for the sovreignty of nations (or at least European ones). But this system broke down and conflagration that followed was only ended with timely American intervention. Woodrow Wilson used this intervention as leverage to explain how the world order should change – and his vision of a world at peace captured a weary Europe. At the core of Wilson’s Fourteen Points was an amendment to the world order, as Wilson saw peace as contingent on granting peoples’ their right of self-determination:

We are glad, now that we see the facts with no veil of false pretense about them to fight thus for the ultimate peace of the world and for the liberation of its peoples, the German peoples included: for the rights of nations great and small and the privilege of men everywhere to choose their way of life and of obedience. The world must be made safe for democracy. Its peace must be planted upon the tested foundations of political liberty. We have no selfish ends to serve.

Wilson believed this goal – of democracy and therefore, peace – was best accomplished and maintained through treaties and a League of Nations. Of course, we all know that Wilson’s vision collapsed as he lay debilitated by a stroke and the Senate refused to ratify the treaty he had fought for. The next three presidents had a less expansive view of the American role in the world – and mainly ignored foreign policy matters.

Franklin Roosevelt focused on domestic matters as well as he sought to end the Great Depression at home. But as he positioned the country to enter World War II he framed the conflict as one of democracy against tyranny. And FDR saw the colonialism of Europe as another form of tyranny. Thus, as he, Winston Churchill and Josef Stalin decided on the outline of a post-war world, FDR was able to secure the independence of many countries throughout the world from their colonial masters in Europe. At the same time, he bargained away Eastern Europe to the tyranny of Communism, convinced that the Soviet Union would take it anyway. FDR thus set in motion a new world order in which colonialism was no longer tolerated, but Communism was. ((Mainly because he had no choice but to accept the powerful Soviet Union’s right to exist and have a sphere of influence.))

This set up the Cold War as a battle of two competing attempts at changing the world order. Truman, Eisenhower, and JFK were less concerned about shaping the order of things than they were in securing advantages against the Soviet Union. What mattered more than how a regime acted or how it was legitmized was whose side it was on.  So, while all spoke highly of democracy – they were willing to accept all allies in their struggle against the Soviet Union – democratic or not. And they were willing to overthrow democratically elected governments if it fit their interests. Later, Richard Nixon, as a proponent of real politik, did not believe in the attempts to shape the world order with moral commandments, and thus he did not attempt to do so. But his significant contribution was to recruit China into the American-led world order (or at least ensure that it was not opposed to it) – thus paving the way for its gradual acclimation to the American-led order over the next decades.

When Jimmy Carter came into the White House, he attempted to redefine again what the world order saw as a legitimate government. Rather than focusing on the struggle against the Soviet Union, he attempted to set universal standards by which to judge both the American-led order and the Soviet order. He described this universal standard as “human rights”:

Because we are free we can never be indifferent to the fate of freedom elsewhere. Our moral sense dictates a clearcut preference for these societies which share with us an abiding respect for individual human rights. We do not seek to intimidate, but it is clear that a world which others can dominate with impunity would be inhospitable to decency and a threat to the well-being of all people.

With his  focus on human rights, Carter and more hawkish liberals such as Scoop Jackson attempted to point out the grave flaws of the Soviet system. This focus also explains why Carter championed the rights of Palestinians and pushed the Shah of Iran to allow greater freedoms to his citizens to protest his regime, leading in 1979 to his downfall.

Ronald Reagan used this foundation to call the Soviet Union the “evil empire” – though he abandoned the self-criticism that came with setting a universal standard. However, Reagan soon began to see the Soviet Union and the leaders he met with as more than the caricatures of evil he had railed against – and he sought to negotiate, to the consternation of many of his staff. Reagan believed that Communism was contrary to human nature – and that traditional forces – greed, laziness, religion – would be its downfall. Reagan’s genius was to combine in clear, forceful terms the human rights approach of Carter with the anti-tyranny framework of FDR – and to push the world to reject the Soviet world order as “evil.” Perhaps more importantly, he benefited from America’s dynamic economy and the Soviet Union’s dependence on oil revenues which, in sinking, sank the USSR.

George H. W. Bush and Bill Clinton – despite all the talk of a “New World Order” as the Soviet Union fell – only sought to enforce through diplomacy, sanctions, and when necessary military action, the previous conceptions of the world order. Bush condemned the crackdown at Tianamen on Carter-like human rights grounds and pushed Saddam Hussein out of Kuwait as he violated the primary rule of the world order for the past century: do not invade another country. Bush and Clinton did begin to expand free trade as a component of the world order – and Clinton sought to create a consensus around amending the world order – creating delegitimizing exceptions beyond invading sovereign nations and the maltreatment of prisoners for terrorism, genocide, the development of weapons of mass destruction, and drug trafficking.

With September 11, though, George W. Bush felt compelled to shake up the world order – and instead of seeking mere amendments, he sought to change the basic ground upon which a regime was legitimized, recalling Woodrow Wilson’s demand and justification for self-determination.  As Bush declared in his second inaugural:

We have seen our vulnerability and we have seen its deepest source. For as long as whole regions of the world simmer in resentment and tyranny prone to ideologies that feed hatred and excuse murder, violence will gather and multiply in destructive power, and cross the most defended borders, and raise a mortal threat. There is only one force of history that can break the reign of hatred and resentment, and expose the pretensions of tyrants and reward the hopes of the decent and tolerant, and that is the force of human freedom.

We are led, by events and common sense, to one conclusion: The survival of liberty in our land increasingly depends on the success of liberty in other lands. The best hope for peace in our world is the expansion of freedom in all the world.

America’s vital interests and our deepest beliefs are now one.

But while Wilson had sought to use the leverage America had in the aftermath of the War to End All Wars, and FDR sought to use the leverage America in the aftermath of World War II, Bush seemed to believe the sheer rhetorical power of his words were enough. As Gregory Scoblete described it:

President Bush did speak out boldly against North Korea and Iran. And both made considerable gains in their nuclear capabilities. From Egypt to Georgia, President Bush … wrote rhetorical checks he had no intention (or ability) to cash.

George W. Bush had radically declared that no nation was legitimate if it was not a democracy – and he declared that it was a vital national security interest for America to ensure that other nations were in fact democracies. This – if applied – would overturn the entire world order. Under this Bush Doctrine, America would become a revolutionary state exporting our values via force, invading for ideology, and fomenting revolution. It would mean that many of our allies were illegitimate governments. But these powerful words were undercut by apparent hypocrisy – as Bush, after insisting on elections, rejected those whose results came out contrary to his wishes – from Hamas in Palestine to Chavez in Venezuala At the same time, Bush was open to charges of hypocrisy as he had supported a coup against the democratically-elected Hugo Chavez – and as he rejected the election of Hamas in the Palestinian territories. This freedom he sought to export to the world was also threatening to many – as majority-Muslim nations and their sharia law were seen to conflict with the Western model of freedom.

But the opportunity Bush left Obama was a significant one – by not being Bush, and by being a black man who had captured the imagination of America and much of the world, and most importantly, by coming into office after America’s radical actions had severely undermined the world order, Obama begins his presidency with a greater opportunity to re-shape the world order than any president since Franklin D. Roosevelt.

It remains to be seen what Obama will do with this opportunity – and if he will pursue the agenda that some in his campaign, including Samantha Power, believe is necessary – reinventing the international institutions maintaining the world order. So far, what Barack Obama has seemed to suggest is an amendment to Bush’s radical notion of democratic revolutions in his Cairo speech, as he referred not to “democracy” but to “consent”:

So let me be clear: no system of government can or should be imposed upon one nation by any other.

That does not lessen my commitment, however, to governments that reflect the will of the people. Each nation gives life to this principle in its own way, grounded in the traditions of its own people. America does not presume to know what is best for everyone, just as we would not presume to pick the outcome of a peaceful election. But I do have an unyielding belief that all people yearn for certain things: the ability to speak your mind and have a say in how you are governed; confidence in the rule of law and the equal administration of justice; government that is transparent and doesn’t steal from the people; the freedom to live as you choose. Those are not just American ideas, they are human rights, and that is why we will support them everywhere…

No matter where it takes hold, government of the people and by the people sets a single standard for all who hold power: you must maintain your power through consent, not coercion; you must respect the rights of minorities, and participate with a spirit of tolerance and compromise; you must place the interests of your people and the legitimate workings of the political process above your party. Without these ingredients, elections alone do not make true democracy.

America has re-defined its moral goals for the world over the past century: from self-determination, to freedom from tyranny, to freedom from Communism, to human rights, to the free market, to democracy, and now, with Obama, the consent of the governed.

Categories
Barack Obama Conservativism Domestic issues Economics Financial Crisis History Liberalism Libertarianism Political Philosophy The Opinionsphere

A Generational Bargain (in which we are getting screwed)

[digg-reddit-me]Back when California’s looming bankruptcy was in the news, George Will wrote:

California’s perennial boast — that it is the incubator of America’s future — now has an increasingly dark urgency…California has become liberalism’s laboratory, in which the case for fiscal conservatism is being confirmed.

Will may be right about fiscal conservatism – but he’s wrong in laying the blame for California’s problems on liberalism. The fault in California, like the fault in America, is deeper – a refusal by the Baby Boom generation to make tough choices to create a sustainable world, economy, or government. Bill Maher summarized California’s trap best:

We govern by ballot initiative – and we only write two kinds of those: spend money on things I like and don’t raise my taxes.

California’s initiative system aggravated a tendency that has been dominant in American politics for some time now. The problem with California – and America – is a combination of two factors:

  1. a kind of accidental unholy alliance between liberals who push for more government spending to alleviate poverty and better the nation and conservatives who want to cut taxes – with neither group having the power or political will to be fiscally responsible at the same time as they push for their pet projects ((This is a bit unfair on the national level – as George H. W. Bush and Bill Clinton – with opposition Congresses checking them – proved to be exceedingly responsible, putting America on a sustainable course after the tax-cutting, free-spending Ronald Reagan and before the tax-cutting, free-spending George W. Bush.))
  2. the deliberate plan of the right-wingers who want to “starve the beast” – by which they mean encouraging the irresponsible system above of  increasing spending while cutting taxes (and these right-wingers do this knowing that the system is unsustainable and will crash, which is the only way they see to get rid of popular programs.)

This is a story of the cowardice of politicians and the idiocy of people.

This idiocy – in almost all of its forms – can be traced to the ascent of the Baby Boom generation as they took power with the Reagan administration. By increasing spending exponentially while cutting taxes – creating enormous deficits – Reagan supercharged (stimulated) the economy out of the stagflation of the 1970s. At the same time, he began the American government’s practice of becoming dependent on East Asia – relying on Japan to lend vast amounts of its money as our trade deficit with them grew. Reagan also began the trend of deregulation of industries – allowing them to take greater risks and reap greater profits if they succeeded – which also allowed companies to kick off a merger boom, leading more and more companies becoming too big to fail while they were regulated less and less. All of these steps led to an economy focused more on finance than industry – leading, along with factors due to globalization, to America’s industrial decline. The dominance of the financial sector in the economy, which is well known for its boom and bust cycle, led to a series of economic bubbles – and in fact, an economy in which growth was maintained through bubbles rather than real worth.

Beginning with Reagan, president after president stimulated the economy constantly – to avoid having to take the fall. But this system was unsustainable. As the Baby Boomers “surfed on a growing wave of debt” – both public and private – they sought to use debt to meet their rising expectations in the absence of creating real value. This was the generational bargain at the heart of the Reagan presidency – a bargain that allowed America to spend the Soviet Union into the ground and jumpstart the economy from the stagflation of the 1970s – but that, unchecked, thirty years later, now threatens our future.

The Baby Boomers pissed away the prosperity their parents bequeathed them and squandered the opportunities presented to them – and now are busy using their children’s future earnings (our future earnings) to buy their way out of the mess they have created. They avoided the challenges of their times and found people to blame. They focused on OJ Simpson, Britney Spears, Madonna, and Monica Lewinsky – on abortion, Vietnam, gays, and religion – and not on global warming, on campaign finance, on the corruption of our political process, on an overleveraged economy.

After decades of avoiding systematic problems – as the solutions became embroiled in the ongoing culture war – we now must face them. With two wars in the Mid-East, a failing world economy, a growing threat of catastrophic terrorism, and whatever else may come our way, procrastination is impossible. Now it’s time for us to try to salvage this wreck. It remains to be seen if we’re up to it.

David Brooks explained this grave situation facing Obama and the difficult tasks ahead (focusing especially on the growing deficit). Brooks concludes with reasons for hope and despair:

The members of the Obama administration fully understand this and are brimming with good ideas about how to move from a bubble economy to an investment economy. Finding a political strategy to accomplish this, however, is proving to be very difficult. And getting Congress to move in this direction might be impossible.

Your cards do not improve if you complain about the hand you have been dealt. But it is essential to understand how we got here. We also must not be complacent now that a leader who we admire has been given power. Individuals are empowered to a greater extent than ever before in history – for good or ill. Which is why it is never enough to get the right man or woman into public office – even if this is a useful initial step. What we must do – as individuals – is to see the world around us clearly and take steps to effect what changes we can, to live the values we hold in our hearts, to reach out to those affected by our actions.

[Image by orangejack licensed under Creative Commons.]

Categories
Economics History

The Reagan Revolution (continued as Paul Krugman echoes me)

[digg-reddit-me]Well – not quite.

I actually cited a Krugman post in my initial post on how the Reagan Revolution caused the financial crisis (followed up with this and this.) So, it’s more like I was influenced by Krugman who then went on to echo a point I made (which I presume he arrived at independently.) As regular readers of this blog know, I tend to agree with Krugman on the broader trends at work in society (citing him here, here, and here for example) – and find him to be a generally insightful and thoughtful analyst of them – but often angrily disagree with his short-term takes on issues (see here, here, here, and here).

But here Krugman is in his most recent column:

For the more one looks into the origins of the current disaster, the clearer it becomes that the key wrong turn — the turn that made crisis inevitable — took place in the early 1980s, during the Reagan years.

As I wrote back in March, somewhat more eloquently:

Take away the regulations; encourage short-term profits; reduce taxes; trim the social safety net; “starve the beast” by spending without taxing; and then supercharge the economy with constant stimulus spending (which is what “starve the beast” is) and easy debt from China and Japan. What you get from this is not only a revolution that undermines the American way of life in the mid-term – as wealth is concentrated and middle class and manufacturing jobs dry up – but an unsustainable economy that is going to collapse, and collapse hard.

In other words, you get what we have now.

Today, we are reaping the effects of the generational bargain at the heart of the Reagan presidency.

I also think my analysis captures a subtlty Krugman’s piece lacks – and that Krugman himself often lacks. His conclusion is tougher in scapegoating specific individuals than mine:

There’s plenty of blame to go around these days. But the prime villains behind the mess we’re in were Reagan and his circle of advisers — men who forgot the lessons of America’s last great financial crisis, and condemned the rest of us to repeat it.

I’m not sure that that’s correct. It’s hard to call men villains if they are not aware of the wrong they do – and if the effects of their actions are essentially not predictable. Instead, what I believe is that Ronald Reagan created a generational bargain by accident – a bargain in which the successes of his presidency – of financial deregulation and rapid growth and huge deficits – would be paid for by my generation. I don’t think this was intentional – or predictable. But what should have been clear was that the financial dynamics the Reagan administration shaped were unsustainable.