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The Enlightenment Made Flesh

 “Unfortunately for Britain- and fortunately for America the generation that emerged to lead the colonies into independence was one of the most remarkable group of men in history-sensible, broad-minded, courageous, usually well educated, gifted in a variety of ways, and long-sighted, sometimes lit by flashes of genius.  It is rare indeed for a nation to have at its summit a group so variously gifted as Washington and Benjamin Franklin, Thomas Jefferson, Alexander Hamilton, James Madison and John Adams. And what was particularly providential was the way in which their strengths and weaknesses compensated each other, so that the group as a whole was infinitely more formidable that the sum of its parts. They were the Enlightenment made flesh, but an Enlightenment shorn of its vitiating French intellectual weaknesses of dogmatism, anti-clericalism, moral chaos, and an excessive trust in logic, and buttressed by the English virtues of pragmatism, fair-mindedness, and honorable loyalty to each other. Moreover, behind this front rank was a second, and indeed a third, of solid, sensible, able men capable of rising to a great occasion.  In personal qualities, there was a difference as deep as the Atlantic between the men who led America and Britain during those years, and it told from first to last.  Great events in history are determined by all kinds of factors, but the most important single one is always the quality of the people in charge; and never was this principle more convincingly demonstrated than in the struggle for American Independence.”

from A History of the American People by Paul Johnson – Harper Collins 1997

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Greenspan

greenspan_volcker

I am reading an excellent biography of Alan Greenspan by Sebastian Mallaby titled The Man Who Knew.  I recommend it as much for its illumination of the economy, the Fed’s role, and political decisions as for its portrayal of Mr. Greenspan.

A few observations:

Greenspan is clearly a very brilliant man and was able to digest and analyze vast sources of very detailed data.  He was one of the first economists to consume details from specific industries and digest it into original insights that the other economists of his day missed.  Few leaders today do such research themselves; they are more likely to depend on minions to provide it. The problem with depending on such intellects is that they are rare. What happens when that power is wielded by lesser minds?

As brilliant as Greenspan is, he missed some significant calls. This does not diminish his genius, but it notes that the economy is a complicated machine and even the brightest minds are incapable of understanding it completely.

The independence of the Fed is a myth.  The President and Congress are often in opposition to Fed policies and they can be brutal is their pressure on them. It takes a very confident and unusual character to stand up to the political pressure.  While fighting shrewdly to maintain the Fed’s independence, Greenspan was still sensitive to the political liabilities of his actions. Paul Volcker and Greenspan took a lot of heat for their efforts to remain independent.  We benefited from it greatly. Volcker painfully wrestled inflation down from its highs of the 1970s.  Alan Greenspan took painful actions not to undo Volcker’s considerable accomplishment.

Greenspan was one of the first to consider the impact of the growth of the financial industry in his decisions. Laissez faire attitudes that may have been suitable when the financial sector was 7% of the GDP may not be acceptable when it is 37% of the economy.

The guidance of time proven principles is often contingent on new realities and structure.  The Phillips curve proved inapplicable in the 1970s.  The link between deficits, inflation, and interest rates was a point of disagreement between Greenspan and his colleagues.  It did not hold during the bond bubble of the early Clinton years, to Greenspan’s dismay.

On the other hand when a factor seems less influential than before it may be because its function is hidden elsewhere in the economy.  The growth of highly leverage hedge funds magnified the impact of Fed action.  The growth of monetized credit and mortgage markets substituted for money creation.

While financial innovations change the effectiveness of old solutions, they only obscure and empower the old problems of excess debt and the blindness of greed.

Greenspan combined a rare talent for data and analysis, a brilliant economic mind, an understanding of political realities, a Machiavellian use of power that spanned political partisanship, and a temperament ideally suited for his job.  His influence often exceeded the president he served.

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Thoughts on the Electoral College

The Electoral College was carefully designed to fulfill a similar purpose of the constitution, to apply a break on majoritarian tyranny.  The framers understood that democracy and demagogue had the same root.

To the greatly disappointed Democrats who lament the second election in memory where their candidate lost while having a larger popular vote, I offer three thoughts to consider.

Expand your time horizon.  A wise politician once warned that you should be wary of endowing any political power to any position unless you can envision that power in the hands of your worst nightmare.

That would apply to the executive power of the president, or the legislative creep of the Supreme Court.  It all seems so palatable when they reinforce your preferred view, but you must remember that political power is a fleeting thing in America.

After the 2004 election Karl Rove spoke of a permanent Republican majority. Two years later the GOP lost the House, two years after that they lost the Senate and The White House.  The Democrats assumed a mandate they did not possess, marginalized any opposition, passed the ACA with no bipartisan support and alarmed us with other extremely partisan agendas. Two years later they lost the House. Two years after that they lost seats in the Senate, two years after that they lost the Senate and more House seats, and two years after that they lost both houses of Congress and we have Donald Trump in the White House.

Fully one third of the Democratic House seats are from three states: California, New York, and Massachusetts. While the Democrats may control these populous states and that may have given them the popular vote, note the trends.  California and New York are losing populations and businesses to southern states like Texas.  At the same time, demographic trends towards Hispanics and minorities are growing in many southern states and the GOP majorities will be threatened there if they do not attract a broader demographic base. You may live to respect the electoral college.

Secondly, it should be hard to ignore the color of the electoral map. The map is overwhelmingly red.  The blue vote is largely focused in large urban coastal centers. Not only are the Democratic House seats narrowly focused the Democrats have weak political power among the states. Of the 50 states, only 18 have Democratic governors, and only FIVE have the trifecta of a Democratic governor and both houses of the state legislature. This compares to 27 states which have a GOP trifecta, and 18 states with divided power.

This explains why the Democrats have such a weak back bench.  The states are the training ground for future national leaders. The alternative to the deeply flawed Hillary was a 75-year-old socialist.  The Republicans had a broad bench of young elected leaders, whose names we can all still remember even though we are also trying to wrap our heads around the reason Trump was the ultimate victor. Rather than deplore the electoral college, however, the Democrats need to address their utter failure to relate to the vast majority of the country. This hurt them far more them the failure of the Republicans to reach minorities.  While it has become politically correct to contemptuously decry white privilege, there is one privilege they retained and that is the vote.

The final thought is the power of contempt.  It is a strong negative emotion.  The voters remember the contempt of the Elizabeth Warren statement, “you didn’t build that.”  They remember the statement from Jonathan Gruber about the need to lie about the ACA because of “the stupidity of the American voter.”  They are tired of constantly being talked over, shouted down, degraded as anti-intellectual, anti-science, racist, and stooges of Fox and oil companies. They are concerned about the intellectual intolerance of the left on our college campuses.

It is intellectually lazy to demonize rather than understand. Unfortunately given the horrified responses to the election this lesson is not being learned.  In spite of Trump’s clumsy and stupid statements that have incited such response, the voters who supported Trump are not the racist troglodytes they are made out to be. Effort to make it so just reinforces this ‘contempt’ factor that helped elect him.

The most productive aspect of the Trump victory may be a rediscovery of the Constitution and the incredible wisdom in it, including the electoral college, that we should be extremely cautious about overturning.

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Eisenhower’s Footprint in The Middle East

Ike’s Gamble by Michael Doran is an account of the 1956 Suez Crisis with a perspective different from many previous ones which were directed from narratives from CIA players at the time.

The United States under Eisenhower supported the rise of independent nations and the decline of colonialism. The CIA and the State Department opposed the recognition of Israel under Truman and remained consistent in that position under Eisenhower. Recognition of Israel in their view stood against American interests (as they saw it), and stood to alienate us from the Arab world and possibly drive them into the communist sphere.

For the CIA and the State Department Gamal Nasser stood as a leader of the Arabs in the Middle East and deserved the support of the United States. When Nasser nationalized the Suez Canal the British, French and Israelis conspired a plan to retake the canal with force. Eisenhower stood with Nasser and strongly against his former allies and forced them to withdraw.

Britain’s Churchill and Anthony Eden warned of the consequences of surrendering such power to Nasser, comparing it to the appeasement of Hitler at Munich. Eisenhower rejected this approach, sensing that colonialization was a dying institution and Arab nationalization was an inevitable growing specter. He allied American power accordingly.

Nasser’s success in the campaign elevated him to hero status in the Middle East and he expanded his power quickly; allying with Syria, and likely promoting the bloody coup is Iraq in 1958. Nasser also embraced Soviet influence in a way that alarmed Eisenhower. The President quickly regretted his decision and took action to save Lebanon and Jordan from encroaching Egyptian power. Eisenhower tried unsuccessfully to promote a northern alliance with Iraq and Iran and Pakistan and wished to make the Saudis a center of power. This infuriated Nasser as a direct threat to his power.

Nasser became bolder, broke his promises to the U.S., militarized the Sinai, and amassed a serious enough threat to Israel that they attacked Egypt in the 1967 war and devastated Nasser and his power.  Eisenhower retired supported and praised the Israeli move. Israel accomplished in 1967 what the British wanted to do in 1956, but the Mideast had substantially changed in the interim.

Eisenhower regretted his decision during the Suez Crisis, but once he realized his mistake he took corrective action. Other opinions at State blame our failure to support Nasser as much as we should have earlier, driving them into the Soviet sphere.

Eisenhower learned that Israel was not the main driving issue that State made it to be.  There were much greater contests for power between rival Arab countries such as Iraq and Egypt than there was between Israel and the rest of the Mideast.  Israel was a useful common enemy.  Ike realized that the chances for Pan Arab unity was nil.

Israel went from being the pariah of the State Department to a useful ally, and relations were re-established with our French and British allies.

The negotiations before and during the crisis were complicated and trying.  Very experienced and knowledgeable players in American foreign policy made rational and morally guided decisions with the focus on American interests and badly blundered.  They believed things to be true that were not, and underestimated the organic friction with other powers in the region. Foreign policy is the most treacherous of political arenas.

The best we can hope for is to recognize errors when we make them and correct them as honestly and quickly as we are able.  The CIA and State likely suffered the problems of an undiversified bubble mentality that was unable to consider options and views that became clear only too late.

Ike’s Gamble was a great read on the history and policy of the crisis, but it is also a valuable look at the difficulty and complexity of foreign policy.

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Redefining Liberty

I attended a Hillsdale College Free Market Forum in Atlanta last week. I was able to meet Don Boudreaux from Café Hayek, one of my daily go to blogs, and Ronald Pestritto, a history professor at Hillsdale.

Ron authored three books on my bookshelf: American Progressivism: a Reader, Woodrow Wilson and the Roots of Modern Liberalism, and Woodrow Wilson: The Essential Political Writings .  They are an excellent window into the origins of the Progressive movement.

In an address on the Principles of the Entitlement State, he spoke of the redefinition of liberty by Franklin Roosevelt in his Commonwealth Club Address in 1932.  FDR spoke of the transition of the United States from its founding due to the settlement of the continent and the industrial revolution.  This is consistent with Woodrow Wilson who found principles embedded in the Constitution to be contingent on the times and unsuitable for modern political life.

The framers saw liberty as a natural right which preceded the government, and that the citizens instituted government to protect those rights.  With liberty perceived to be  threatened by a new economic order FDR sought power for the government to protect individuals from threats to their liberty from sources other than the government such as the powerful business trusts.  Instead of a protector of liberty the government could grant liberties due to its power.  The more power the government had the more liberties it could bestow. This innocent sounding transition from the protector to the grantor of rights was used to justify the growth in power of the government that characterized the Progressive movement.

George Will characterized the Progressive pivot as the point where liberty was superseded by majoritarian democracy in his essay in National Affairs, The Limits of Majority Rule. Pestritto contends that perhaps it is more accurate to say that liberty was redefined by FDR to require the power of the state to do more than protect pre-existing natural rights.

The outcome of a century of growing Federal Power in the name of Progressivism and the evolution of the entitlement and regulatory state allows us to see the dangers of uncontrolled government power and the wisdom of the original principles of limited government power.  Would the original Progressives have approved of the expansion of government to its current size and power?

William Voegeli in Never Enough mirrored Pestritto’s examination of the redefinition of language by FDR:

“According to Sidney Milkis, “FDR’s deft reinterpretation of the American constitutional tradition” gave “legitimacy to progressive principles by embedding them in the language of constitutionalism and interpreting them as an expansion rather than a subversion of the natural rights tradition.” Significantly, FDR conveyed this orientation by enthusiastically embracing “liberalism” as the designation for the New Deal’s philosophy, sending the term “progressivism,” with its clearly implied critique of the American founding, into a long exile. To do so he wrested “liberalism” away from the defenders of limited government, who acceded unhappily to calling themselves “conservatives.”