Sunday, March 29, 2009

To Regulate or Not to Regulate, that is American Exceptionalism

Government regulation of the market in American has always been either too invasive or too superficial, never just right. This tells us more about ourselves than the day-by-day report card of Obama's fledgling administration.

The Obama adminstration's firing of GM CEO Rick Wagoner seem to some to have been a power grab and an overkill; yet others feel that the administration's plan to help to buy up some of the toxic assets owned by banks will be too easy on the banks.

We swing between the extremes of excessive regulation and unfettered laissez faire - indeed we have majority factions within both major parties staunchly defending both extremes - because our country has never properly worked out the tension between the two.

Consider the last time an economic crisis of even greater proportions rocked the country. The New Deal and in particular the National Industrial Recovery Act (NRA) represented an even greater power grab by the Roosevelt administration than the one Obama is being accused of today, including the right by the president to approve of a set of "codes of fair competition" for every industry regulating minimum wages and maximum weekly hours. The Supreme Court unanimously declared the NRA unconstitutional in 1936.

As a country born without the feudal baggage of the old world and one which has constructed the self-fulfilling myth of the American Dream, we have never had to fully confront the crisis of capitalism that industrialization provoked elsewhere. Even having experienced the Great Depression, we still have not found, and no politician has successfully articulated, a sustained national consensus about the relationship between the state and the economy. Our love-hate relationship with the federal government explains American exceptionalism, but it also the source of our current woes.

Because ours is a capitalist economy which concedes the value of government intervention and regulation, we must live with mixed (and hence often botched) solutions to our current economic crisis. We can neither nationalize the banks - and hence control how they are run including how executive compensation is structured, nor can we leave the banks alone - no politician would dare risk a depression on the heels of his/her inaction. In trying to find a compromise between market liberalism and political control of the market, we often end up achieving neither. So the Obama administration will alternately be accused of sleeping with Wall Street or witch-hunting it; decades after we have weathered the current crisis, we will still be debating whether or not what Obama did helped or worsened the problem. This is America, where we have a right, nay, a duty, to earnestly debate - as our Founders did - the necessity even of having a federal government at all.

Monday, March 23, 2009

Outrage in Washington

On the news that AIG paid out bonuses to its executives, our politicians in Washinton were outraged. Nay, "stunned," was our president on the Jay Leno Show. Shock, awe, disbelief are the attendant and contiguous emotions.

The only thing politicians prefer to do more than mutual congratulation is to register their outrage. Unbelievable they say, that AIG had the temerity to have done what they did. Goodness gracious, it was so outside the boundaries of civil decorum that we could not possibly have foreseen the loophole that permitted such behavior. Executives rewarding themselves - completely beyond comprehension, surely. The politicians doth protest too much.

Poor AIG chief Executive Edward Liddy - he shall get a whipping when he testifies before Congress on Wednesday. Worse still, he will have to sit through the public grandstanding of politicians who probably would have done the exact same thing had they been in his position. (Technically, they wrote a law that permitted him to do so.)

On trial would not only be Liddy, but the ugliness that Washington has become. Our elected representives excel in mimicking the anger of their constituents, parodying this anger in hyperbolic proportions in order to cover up their complicity in the mess that is AIG. This is reverse psychology 101; we all tried our hand at it at one point or another when we were young and our parents caught us red-handed stealing the cookie from the cookie jar. Goodness gracious, I can't believe you would think I would stand by and allow all of this, say aggrieved Senators and members of Congress. (For they know full well how quickly voters' anger can spill over.) Except that they actually did.

Some Senators have suggested that if the AIG executives had any integrity, they would return the $165 million in bonus money. Well Senators, this is capitalism. Voluntary acts of benevolence and self-abnegation aren't exactly the ingredients of the invisible hand.

The truth is our politicians are crying foul and not doing much more beyond crying because we have so thoroughly bought the virtues of capitalism that we do not have the resources to correct its slip-ups other than howl. The executives should have known better, Washington sighs. That is what Washington's outrage amounts to - an impotent vent that belies a lack of will to do something to correct the situation.

Even though the American taxpayer now owns 80 percent of AIG, the truth is Washington cannot tell a private company what to do. That would be socialism, some say. Well then we cannot have our cake and eat it. Either we embrace capitalism and the predictable instinct for executives to look out for themselves, or we say, when 80 percent of a company is owned by the public, we should call things what they are and acknowledge that this company has become a public trust to whom an obligation and an accounting is owed to taxpayers for the manner in which the company is run. Mere outrage - an invitation for voluntary self-correction seldom gets us anywhere. Washington should either get its act together or stop bloviating.

Monday, March 16, 2009

Dick Cheney's Interview with John King

In his first interview since leaving the White House, former VP Dick Cheney declared in no uncertain terms that the Obama administration's reversal of some of the Bush administration's foreign policies has left America less safe than before.

The substantive claim may well be true. And it doesn't even matter that Cheney has no credibility having been wrong about the WMDs and the prediction that the Iraqis would greet American troops as liberators. But he makes such bad arguments with so much conviction that he gives us clues as to how we were all hoodwinked by an administration drunk on its own hubris and desire to save us from Evil.

Here, I think, is his central argument against Obama's attitude towards waterboarding, wiretapping and all the other "legal," "constitutional" programs his administration pursued:

"Those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that let us defeat all further attempts to launch attacks against the United States since 9/11."

So the argument goes:

A. We have had no terrorist attack on American soil since September 11, 2001.
B. Everything the Bush administration did was therefore instrumental to this positive outcome.

This argument has no difference in form to this other one:

C. We had not had a terrorist attack on American soil until September 11, 2001.
D. Everything the Clinton and Bush administrations did until September 10, 2001 were instrumental to delivering this positive outcome.

If this sounds like a crackpot argument, it is because it asserts a premise and leaps (across galaxies) to a conclusion with utter indifference to the need for counterfactual reasoning. Too often, we allow our politicians to substitute assertion for argument. We have allowed conviction to substitute for reason, and we have paid a heavy price for it.

All the slick moves Cheney made while in office he made again in his interview with CNN's John King. Here is another telling paragraph in response to King's probe that Cheney had gone back on his fiscally-conservative principles, in which Cheney displayed his dark rhetorical genius:

1. Always start off with a casual reference to September 11.

"Eight months after we arrived, we had 9/11. We had 3,000 Americans killed one morning by al Qaeda terrorists here in the United States."

2. Deny all agency (and with that culpability) by characterizing every decision as an inevitable bow to necessity.

"We immediately had to go into the wartime mode. We ended up with two wars in Afghanistan and Iraq. Some of that is still very active. We had major problems with respect to things like Katrina, for example."

3. When all logic has been cast aside and one's sympathetic partisan audience suitably hypnotized, declare an ideological about-face and expect to get away with it with grim determination.

"All of these things required us to spend money that we had not originally planned to spend, or weren't originally part of the budget."

Topsy-turvy, Right becomes Left, Wrong becomes Right, spell-binding shenanigans. But, I concede, it's Cheney's and every politician's job and instinct to rewrite history in their favor. In this precise instance, I blame John King for buckling under Cheney's intimidating sneer and delivering a slew of softball questions with no follow-up. Cheney may be the original Tricky Dick, but our journalist from "the most trusted name in news" completely failed to pin him down. This is the democracy in which we live, where the mere facade of a free exchange of ideas between rational interlocutors belies us that it is reason and not rhetorical brow-beating that dictates the direction of policy.

Sunday, March 8, 2009

Does Rush Limbaugh Lead the Republican Party?

To answer this question, one must first ask: what is the Republican party and who leads it?

There are three possible answers to these questions. Here is a helpful distinction political scientists invented a while ago. There is the party in the electorate consisting of rank-and-file Republican identifiers, there is the party as organization instantiated in the DNC,and there is the party in government, which is the sum of elected Republican officals in government. So here are the potential leaders of the Republican party:

Leader of the party in the electorate - Rush Limbaugh, or so he hopes.
Leader of the party as organization - Michael Steele, or so he tries.
Leader of the party in government - future nominee, or so s/he plots.

Rush Limbaugh's recent elevation in the political limelight was a result of the fact that the Republican party in government is in shambles after a stinging defeat in the 2008 elections. (It wasn't just because President Obama mentioned him in a speech.) John McCain has been sidelined, and no one (not even Bobby Jindal, especially after his much derided reponse to the president's message to a joint session of Congress) has emerged to fill the political vacuum on the Right. The party in the electorate are yearning for a shepherd and since they are not finding it in government, they are looking to a talk-show host.

The recent tussle between Limbaugh and Michael Steele was only to be expected in the light of this threefold characterization of the Republican party. They were merely jostling for power as the party in government is regrouping. But it also tells us how weak parties have become as personalities (in the media and in politics) have trumped organizations in the running of American democracy.

None of this is good for the Republican party (as organization). When the party in the electorate has to turn to a talk how host for a potential leader, it spells disenchantment at their elected representatives in DC. The organization - its fundraising and voter turnout machine - was what gave the Republicans the electoral edge up till 2006. But now the party appears to be left only with personalities - like Joe the Plumber (still around), Aaron Schock (the youngest member of Congress), and Limbaugh. Personalities flit in and out of political life, and at best can only temporarily bring together a a diverse coalition of interests. They are not the way back to a competitive two-party system.