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Failure to Persuade

From The New York Times, The End of Identity Liberalism by Mark Lilla

But the fixation on diversity in our schools and in the press has produced a generation of liberals and progressives narcissistically unaware of conditions outside their self-defined groups, and indifferent to the task of reaching out to Americans in every walk of life. At a very young age our children are being encouraged to talk about their individual identities, even before they have them. By the time they reach college many assume that diversity discourse exhausts political discourse, and have shockingly little to say about such perennial questions as class, war, the economy and the common good. In large part this is because of high school history curriculums, which anachronistically project the identity politics of today back onto the past, creating a distorted picture of the major forces and individuals that shaped our country. (The achievements of women’s rights movements, for instance, were real and important, but you cannot understand them if you do not first understand the founding fathers’ achievement in establishing a system of government based on the guarantee of rights.)

But it is at the level of electoral politics that identity liberalism has failed most spectacularly, as we have just seen. National politics in healthy periods is not about “difference,” it is about commonality. And it will be dominated by whoever best captures Americans’ imaginations about our shared destiny. Ronald Reagan did that very skillfully, whatever one may think of his vision. So did Bill Clinton, who took a page from Reagan’s playbook. He seized the Democratic Party away from its identity-conscious wing, concentrated his energies on domestic programs that would benefit everyone (like national health insurance) and defined America’s role in the post-1989 world. By remaining in office for two terms, he was then able to accomplish much for different groups in the Democratic coalition. Identity politics, by contrast, is largely expressive, not persuasive. Which is why it never wins elections — but can lose them.


The Democratic party has cried wolf so often on race that no one listens to them anymore.  Without it their policies have little appeal, and their failures become more apparent.

Emotional appeal still works in politics.  But negative emotions are also strong.  Their appeal to the SJW crowd has less clout because of the success won in the last generation. But the negative emotion of contempt drove many a voter to the possibility of Trump, even if it was a reluctant move.

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Thoughts on the Transition

I did not think Trump would win the primaries or the election and I was wildly wrong.  I guess there is a chance that I am wrong about some of my fears about his policies as president.  So, for the time being I am willing to wait and see and have little to comment on cabinet selections.  I feel like I have a bit of a vacation from focusing on policy.

I had cursed the Republicans for running the only candidate that could lose to Clinton.  Now the Democrats lost to the one guy they thought they would have the easiest time defeating.  How inept of a campaign does one have to run to lose to Trump?

I would think that keeping Pelosi in power after the disaster she unleashed on the Democrats from the 2010 midterms forward would be a nonstarter.  I would be wrong again.

Trying to mollify the old guard with the consolation of winning the popular vote is just another form of denial.  If we had a popular vote the candidates would have run differently and the voter turnout would have been different. Republicans in California who stayed home with no chance of impacting the electoral count would have come out in droves.  Her popular vote victory can be attributed to her edge in California alone.  Her supporters claim she won a race that never occurred. The electoral college is not going to go away, nor should it.

The more that power is centrally focused, the more important is the electoral college. A national popular vote would be more tolerable if power was more dispersed to the localities as the founders and framers intended.

There are three legs to the Democratic losses. (Even though we were wrong on everything about the Trump victory, we still claim insight into how it happened.) First was Hillary’s terrible candidacy and terribly run campaign. Second was the deterioration of the party’s power at the state level. They have no back bench or youthful energy.  They are the party of old shrill white people.

The third cause was the accumulation of contempt.  The Democrats are the party that cried wolf. When they cry racism now nobody listens.  Every display of contempt toward the winning candidate and his family only serves to confirm the choice of many of his reluctant voters. If the Democrats want to lose even more seats in the House and Senate in the next midterm then by all means keep Clinton, Pelosi, and Warren as the face of the Party, and then to alienate even more moderates, make Keith Ellison the party chairman. Make fun of the first lady and display your moral superiority in every possible forum.

Their only hope if they pursue this course is if Trump screws up badly. While this remains a distinct possibility, they may want to develop an alternate strategy just in case they remain as wrong about Trump as they have so far.

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The New Republicans

From Henry Olsen at National Review, Can the Republican Party Keep Trump Democrats? 

They are best viewed through the lens of active citizenship. They take national identity seriously and imbue Americanism with an implicit bargain that flies in the face of liberal or libertarian cosmopolitanism. They believe that being American means more than voting and paying taxes. To them it means that if you work hard and play by the rules, the people who run the country owe it to you that you will live with dignity and respect.

It became painfully obvious to these voters over the last eight years that national Democrats no longer treat them with respect or believe they are capable of living dignified lives. They have seen their way of life under assault, whether in the form of attacks on gun ownership, the focus on climate change over growth, or implicit claims that they are bigots. For people who voted twice for President Obama, these last insinuations might have been the most offensive and damaging of all.

Just because progressive Democrats seemed determined to drive these voters away did not mean, however, that they found conventional Republicans any better. These voters have shunned Republicans because they disagree with the party’s focus on low taxes, small government, and pro-business policies. They benefit enormously from middle-class entitlement programs; their children get what they consider to be good educations from public schools and state universities. They have no problem with redistribution so long as it is focused on either people who can’t work or people who do.

This attitude comes out clearly when we look at entitlement reform. Polls show that these voters do not want to cut Social Security or Medicare at all. Pew Research surveys also show that voters like these believe the government should spend more to help the poor even if it adds to the debt. These are not mainstream views among most Republicans, to say the least.


Trump Democrats were the great surprise of the election. Keeping them will require a significant adjustment of the Republican message.  The Republicans can screw this up by ignoring this segment, and returning to social conservatism and  rejecting established institutions from the progressive era.

This was not an embrace of Republican or conservative  ideology, but a rejection of the Democrat’s identity politics.  Every time a Democrat now cries racism towards Trump’s victory or his cabinet appointees or considerations, they drive this group further into the arms of the opposition.


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The Electoral College Reader

From Jeff Jacoby, In Defense of the Electoral College:

It’s easy to score rhetorical points by claiming smugly that “the people chose Hillary Clinton,” but the American method of choosing a president has been in place for two centuries. The Constitution is indifferent to national popular voting trends. This is a nation made up of states, not the undifferentiated population as a whole. Those states have different political, economic, and cultural interests — Massachusetts and Arkansas are not interchangeable — and the Founders designed a federal system that respects each state’s identity and autonomy. The Electoral College, as part of that system, ensures that voters in a handful of densely populated urban regions cannot hand the presidency to a candidate that a significant majority of the states oppose.

From Josh Gelertner at National Review, Why We Have an Electoral College:

Remember: The constitution intends that most laws be made on a scale much smaller than the federal government, where the individual voter has, proportionally, a much greater say, and where local problems can be dealt with without affecting unconcerned strangers. The federal government is the federation of one level of distinct law-making units — the states — and a direct presidential election would mean that problems unique to sparsely populated parts of the country would be irrelevant to the president.

From John Samples at Cato

What about the democratic principle of one person, one vote? Isn’t that principle essential to our form of government? The Founders’ handiwork says otherwise. Neither the Senate, nor the Supreme Court, nor the president is elected on the basis of one person, one vote. That’s why a state like Montana, with 883,000 residents, gets the same number of Senators as California, with 33 million people. Consistency would require that if we abolish the Electoral College, we rid ourselves of the Senate as well. Are we ready to do that?

The filtering of the popular will through the Electoral College is an affirmation, rather than a betrayal, of the American republic. Doing away with the Electoral College would breach our fidelity to the spirit of the Constitution, a document expressly written to thwart the excesses of majoritarianism. Nonetheless, such fidelity will strike some as blind adherence to the past. For those skeptics, I would point out two other advantages the Electoral College offers.

From Larry Arnn at the Wall Street Journal, The Electoral College Is Anything But Outdated:

The Constitution is paradoxical most of all about power, which it grants and withholds, bestows and limits, aggregates and divides, liberates and restrains. Elections are staggered, so as to distribute them across time. The founding document also divides power across space; the people grant a share of their natural authority to the federal government, but another share to the states where they live.

This innovation is most directly responsible for the greatness of the United States. Think what the Founders achieved: They invented a way of governing, and they extended it without benefit of kings or colonies across a vast continent, bigger than they could imagine, until they got to the other side 30 years later. The magnificent Northwest Ordinance granted free government to the territories, then representative and independent state government thereafter. Ruled from Washington, the nation could never have settled this land in freedom nor made it so strong.

From my own previous post, Thoughts on the Electoral College:

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.

From Varad Mehta at National Review,Nobody Understands What a Popular Vote Presidential Election Would Mean

Do we want a president who wins by running up the score in one or two states, or do we want a president who wins by garnering narrower victories in a wide array of states? Clinton won New York and California. Trump won Texas. And Florida. And North Carolina, Ohio, Michigan, Wisconsin, Pennsylvania, and even one electoral vote in Maine. He won the Electoral College by assembling a more politically and geographically diverse group of states than Clinton did. In our system, winning the Electoral College confers legitimacy because such a victory exemplifies the reality the Electoral College was created to ground in our political order: that the United States is a federal union of semi-sovereign states.

From The New York Post and Mark Cunningham, Why ‘moral outrage’ over the Electoral College outrages me

 To start, it’s based on an illusion: Clinton “won” an election we didn’t have: Neither side was focused on a national-popular-vote win, because both knew the rules.

And if the rules were different, the whole campaign would’ve differed, too.

Just for starters, a lot more Republicans would’ve voted in California. They had no reason to turn out when everyone knew Clinton would carry the state — and the US Senate race was between two Democrats.


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The Greenspan Put

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The Man Who Knew by Sebastian Mallaby is an excellent biography of Alan Greenspan, but it may have greater value in understanding the power and limitations of the Federal Reserve itself.

Greenspan has been accused of being an ideologue by some and a betrayer of free market economic ideology by others.  He was a brilliant thinker and in his early career in his consulting firm, Townsend and Greenspan, consumed vast quantities of technical industry specific data long before econometrics was a word.  He gathered unique insights facilitating valuable forecasts clients paid for dearly and willingly.

His close relationship with Ayn Rand fit with his market bias, but was tempered with pragmatic realities when he entered the political halls from Nixon to the second Bush. He served as Fed Chairman from 1987 to 2006.

With the analytical skills of a technocrat, he also possessed the depth of a philosopher.  He understood the limitations of models. For example, in 1977 his firm realized that mortgage extraction was providing a spending source that was not included in the current models.  Fueled by higher home prices it was also a vulnerable retardant if the home price boom ended.

Greenspan was one of the first to realize the value of financial assets in economic forecasting. As the financial sector grew in importance this moved to the center of many of his economic analysis and decisions.  Yet while he knew that the financial sector was subject to excesses he was sharply criticized for failing to act in a way that would have prevented the calamity of the 2007-09 bust.

There were several reasons.

Volcker was considered a hero for staying with painful and politically unpopular actions to bring the inflation of the 1970’s under control.  Following Volcker at the Fed, Greenspan remain stubbornly focused on managing inflation and protecting the difficult accomplishment of Volcker.

He became quite adept at digesting data and raising interest rates just enough to head off inflationary expectations while avoiding larger increases that would slow down the economy too much.

When his board viewed wages increasing and not matched by productivity they saw inflation on the horizon and recommended higher rates to avert the inevitable growth in inflation.  Alan saw this did not fit with frequent stories about the productivity gains CEOs of industry spoke.  Further diligent study saw that the industrial sector was reaping very strong productivity gains, but was offset by weak productivity gains in the service sector. This insight led him to a much smaller boost which proved correct.

Should the Fed act to prick financial asset bubbles?  This was a frequent question as his tenure spanned a stock bubble in 1987 and 1999, a bond bubble in 1993 and of the course the mortgage bubble which burst painfully immediately after his term. Financial bubbles often occurred in a low inflation environment and this further complicated his work. The Fed had a mission to fight inflation and unemployment; bubbles seemed at best a peripheral issue.

Greenspan remained focused on inflation because it was easier to assess than market bubbles.  He well understood that financial markets tended to excess but assumed self-discipline would generally yield better results than regulation. There was just too much information to process for most regulators to be able to assess effectively.

He assumed that the basics of the system were strong. When he learned of the accounting irregularities of Enron he was furious, understanding how the system depended on accurate accounting information. Still he understood that to supervise at this level would require a fivefold increase in the size of regulatory bodies, and weaknesses in the regulatory solution would remain.

He also assumed that in the event of a failure that would have serious economic consequences that the Fed would remain the lender of last result and could impose its power only when necessary.

For some this was a unacceptable inconsistency. The Fed would support failures, but not prick bubbles. The would protect firms on the downside, but not limit any risk on the upside.  This would encourage excess risk.

He also recognized the risk of a long string of successes at the Fed though the 1990s.  Success breeds confidence, confidence breeds complacency, and complacency breeds failure.  The confidence in the Fed to act to reduce downside risk became known as the Greenspan Put.  (A put is an option contract designed to profit from or protect from a market loss.)

Greenspan understood the risks of the insanely complicated financial and mortgage options. Even though he was warned about the unregulated derivatives by Brooksley Born in 1999, he understood how they helped availability and targeting of risks, and remained skeptical of regulatory solutions. He was alarmed at the massive size of the GSEs, Fannie Mae and Freddie Mac and the damage that would ensue from a housing bust.

He knew of the risks of bubbles but underestimated the size of the damage.

While he commanded interest rate and price stability quite well, this did not translate into financial stability. While we can see in hindsight the failures of reliance on self discipline, that does not mean that we understand the failures of excess regulation.

We have designed a fragile system that depends on regulation, rather than a robust system that requires less regulation.  The regulatory system stifles competition rather than encouraging it.  Fewer firms following the same rules may increase risk rather than mitigating it.  We also suffer from a fractured regulatory system.

We need fewer rules more firmly enforced.  Higher cap requirements for banks would reduce the need for bailouts, but Greenspan warned that this should vary greatly depending on the assets held.  Low cap requirements for mortgages from the regulatory agencies led banks to prefer these instruments and made the mortgage collapse more painful.

The Fed firewall, the lender of last result, is necessary for ultimate stability, but such bailouts should come at a stiff price.  Wage contracts and terms at the banks requiring such rescue should become null and void.