Posts Tagged ‘Ronald Reagan’

A Typically Wrong-headed Krauthammer Column

Monday, April 6th, 2009

Charles Krauthammer in a typically insightful yet wrong-headed article carries out an intriguing thought experiment:

Five minutes of explanation to James Madison, and he’ll have a pretty good idea what a motorcar is (basically a steamboat on wheels; the internal combustion engine might take a few minutes more). Then try to explain to Madison how the Constitution he fathered allows the president to unilaterally guarantee the repair or replacement of every component of millions of such contraptions sold in the several states, and you will leave him slack-jawed.

I’m somewhat surprised that Krauthammer knows who James Madison is – given his reluctance to acknowledge the Constitution places any limits on executive power in the realm of national security in direct contravention of Madison’s understanding of his Constitution. But I suppose Krauthammer rationalizes that away by explaining that the Constitution is not a “suicide pact” and thus in times of physical danger can be safely stored away – but in an economic emergency, it must constrict the president as much as possible to preserve the status quo. But by exclaiming how shocked Madison would be at power politics, Krauthammer manages to make Madison out to be a naif – rather than the student of human nature and power that he was.

Still, one can rightly imagine Madison questioning how we got here. So, I will answer Madison’s hypothetical question, namely – “How is it that the limited government he constructed in his Constitution can allow the president to unilaterally guarantee the repair or replacement of every component of millions of such contraptions sold in the several states?”

Because, Mr. Madison, in 1929, with a small percentage of Americans gaining control of a large chunk of the nation’s economy, the market broke down and the government was forced to assume some partial responsibility for the well-being of it’s its citizens and to curb the excesses of the markets.

Then, in 1980, the government began reducing it’s its responsibility for the well-being of its citizens and removing the safeguards put in place to prevent another disasterous market breakdown. This led to another thoroughly undemocratic concentation of power – which the public accepted in return for the assurance that their standard of living would constantly improve. And so it was under Ronald Reagan that the government became responsible for assuring constant economic growth that would benefit all classes of society, at least a bit.

And now, that arrangement has come to a screeching halt. 

Obama is proposing a new social bargain – a fact which Krauthammer recognizes. But Krauthammer sees this bargain in terms that were relevant in the 1980s – as a resurgence of the Great Society liberalism he grew to hate. But instead, Obama proposes a new market-state liberalism – in which the government accepts a responsibility to referee and more actively maintain the markets and to provide investments that are too capital-intensive and long term for corporations with their limited time horizons to finance. Obama also believes it is the government’s role to reduce the disruption and instability that the creative destruction of capitalism wreaks. The end goal is to create a more level playing field and mainly through soft government pressure prevent destabilizing concentrations of power.

Krauthammer though only sees Lyndon Johnson reborn intent on “leveling” society and reducing the inequities between the rich and the rest of us. Krauthammer explains that for Obama the “ultimate social value is fairness” – and Krauthammer means this as a bad thing. The subtlety that Krauthammer sidesteps is that Obama is in favor of fair processes rather than enforcing some pre-determined fair ends. This was the traditional position of the conservative – but it is position that conservatives have long since abdicated. Presumably when he criticizes fairness, Krauthammer believes that markets should strive for efficiency rather than fairness – but he neglects to make any case that our current market structure is efficient. 

Michael Osinski described in New York magazine the logic of how money is awarded on Wall Street:

I was very good at programming a computer. And that computer, with my software, touched billions of dollars of the firm’s money. Every week. That justified it. When you’re close to the money, you get the first cut. Oyster farmers eat lots of oysters, don’t they?

This describes neither a fair nor an efficient way of distributing resources. What “conservatives” such as Krauthammer do not realize is that capitalism, like democracy, is merely the least-worst system of managing the market – and that just as democracy’s excesses must be managed, so must capitalism’s. Krauthammer does not seem to accept that the structure of governance is changing with globalization – as the nations of the world are evolving into market-states. It was the beginning of this shift that led to Ronald Reagan’s and Margaret Thatcher’s success. Although some conservatives saw these successes as a return to a pre-Great Society or a pre-New Deal America, they represented instead a shift forward, an evolution from nation to market-state. Liberals lost elections because their solutions no longer spoke to this evolved America – and they could not see the sand shifting beneath themselves. They were stuck in the past.

But now – as Niall Ferguson has admitted – it is only the liberals who are providing a coherent answer to the challenges we face.

Krauthammer – like far too many conservatives today – is stuck pretending we face the challenges of the 1980s all over again. Until conservatives like him notice the sand shifting beneath them, they will have little to offer. As a well-functioning democracy requires at least two functioning political parties, I hope they get their heads our of the sand sooner rather than later.

The Reagan Revolution (cont.)

Thursday, March 19th, 2009

Some objections have been raised to my two posts on the Reagan Revolution earlier this week (here and here) that stem from a misunderstanding of what I was trying to say – a misunderstanding perhaps based on what I chose to emphasize when telling the story of the 1980s revolutions.

So let me re-tell the story briefly.

Ronald Reagan in 1980 was a man who met his moment. The nation was reacting to the excesses of the New Deal and Great Society liberalism and the 1960s revolutions – and they wanted a return to an older time. The country was in a reactionary mood, but still looking for optimism after the glum and depressing honesty of Jimmy Carter. Reagan blended the two in his own distinctive way. At the same time, the conservative movement that had been launched with Senator Barry Goldwater’s 1964 campaign was finally reaching maturity. The infrastructure of think tanks, foundations, magazines, and other organizations that the Scaife family and the Coors family and the Koch family and later the Walton family and others had started to build in 1964 was generating new and innovative right-leaning ideas. The neoliberal philosophy that Reagan was sympathetic to still only had a small number of adherents, but thanks to the conservative infrastructure it had reach and with marketing savvy was sold. At the same time, wealth was already becoming more heavily concentrated in the hands of fewer and fewer people, giving the rich benefactors of the conservative movement more power.

In this moment, Reagan became president – with liberalism tired and worn out, with a reaction against it’s excesses and the excesses of the revolutions of the 1960s reaching a boiling point, and a conservative movement heavily influenced at the top levels by neoliberalism finally maturing. Thus was launched the Reagan Revolution. 

This revolution wasn’t really about Reagan – but he was the figurehead at the top. A lot of the revolutionary changes had to do with society’s changing mores that allowed, “Greed is good” to became a positive mantra echoing the neoliberal Ayn Rand’s talk of the “virtue of selfishness.” Some of it had to do with the growing influence of the extremely wealthy. Some of it was a reaction against the silliness of the anti-materialism of the hippie generation. But like the 1960s revolutions, which were enabled though not created by the government, likewise for the 1980s revolutions. Reagan’s constant stimulus spending supercharged the economy; his trimming back the social safety net, his tax cuts for the wealthy, and his spending increases accelerated the concentration of wealth and power in the hands of fewer and fewer. His acquiescence to the informal Bretton Woods II arrangement created an economy that “favored finance over domestic manufacturing.” His trimming back of regulations also accelerated this trend. To some degree, these changes had positive effects – as the market was freer, as the economy grew, as corporations thrived, as the overall wealth of America grew. 

But they spelled trouble down the road. The stimulus spending and tax cutting, the informal Bretton Woods II agreement, and concentration of wealth created an unstable system. Internally, the society was imbalanced as extremes of wealth and power were accumulated by a small minority. This eventually undermined the very free market and democratic discourse that is essential to the American tradition. A course correction later might have saved the Reagan vision – and for a time it seemed as if Bill Clinton’s moderate presidency had, as middle class wages finally began to grow again – but Bush doubled down on Reaganism when he should have pared back, and we are left with this mess.

Is this collapse Reagan’s fault? I wouldn’t say so. But he set the initial course towards this iceberg, even if the iceberg was out of sight at the time he set the course. He – and the 1980s revolutions in finance, economics, and government that his administration supported and enabled – are the true authors of this economic collapse, even if they cannot be blamed for not forseeing it.

The Reagan Revolution (cont.)

Monday, March 16th, 2009

I’ve gotten a bit of feedback/blowback about having simplified what went on the in 1980s that led to the indisputable higher levels of income disparity, the concentration of wealth, the decimation of manufacturing, and the rise of finance. This wasn’t about Ronald Reagan and his neoliberal policies – it is claimed – but about basic economic forces. I tried to take that into account by pointing out that Reagan was only accelerating the trends that started in the 1970s – but let me go further now.

Another major factor that aided these trends was not entirely within Reagan’s control. As John Judis explained in The New Republic, in the 1980s:

…Japan was threatened by a cheaper dollar. To keep exports high, Japan intentionally held down the yen’s value by carefully controlling the disposition of the dollars it reaped from its trade surplus with the United States. Instead of using these to purchase goods or to invest in the Japanese economy or to exchange for yen, it began to recycle them back to the United States by purchasing companies, real estate, and, above all, Treasury debt…

With Japan’s purchases, the United States would not have to keep interest rates high in order to attract buyers to Treasury securities, and it wouldn’t have to raise taxes in order to reduce the deficit…[That] informal bargain…became the cornerstone of a new international economic arrangement…

Judis goes on to explain how this arrangement evolved through the 1990s:

Asian countries, led by China, adopted a version of Japan’s strategy for export-led growth… They maintained trade surpluses with the United States; and, instead of exchanging their dollars for their own currencies or investing them internally, they, like the Japanese, recycled them into T-bills and other dollar-denominated assets. This kept the value of their currencies low in relation to the dollar and perpetuated the trade surplus by which they acquired the dollars in the first place…

Until recently, there have been clear upsides to this bargain for the United States: the avoidance of tax increases, growing wealth at the top of the income ladder, and preservation of the dollar as the international currency…

[The current financial system] is sustained by specific national policies. The United States has acquiesced in large trade deficits – and their effect on the U.S. workforce – in exchange for foreign funding of our budget deficits. And Asia has accepted a lower standard of living in exchange for export-led growth and a lower risk of currency crises.

This financial arrangment was not created by Ronald Reagan – but he did acquiese to it – and spent America into a level of indebtedness it had not been in since World War II. This arrangment would not be consistent with a ideological neoliberalism that was discussed before – but this arrangment, most importantly, did benefit many of those who were vocal proponents of neoliberalism. 

The revolutions of the 1980s then, was not merely the result of a political movement within America – not anymore than the revolutions of the 1960s were. There were international factors that helped along both domestic movements. The combination of this special relationship with Japan – and later China and other Asian countries – with the neoliberal revolution of Ronald Reagan – led to a concentration of wealth and power within a small class of people rarely seen in a developed country. As Paul Krugman observed:

It’s important to know that no other advanced economy has seen a comparable surge in inequality – even the rising inequality of Thatcherite Britain was a faint echo of trends here.

Combined with the neoliberal principle, as described by Stanley Fish, that “Short-term transactions-for-profit [are better than] long-term planning designed to produce a more just and equitable society,” it becomes more clear how we ended up in this enormous financial mess. 

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.

The Reagan Revolution

Friday, March 13th, 2009

In which I discuss a repeated theme of this blog – the two domestic revolutions of the past 50 years that undermined the ever-evolving “American way of life” and caused profound social, economic, and political anxieties. The Reagan Revolution did for money what the ’60s did for sex – and today we are paying the price. 

The 1960s are remembered today – for better or worse – for the social, cultural, and sexual revolutions which roiled the nation between 1960 and 1972. The iconic images and movements of the later, more radical years of the time period primarily involve forces that undermined American mores and traditions. Flower children, the Summer of Love, LSD, marijuana, rock and roll, SDS, teach-ins, Black Panthers – the cumulative force of these challenges to the American way of life led to a backlash, which Richard Nixon and his counterparts rode to power. By 1968, many Americans felt as if their way of life were under siege from radical forces – oftentimes, a radicalism embraced even by their children. Riots broke out in major American cities; illegal drugs were consumed conspicuously and without shame; sex was given freely and openly; the legitimacy of the military, of the government, and of the academy were all questioned and often attacked – all of this in the name of freedom and in protest against the societal structures and rules that had heretofore defined the American experience. By the end of the 1960s, the “silent majority” felt their way of life under attack by these sixties revolutions, as Richard Nixon explained in a speech connecting major societal problems to the “sixties” experience:

We are reaping the whirlwind for a decade of growing disrespect for law, decency and principle in America.

Aside from Richard Nixon, the most prominent beneficiary of this counter-revolution, this reaction against the sixties revolution, was a second-rate actor turned politician, Ronald Reagan. He ran for governor on a law and order platform – pledging to beat back the forces of chaos and freedom to protect the compromises that were the basis for the American way of life. Reagan made a national name for himself by taking aggressive measures to quash the college demonstrations of the “communist sympathizers, protesters and sex deviants” at the University of California, Berkley campus.

In defending his extreme measures that resulted in the death of a student in the aftermath of a police riot, Reagan drew a line in the sand:

If it takes a bloodbath, let’s get it over with. No more appeasement.

Reagan’s popularity stemmed in a large measure from how he was able to harness his populist law-and-order stands with a sunny optimism about America. But when Reagan finally took power in 1980, he did not merely attempt to reverse the 1960s revolutions. He unleashed a new revolution, undermining American values and traditions just as radically as the 1960s revolutions had. As Stephen Metcalf explained in Slate:

The ’80s did for money what the ’60s did for sex.

Metcalf goes on:

They told a miraculously tempting lie about the curative powers of disinhibition. It took AIDS, feminism, and sociobiology a while to catch up to our illusions about free love. It has taken cronyism, speculation, and manic overleveraging a while to catch up to our illusions about free money.

Reagan himself revered Franklin Delano Roosevelt and the New Deal but the forces he unleashed were determined to overthrow not just the Great Society programs of the 1960s and the social, cultural, and sexual revolutions of that decade, but the New Deal of the 1930s and the social and economic structure that sprang from the Depression and the government involvement in its aftermath. The Reagan administration unleashed a neoliberal revolution. While Reagan’s support and popularity was to a large degree a result of his stands against the social, cultural, and sexual revolutions of the 1960s against the commonly accepted American values and traditions, his administration unleashed its own revolution which likewise attacked and undermined commonly accepted American values and traditions.

As Stanley Fish recently described neoliberalism in the New York Times:

Whereas in other theories, the achieving of a better life for all requires a measure of state intervention, in the polemics of neoliberalism (elaborated by Milton Friedman and Friedrich von Hayek and put into practice by Ronald Reagan and Margaret Thatcher), state interventions — governmental policies of social engineering — are “presented as the problem rather than the solution” (Chris Harman, “Theorising Neoliberalism,” International Socialism Journal, December 2007).

The free market was seen by these neoliberals as a natural phenomenon that was destroyed by government involvement rather than the government- and society-tended creation that it actually is, as has commonly been understood by Americans from Alexander Hamilton to Theodore Roosevelt. This neoliberal revolution began with much less fanfare and demonstration and less popular support and revolt than the sixties revolutions, but its effects were at least as profound. There were not the same iconic or disturbing images of radicalism and culture war, or catalyzing events like Woodstock, in this second domestic revolution, but the impact on the fabric that bound and organized the nation was just as profound. By explicitly seeking to undermine the “American system” of capitalism and especially the changes to the social contract since the New Deal (which involved the government regulation of businesses, a focus on local and small corporations rather than consolidation, a focus on labor and manufacturing instead of high finance, and a strong, robust middle class that was the focus of a growing economic prosperity) the Reagan revolution accelerated the trends that had begun to appear in the 1970s. Income inequality soared, middle and lower income stagnated while the wealthiest rose, businesses combined and became ever larger, and regulations were relaxed. In what became known as the Great Divergence, the wealth produced by American society stopped being spread out to the middle class and became concentrated in an ever smaller percentage of the population. The very shape of our society changed as a result of Reagan’s revolutions – and American families began to feel squeezed, until the effects of this revolution became more pronounced. By the 2000s, this “silent majority” again felt under seige – though without the same sense of focus as neoliberals actively sought to shift the blame for these economic attacks on the middle class to the 1960s revolutions in a manner that was still resonant for older Americans.

And while the effects of the sixties revolutions have been widely discussed, the effects of the revolution of the 1980s have been largely unspoken. The concentration of wealth in ever smaller percentages of the population, the economic focus on finance over labor, manufacturing, or industry, the slashing of the social safety net, the push for ever bigger corporations, and the relaxation of any type of regulation. 

Thus Reagan, opposing the cultural, social, and sexual revolutions of the 1960s overthrowing conventions that held together American society, unleashed a new economic, financial, and governmental revolution that overthrew the social contract of Franklin Delano Roosevelt, and the economic and governmental conventions that held American society together.

Stimulus Is What We Need

Friday, February 13th, 2009

It is commonly stated that China’s ruling power has struck a kind of bargain with it’s people – that they will accept the one-party rule and other political restrictions – as long as the government is able to keep the standard of living rising. Orville Schell, Dean of the Graduate School of Journalism at the University of California at Berkeley and author of several books on China, gives a typical explanation:

…it would not be excessive to say that everything – economic health, social stability, political reform, environmental modernization, etc. – all depend on China’s economy maintaining at least a 6 percent to 7 percent growth rate. This is something that most market economies cannot do in perpetuity given the nature of cyclical growth cycles.

When this topic is brought up in foreign policy discussions, it is often understood as a uniquely Chinese problem – this bargain between the people and the state that they will accept an authoritarian government in return for a growing economy. But a government’s dependence  on its ability to increase opportunities for its people for its legitimacy is not a uniquely Chinese problem. The Chinese government may only be able to survive as long as it continues to provide economic growth to it’s citizens, but how different is this bargain the Chinese people have made with their government from the bargain the America people have with ours? As long as American citizens have their basic needs met and a reasonable opportunity to succeed, they will accept a polarized distribution of wealth, corruption of various sorts, and sundry other injustices. And as long as the Chinese citizens are moving towards having their basic needs met and have a reasonable opportunity to succeed, they will accept a single-party state, restrictions on freedom of speech and assembly, and other restrictions.

Any state’s constitutional structure is legitimated by whether it provides for the needs of it’s people. In another age, the state merely provided security against hostile invasions and criminals; later, it provided an identity as well; by the middle of the 20th century, a state was legitimated by the extent to which it could provide for the basic needs of it’s citizens. The Cold War was, to a large degree, a competition between the capitalist states and the Communists states to see which could provide more ably for the needs of it’s citizens. Today, the state is evolving from providing for the needs of it’s citizens to providing opportunities for it’s citizens. The basic problems of sufficient housing, food, clothes, and other necessities are able to be met with our global prosperity.1

This evolution of our state into a market-state can best be seen by looking at the long-term trends in politics, shaping both the left and the right – as politiciains, with their ears constantly attuned to changing expectations, have sensed this evolution before most. Looking from Carter to Clinton to Obama, we can see how each has progressively embraced a different sort of liberalism – each less focused on a government providing services and more focused on government providing opporunity. Carter was a traditional big state Great Society liberal; Clinton favored free trade, ending welfare, and reining in the deficit; Obama’s liberalism accepts a number of libertarian premises and seeks as it’s goal the maximization of opportunity – as his health care reform plan, for example wouldn’t force people to join any particular program while offering a stable base for a necessary service that often causes people to remain in jobs they would not otherwise. A similar evolution can be seen in Nixon to Reagan to Bush – as Nixon favored big government programs; Reagan attacked big government; Bush focused on creating an ownership society among other reforms. Even when misguided – as for example his Social Security proposal – it was focused on offering greater opportunity.

James Glassman speaks for many doctrinaire anti-government conservatives when he suggests we allow our economy to contract – as eventually, it will reach bottom and bounce back. Stimulus – he says – is the wrong metaphor:

“We’re going to have to jump start this economy with my economic recovery plan,” [Obama] said on January 3. According to the image, one can jolt a dormant economy into action just as one can hook up polarized cables to a car battery, clamp a defibrillator to the chest, or breathe into the ear of a reluctant lover. Suddenly, the object of our attention will be back in action, aroused…

In fact, stimulus may be precisely the wrong metaphor. Rather than getting jazzed up, we need to be calmed down and to take the time to learn from the Great Depression, a time when government did too much, not too little.

Putting aside the non-consensus historical take on government action in the Great Depression (discussed here), Glassman misses the point our political leaders do not: our societal order is premised on the idea of continuous growth. A growing economy in a market state is like a beating heart – without it, we cannot survive. Perhaps a more apt metaphor is a business not making a payroll – the company can’t continue if it’s employees don’t get paid. The employees will no longer consent to subject to their employer’s authority – and the company will dissolve. When the nation-states of the early 20th century were not able to legitimate their structure by providing for the basic needs of their citizens, radicalism, revolution, and war ensued as the old order broke down and fascism and Communism took it’s place. Today, if market-states are unable to provide opportunity their citizens, they will not survive going forward. 

Our politicians and the elites sense this – which creates the manic desire to arrest this free fall and start our economy moving forward again – before it’s too late.

  1. Clearly, the problems associated with deficiences in these areas aren’t gone. But technologically, we have solved them. The problems remaining are systematic – how to satisfy the needs of those who don’t have access to the excess prosperity of the developed world. []

Bush’s Counterterrorism Strategy: Winning Through Losing

Monday, June 2nd, 2008

Who knew the Bush administration actually had a strategy in fighting Al Qaeda?

Robert Grenier, who according to Joby Warrick of the Washington Post is “a former top CIA counterterrorism official who is now managing director of Kroll, a risk consulting firm” explained that we were now winning the fight against Al Qaeda after losing so many battles because:

One of the lessons we can draw from the past two years is that al-Qaeda is its own worst enemy. Where they have succeeded initially, they very quickly discredit themselves.

And you didn’t think Bush had a strategy.1

It’s the old “invade-two-countries-and-use-heavy-handed- tactics-to-rile-up-the-extremists- so-that- they- initially- have- public- support- but-then- pretend -to-have -an-incompetent- strategy- to-combat- the-extremists- so-that-they- succeed- which-will- then-lead- to-the- public- turning -on- them- because- they-are- evil- doers -after-all.” One of Sun Tzu’s classic stratagems.

And apparently one which is having some success – as Peter Bergen and Paul Cruickshank suggest in their important piece in The New Republic, “The Unraveling.” Bergen and Cruickshank attribute the ideological rifts within the Muslim extremist community to Al Qaeda’s strategic blunders – but they do not give Bush enough credit for his secret plan to let Al Qaeda succeed so that their empty ideology could be exposed for what it is by fellow extremists.

Bush’s secret plan to win the War on Terrorism bears a strong resemblance to Ronald Reagan’s plan to defeat the Communist Soviet Union. By convincing the public and most of his administration that the USSR had taken a significant lead in all sorts of military areas, he increased America’s military spending exponentially. As the Soviet Union tried to keep up, it eventually collapsed exposing it’s system’s hidden flaws. Although the CIA was caught by surprise by this development during George H. W. Bush’s first term, conservatives quickly confirmed that this was all part of Reagan’s secret plan to end the destroy the Soviet Union by spending like a drunken sailor in America.

George W. Bush – whose wisdom, like Reagan’s is often compared to that of the mythical hedgehog of Isaiah Berlin’s famous essay – has been blessed with authentically evil enemies. Even if he allows them to win, within their winning are the seeds of their destruction.

It is a cunning strategy.

Now we just have to make sure we don’t choose a president who screws it all up by going after Al Qaeda in a competent fashion – a competence that might even distinguish between the Muslim extremist groups that are fighting with one another. It might look like Al Qaeda’s recent troubles happened despite, rather than because of, Bush’s ingenious strategy. But that’s only because we didn’t give enough credit to Bush and John McCain for having this secret strategy.

Now that we know, it’s important to support the right American candidate for this American presidency in this American election against all those anti-Americans out there. Vote for the Bush-McCain Super-Secret Counterterrorism Strategy: Winning the War on Terrorism by Losing Every Battle and Letting Al Qaeda Defeat Itself!

(more…)

  1. To be clear – I do think the recent successes are real, and that Al Qaeda is losing support, etcetera.  But I think Bush’s strategy has been largely counter-productive – and in fact put off this recent intra-extremist fight because he refused to distinguish between these opposing groups – the most egregious example being the invasion of Iraq in response to 9/11. []