Picking Winners by Picking Losers

December 19th, 2008

It’s official.  The White House now picks winners.

After the Senate failed to agree to auto bailout legislation, President Bush today announced that the Treasury will lend $17.4 billion to GM and Chrysler (two will likely merge) to prevent their imminent collapse.  Though their collapse would have disastrous economic consequences in certain rustbelt states, the action marks yet another step in the unwitting construction of a national industrial policy.

Though the loans’ terms require the companies to restructure their operations drastically, the public should remain skeptical.  If politicians employ the specter of increased joblessness to justify such an unprecedented level of Federal intervention, these same reasons can be used to modify these loan terms to preclude substantive restructuring.  Any decent analysis of the auto industry will conclude that GM and Chrysler, in order to survive, must make several politically unpopular steps: they must lay-off employees right away to reduce production to meet lowered demand, they must produce cars people actually want to buy, and they must cut the wages and benefits of their new-hires and those of their  long-time employees and those of their retirees.

Now that public money is put at risk to assist two poorly run companies restructure, many will view this public investment as an excuse to demand the automakers not make the necessary job, pay and benefit cuts.  After all, why should laid-off employees pay taxes to fund their own layoffs?

What a shame that the Administration in its decision to pick winners has picked two losers.

Jesus à la Carte

December 10th, 2008

“Prop 8 - The Musical” by Jack Black

An rhythmic illustration of the troubles of à la carte scriptural interpretation.  One cannot solely cite one passage as the basis of a moral principle without conceding all other passages as equally valid.  To uphold one passage but not another must be the result of extra-scriptural motivations, e.g. prejudice.

An Inaugural Ruckus

December 9th, 2008
Accessible via the Library of Congress.

President's Levee, or All Creation Going to the White House, Washington, March 4, 1829, available via the Library of Congress.

The D.C. City Council voted to extend, just for the inauguration, the hours during which bars and clubs may serve alcohol.  Some city residents objected to the hastily passed bill and the mayor has qualified his support.  Nonetheless, the legislation will likely become law.

Cue the teetotalers!

Two members of the Senate, the body to which District residents are deprived the right to send representation, have objected to the plan.  Sens. Feinstein (D-CA) and Bennett (R-UT, surprise, surprise) fret like John Stuart Mill—who, coincidentally, served in the House of Commons—asserting “that the benefits of this emergency legislation, passed with little public notice, are far outweighed by its possible consequences.”

These Senators do no represent the District and should not horn-in on the city’s democracy.  Furthermore, the city cannot be expected to pass-up the expected windfall in tax revenue this inauguration will generate.  In these tough economic circumstances, who doesn’t want outside visitors to empty their pockets into one’s local treasury?

Ivory Tower Plutocracy

December 3rd, 2008

Conservatives love to accuse academia of a rampant liberal bias. While it is true that professors are overwhelmingly registered as Democrats and that college students and professors are the only people left in the free world who take Marxism seriously, academia’s actions tells a different story.

Yet another study, this one by the National Center for Public Policy and Higher Education, has found that college tuition costs are outpacing income growth. America’s universities are increasingly closing themselves off from America’s poorest.

For all the high-minded rhetoric of “social justice” the tuition bills seem to tell a different story.

Blaming Main Street

November 20th, 2008
The "South Sea Bubble" painting by Edward Matthew Ward hangs in the Tate.

South Sea Bubble, by Edward Matthew Ward, hangs in the Tate.

A widespread financial calamity in an election year lends itself more to the scapegoating of Wall Street than to the pursuit of a calm, reflective truth.  After all, the rich and powerful few are an easy target since their numbers are small and society does not deem them to be bearers of legitimate social grievances.

Harry Truman, who left office almost as unpopular as Pres. Bush, jokingly demanded a one-handed economist since all those presented to him offered nuanced explanations of causes and consequences.  Price floors ensured affordability on one hand but reduce the supply on the other hand.  Much of economic thought is a dialectic of trade-offs.  Consequently, economic decisions resemble the moral evaluations of a Utilitarian philosopher: the rightness (or wrongness) of an action depends on its net benefit after accounting for both sides of the equation.

Basic market theory is premised on the freedom of contract and the scarcity of goods and services desired.  Economic transactions require the complicity of more than one party.  When the buyer and seller willingly and knowingly accept a price, a rightful exchange occurs.

Since public opinion (and office-seekers pandering to public opinion) have leveled enough criticism at the masters of Wall Street, I will be among the few voices willing to suggest that it takes two to do the tango mercado.

I came across several writers of the past few weeks referring to Scottish journalist Charles Mackay’s book Extraordinary Popular Delusions and the Madness of Crowds.  This 1841 book recounts numerous popular follies, hoaxes, myths, and deceptions.  The first three chapters are popular among economists for their descriptions of three different early-modern economic bubbles: France’s Mississippi Company (Compagnie du Mississippi), the Netherlands’s Tuplipomania, and Britain’s South Sea Company.

The South Sea Company in Britain issued stock in the early 18th century promising vast riches in trade with the Spanish colonies in South America.  Never mind the fact that Spain, a strict mercantilist empire, had no desire for free trade with European competitors.  Speculators bought the company’s stock and drove the price to unrealistic heights.  The company’s revenues were a pittance compared to its share price, but the temptation of getting rich quick didn’t temper the public appetite one bit.

Finally, the stock price crashed, nearly wrecking the British financial system in its fall.

With the a lecturing tone, Mackay writes:

Public meetings were held in every considerable town of the empire, at which petitions were adopted, praying the vengeance of the Legislature upon the South-Sea directors, who, by their fraudulent practices, had brought the nation to the brink of ruin. Nobody seemed to imagine that the nation itself was as culpable as the South-Sea company. Nobody blamed the credulity and avarice of the people,—the degrading lust of gain, which had swallowed up every nobler quality in the national character, or the infatuation which had made the multitude run their heads with such frantic eagerness into the net held out for them by scheming projectors. These things were never mentioned. The people were a simple, honest, hard-working people, ruined by a gang of robbers, who were to be hanged, drawn, and quartered without mercy.

Likewise, neighborhoods of $800,000 McMansions sprang up in far-flung exurbs and few seriously questioned the true value of these homes, that, in sober times would have likely fetched half the price.  The builders sold at prices that buyers would tolerate and borrowers agreed to lending terms that banks would tolerate.  Never mind that the highly-leveraged houses people were buying were terribly overpriced—when credit is easy and housing prices continue to rise at unrealistic rates, the only restriction is personal caution.

When the housing prices plummeted (falling the fastest where they rose the fastest), one could hear the moans of those unwise buyers, who, not too long ago presumed perpetual price appreciation, threw caution into the wind and signed sales agreements for homes that were fundamentally overpriced.  Now they were stuck with white elephants caged in far-out cul-de-sacs of dubious intrinsic value.

The populist howls could be heard from Captiol Hill and it took little time for Members of Congress to pull out their compasses and point their fingers norteastward at Wall Street.

Aside from cases of predatory lending, the blame of unrealistic housing price inflation rests mutually with lenders and borrowers.  Those who bought houses at unrealistic prices abetted the price increases and did their part to inflate the bubble slightly more with each purchase. Even when the rent-versus-buy formulas clearly pointed in favor of renting, the desire to hitch one’s fortunes to soaring prices overruled better financial judgment.   Mortgage lenders repackaged their loans and passed them on to investors. What did it matter to them if what they were passing on wasn’t as strong as they had claimed? Likewise for borrowers: what would it matter if a house were overpriced if it could be sold quickly at an even more outrageous price?

Careless lending gleefully skipped hand-in-hand with careless borrowing. Now that prices are drifting downward to realistic and sustainable numbers, Mackay’s successors may end up chronicling the opening years of the twenty-first century as a time when the American Dream became reality, and, as many are now learning, a time when that reality was really a dream.

GM as Vehicle of Our Desires

November 18th, 2008

Here are three varying takes on the potential GM bailout.

On the Left, Jeffrey Sachs believes the Detroit automakers are indispensable employers in several rustbelt states whose economic decline would severely damage the rest of the national economy.  He fails to explain why this is or how Michigan, in economic decline for many years, didn’t manage to bring down the entire national economy with it.

Sachs also claims that there is huge global growth in auto purchases, but somehow assumes that foreigners, like Americans, would be reluctant to purchase vehicles from a bankruptcy-protected company.  That remains to be seen.

Sachs also partly absolves Detroit from the blame of the decades of mismanagement:

Some want to see the industry punished for its neglect of energy and environmental realities, but we should acknowledge that the SUV era reflected poor judgment across society. Yes, the industry ignored warnings about energy insecurity and climate, but so did the public and politicians.

Curiously absent from Sachs’s article is any mention of Toyota and Honda, two companies that invested in and started producing low-emissions and hybrid vehicles even when gas was significantly cheaper.  One wonders why GM, Ford, and Chrysler didn’t do the same.  Perhaps a lack of vision even when the increase of oil consumption was clearly outpacing the increase in supply?  One cannot so easily blame Detroit’s decline on “the system” when both Toyota and Honda are a part of the same system and not flirting with bankruptcy.

What is Sachs’s motive?  He seems intent on nationalizing Detroit automakers as a means of promoting various pet projects such a fuel cell cars, a new technology GM is within two years of producing—so they say.  If such a great revolution is within short reach, certainly there are private investors willing loan the company money for fuel cell vehicle production.  However, many doubt GM’s claims on the fuel cell Volt and Sachs wishes the government to act as an investment house for ideas that, if they were good on their own merits, could easily fetch private investment without the help of the Treasury.

Sachs mentions nary a word on the political realities the government money in any bailout.  Such funds would inevitably be directed to over-employ and over-pay people in politically powerful districts to produce cars that simply won’t sell.  State capitalism is not capitalism as any investment will inevitably be held hostage to various vocal political constituencies.

The Washington Post’s center-right economist Robert Samuelson lukewarmly advocates a bailout.  He asserts that a bankruptcy, even under Chapter 11, will damage the economy (again, unexplained).  However he also asserts that any bailout must not suit political goals (as Sachs would prefer).  Samuelson writes,

But neither does it make sense simply to heave taxpayers’ money at automakers. The goal is not to rescue the companies or workers; it’s to shore up the economy and improve the U.S. industry’s competitiveness. A bailout won’t succeed unless other things also happen.

He lists three things that must be done in order to make a bailout worthwhile to the taxpayers:

  1. GM must shutter plants it does not need.
  2. Workers’ lavish pay, benefits and pensions must be renegotiated to compete with other automakers.
  3. The government must mandate lower fuel consumption, either through mandated increases in efficiency or through hikes in gas taxes.

But the devil is in the details, Mr. Samuelson.  How exactly does Samuelson expect the a recipient of public funds to lay-off thousands of taxpayers?  GM will find it hard to make business decisions that hurt separate communities when their public investment itself was premised on saving “the economy.”  If you’re in a town whose GM plant is about to close, surely you’d think that the closure is not saving your economy.

Furthermore, just as the Bush administration retained close ties to its corporate backers, the Democrats now coming into power will remember who funded their ascent: Big Labor.  Samuelson quotes the UAW President as saying that a bailout is necessary “so that auto companies can meet their health-care obligations to more than 780,000 retirees and dependents.”

At least the UAW is honest in its assessment of GM.  General Motors is an HMO that, by the way, just so happens to produce a few automobiles on the side.

Finally, government mandates for higher fuel efficiency have always met strong opposition from both Detroit’s auto executive and the UAW, the latter fearing that such standards will put their members out of work.  It’s unlikely the UAW is suddenly going to drop its opposition in the name of the public interest.

On the Right, NYU Law School professor Michael Levine, a former airline chief (probably familiar with bankruptcy!), makes a compelling case that Chapter 11 is the most thorough way to free the company from various laws and labor agreements that have served to increase the industry’s employment while diminishing the industry’s efficiency.  The obstacles GM faces are intimidating and better overcome through bankruptcy protection than through political goodwill, which, let’s face it, often favors sound-byte populism to sound macroeconomics.

Levine lists several of the challenges:

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota’s.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM’s. But their expenses for benefits are a fraction of GM’s. GM is contractually required to support thousands of workers in the UAW’s “Jobs Bank” program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it’s not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities.

The political pressure to resist any change to this stifling system is too powerful and will inevitably ruin the solvency of any nationalized (and thus politicized) automaker.  If GM were to receive government money, what’s to stop it from demanding even more cash six months later?  Twelve months later? Two years later?

•••

Lots of people see GM and project onto it different ideals.  Some see a social service provider obligated to provide what the state does not and never did.  Others see it as an environmental and geopolitical silver bullet to reduce environmental strain and reduce the power of oil dictators.  Others see it nostalgically as a symbol of American manufacturing prowess.

A bankruptcy judge is best positioned to see GM in a different view—not GM as cradle-to-grave patriarch, not GM as Jonas Salk of the skies, not GM as Winston Churchill of oil politics, and not GM as Neil Armstrong.  A bankruptcy judge is best suited to view GM in a new light, i.e. as a car company.

Letter of Opposition to a Detroit Bailout

November 16th, 2008

My arguments against a Detroit bailout have finally coalesced into a cohesive letter to my Congressional delegation.

The Honorable [Ben Cardin/Barbara Mikulski/Christopher Van Hollen]
[United States Senate/House of Representatives]
Washington, DC

Dear [Sen. Cardin/Sen. Mikulski/Mr. Van Hollen],

I am writing to express my strong opposition to the use of any public money to bailout Detroit’s ever-ailing automakers.  The Detroit automakers have invited their own demise through a series of poor decisions to their own detriment, to the detriment of America’s security and to the detriment of the environment.  They must not be rewarded and taxpayers’ money must not be used for the three automakers who have done the most to harm the public good.  A government stake in these companies is bound to be politicized and an “auto czar” will thus fail to restructure these companies better than bankruptcy protection could.

First, this crisis in Detroit was foreseeable and of its own making.  For decades the Detroit automakers, at the behest of the United Auto Workers union, have paid their employees rates unimaginable elsewhere in the private sector.  Their workers have received wages and retirement benefits most Americans could only dream of.  Consequently, the Detroit automakers priced themselves into a disadvantaged position compared to foreign manufacturers who set up shop in the United States.  It is unfair to expect taxpayers, many of who do not receive the lavish pay and benefits of autoworkers, to bailout an overpaid industry.

Second, over the past fifteen years, the Detroit automakers have put much of their design, marketing, and sales focus into the production of SUVs and trucks, whose popularity was predicated on the low price of a volatile global commodity.  While Honda and Toyota were developing fuel-sipping hybrids, the Detroit automakers kept producing bigger and bigger vehicles.  Suddenly the price of oil jumped, public tastes turned away from fuel profligacy, and the Detroit business model crashed.  This was all foreseeable years ago.

Not only was Detroit’s focus on gas-guzzlers a careless business decision, but it hurt the public welfare in three ways:

  • By Burdening our Infrastructure: Detroit’s promotion of gas-guzzlers needlessly increased the weight and size of vehicles and thus their impact on the public roadways.
  • By Emboldening our Enemies: Detroit’s dreadful decline into fuel inefficiency increased America’s dependence on imported oil, much of which comes from countries hostile to the United States.  The auto industry had encouraged the transfer of America’s wealth to some of the nastiest regimes on earth, showering our enemies with petrodollars. There is little doubt that our insatiable demand for oil—a demand Detroit enabled and encouraged—has emboldened Messrs. Ahmadinejad, Putin, and Chávez, who have challenged our security while accepting our money.  Detroit has encouraged the American public to finance unwittingly the schemes of these global despots.
  • By Maximizing Environmental Harm:  Detroit’s peddling of gas-guzzlers has maximized the burden on the environment by promoting the most inefficient passenger vehicles available.  Detroit and the UAW have consistently lobbied Congress for the reduction of efficiency and emissions standards.

An industry that has consistently maximized public harm has minimized its claim to public support.

Furthermore, I have little confidence that a bailout would adequately protect the public investment, as any government control is bound to be politicized for every reason other than minimizing taxpayer losses.  Politically powerful delegations (e.g. from Michigan and Ohio) would find every way to force the rest of the nation to subsidize unnecessary jobs.  I would find it particularly offensive if the industry were to receive public money and continue to spend more money lobbying Congress for even more handouts.

A government bailout, by political circumstance, will end up throwing good money after bad.  These companies should, like every other careless company, face the consequences and file for Chapter 11 bankruptcy, which will allow them to reorganize under established court procedures, not under political expediency.

It is fair for public money to be spent retraining laid-off workers and to help soften the blow to towns dependent on soon-to-be-shut factories, but it is not fair to finance boondoggles to assemble cars that people don’t want to buy.

I am eager to hear your response and will keep an eye on this issue if it makes it to the floor.

Sincerely,
/s/

The Creative Destruction of Detroit

November 14th, 2008

Sen. Christopher Dodd is declaring any auto bailout dead for the remainder of this Congress.  GOP opposition appears to be too strong and the President has already announced his opposition.

In the New York Times, David Brooks rightly denounces any bailout as government meddling in the process of creative destruction.  He distinguishes between Detroit and Wall Street:

This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.

Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America. There already is a long line of lobbyists bidding for federal money. If Detroit gets money, then everyone would have a case. After all, are the employees of Circuit City or the newspaper industry inferior to the employees of Chrysler?

The Wall Street intervention also garnered much wider political support since it threatened the entire national (and international) economy.  Though a GM bankruptcy would certainly damage the ever-ailing state of Michigan and its close rustbelt neighbors, it is not a national threat.  Furthermore, banking is a fundamentally profitable business, but an epidemic of a lack of confidence brought sound institutions (momentarily) to the brink of failure.  The Big Three, however, have been hemorrhaging money for years.

Brooks and other have suggested a more sensible alternative: use government funds only to mitigate the social consequences of automaker bankruptcies, e.g. fund worker retraining programs and extend unemployment benefits for those downsized.  Letting the Detroit automakers file for Chapter 11 is not such a bad idea after all.  They can shred their existing labor contracts and shed unnecessary plants, models, and employees.

Foreign automakers who have set up shop in the South have shown that it is certianly possible to manufacture cars in America for a profit.  It is time for Detroit to emulate them.  As much as President-elect Obama promises changes, a government garantee is unlikely to force the Big Three to change.

Washington to Ford & GM: Drop Dead

November 12th, 2008
Blue-collar work with a white-collar pension will bankrupt an industry.

Blue-collar work with a white-collar pension will bankrupt an industry.

New York Times columnist Tom Friedman’s articles had become boringly repetitive during the waning years of the Bush Administration.  It was as though in every column he felt to urge to demand the administration adopt his various favored green policies, as though doing so would encounter no political opposition or economic costs.

Well.  Now Mr. Friedman is starting to make sense today.  Now that incoming leadership at both ends of Pennsylvania Avenue is dominantly Democratic and thus aligned with the interests of labor unions and archaic wage and pension scales, GM is now in the position of seeking a government bailout for its long-mismanaged state.  “The market is too tough!” Detroit cries.

Friedman has little patience:

How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it.

….

This included striking special deals with Congress that allowed the Detroit automakers to count the mileage of gas guzzlers as being more than they really were — provided they made some cars flex-fuel capable for ethanol. It included special offers of $1.99-a-gallon gasoline for a year to any customer who purchased a gas guzzler. And it included endless lobbying to block Congress from raising the miles-per-gallon requirements. The result was an industry that became brain dead.

Nothing typified this more than statements like those of Bob Lutz, G.M.’s vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.”

When Detroit auto companies claim that it is simply impossible to manufacture cars economically in North America, they further a notion belied by the mere presence of foreign car companies in Ontario and various southern U.S. states.

Honda in Ohio, Toyota in Kentucky, Mercedes and BMW in the south.  These foreign manufacturers prove that realistic pay scales and a model line that people actually want to buy does not a bankrupt automaker make!

Friedman notes:

Not every automaker is at death’s door. Look at this article that ran two weeks ago on autochannel.com: “ALLISTON, Ontario, Canada — Honda of Canada Mfg. officially opened its newest investment in Canada — a state-of-the art $154 million engine plant. The new facility will produce 200,000 fuel-efficient four-cylinder engines annually for Civic production in response to growing North American demand for vehicles that provide excellent fuel economy.”

The blame for this travesty not only belongs to the auto executives, but must be shared equally with the entire Michigan delegation in the House and Senate, virtually all of whom, year after year, voted however the Detroit automakers and unions instructed them to vote. That shielded General Motors, Ford and Chrysler from environmental concerns, mileage concerns and the full impact of global competition that could have forced Detroit to adapt long ago.

Indeed!  But with the Democratic Party ascendant in American politics, how much do you want to bet that auto bailouts will be coupled with dissolved labor contracts and stricter environmental standards?  Don’t hold your breath: the Michigan delegation and the UAW hold sway in the Democratic Party enough to scuttle any realistic restructuring of American automakers.

If the GM palliative bailout goes through, one must worry that American taxdollars will be put at risk with few concessions from Big Labor and no environmental standards to suit the public good.  We will be throwing good money after bad, enabling an incestuous, luxurious, and unrealistic GM-UAW corporate-social welfare contract, and we will prolong the inevitable death of auto dinosaurs that should have rightly perished long ago.

Equal Rights For Me, But Not For Thee

November 7th, 2008

Black voters in California voted overwhelmingly to elect Barack Obama—and to write discrimination into the state’s constitution.  The Post writes:

Any notion that Tuesday’s election represented a liberal juggernaut must overcome a detail from the voting booths of California: The same voters who turned out strongest for Barack Obama also drove a stake through the heart of same-sex marriage.

Indeed the New York Times reported earlier the worry among the proposition’s opponents that a high turn-out among California’s blacks would likely increase the measure’s passage while simultaneously ensuring Obama’s election.

Exit polls show that a bare majority of the state’s white voters voted for the measure, 53% of the state’s Latinos voters voted for the measure, and an astounding 70% of black voters voted for the measure.

One Californian discussed what drove her to vote to reduce the state’s civil rights commitment:

“I think it’s mainly because of the way we were brought up in the church; we don’t agree with it,” said Jasmine Jones, 25, who is black. “I’m not really the type that I wanted to stop people’s rights. But I still have my beliefs, and if I can vote my beliefs that’s what I’m going to do.

“God doesn’t approve it, so I don’t approve it. And I approve of Him.”

The overwhelming rejection of same-sex marriage by black voters was surprising and disappointing to gay rights advocates who had hoped that African Americans would empathize with their struggle.

The article continues with other quotations from people who wish to rework the state Constitution’s equal protection guarantees to suit their prejudices.  I’m sure many of these same people would decry any state measure that denied them rights or privileges solely on account of race, but it’s sad to see that they deem it acceptable to do the same regarding sex.

The proposition faces challenges in court (it was passed as an Amendment, though some argue that should be a Revision since it partly nullifies equal protection guarantees).

Nonetheless, Dr. King famously said that “the arc of history is long, but it bends toward justice.” Perhaps we shall overcome.

A New Ruling Elite

November 4th, 2008

David Brooks captures two elements of Obamania.  First is its close association with privilege:

Obama is not only a member of this temperate [post-boomer] generation, but of its most educated segment. He has lived nearly his entire adult life within a few miles of one or another of the country’s top 10 universities.

His upscale, post-boomer cohort has rallied behind him with unalloyed fervor. Major college newspapers have endorsed him at a rate of 63 to 1. The upscale educated class — from the universities, the media, the law and the financial centers — has financed his $600 million campaign (which relied on big-dollar donations even more heavily than George W. Bush’s 2004 effort). This cohort will soon become the ruling class.

Second is its unpreparedness in handling the nation’s challenges.  The ruling elite will come to face problems America has not seen for decades.  Deflating asset prices, higher unemployment, and lower tax revenues will challenge any new administration, no matter who wins tonight.  Can the young Obama supports, roused to the polls by promises of hope and change, fully comprehend the pending hard-nosed politicking?

Raised in prosperity, favored by genetics, these young meritocrats will have to govern in a period when the demands on the nation’s wealth outstrip the supply. They will grapple with the growing burdens of an aging society, rising health care costs and high energy prices. They will have to make up for the trillion-plus dollars the government will spend to avoid a deep recession. They will have to struggle to keep their promises to cut taxes, create an energy revolution, pass an expensive health care plan and all the rest.

….

We’re probably entering a period, in other words, in which smart young liberals meet a stone-cold scarcity that they do not seem to recognize or have a plan for.

Indeed, the boomers continue to haunt American politics, even if one of their representatives is not in the Oval Office.  Hope and change are good talking points, but health care plans cost money and most economists agree that raising taxes right now would further damage the economy.  We can’t hold hands to make tough decisions; some constituencies will inevitably lose and if Sen. Obama wins the election, it won’t take long before some of his young naifs are disillusioned with the messiness and required compromise of democratic politics.

A President Obama may claim to represent change, but as Brooks astutely concludes, “In an age of transition, the children are left to grapple with the burdens of their elders.”

Hobbesian Washington

November 2nd, 2008

Having abolished the death penalty decades ago, the only taking of lives in Washington occurs without the privilege of a trial.  Graphing the city’s homicides of 2007 is quite revealing.  Notice that the section of the city west of 16th Street NW suffered only two murders last years even though this section is the most densely populated part of the city.

Capitol Hill appears as an oasis of civility engulfed by death.  In some areas, though, the looks may be deceiving: the area just west of Brookland may look safe, but much of that land, just like Fort McNair along the southern stretch of the Potomac, is limited-access military land.  Large parks, such as Rock Creek Park in Northwest and Fort Dupont Park in Southeast are also murder-free, though probably due to their isolation.

Though savage violence is nothing new to the District, few are aware of how lopsided the geographic distribution of the violence is.

Is New York Gov. Patterson Anti-Obama?

October 30th, 2008

Democrat David Patterson become the governor of New York on the heels of Elliot Spitzer’s resignation over a sex scandal.  This unusual route to the governor’s mansion is just one of many unusual features of Gov. Patterson.  He has been among the few governors—Democrat or Republican— to publicly support the legalization of same-sex marriage, the third-rail of American politics.  Many politicians quietly support its legalization, but must pander to public opinion, which typically opposes the idea.

In addition to same-sex marriage we can add Ayn Rand to the list of Gov. Patterson’s unusual opinions.  The New York Post reports the governor’s admiration of Rand during his plea to Congress for a hand out:

Paterson cited Rand, a libertarian icon, and her best-seller “The Fountainhead,” noting the novel proclaimed that “our country, the greatest country in the world, was founded on the basis of individuals, where people were encouraged to adventure, not to be complacent; to be daring, not dormant; to prosper, not to plunder.”

Is Gov. Patterson a Democrat in name only?  Even few Republicans publicly cite Ayn Rand, as she is considered on the far right of economic thought.  In another sign of the governor’s unusual tilt, it seems he’s also against the redistribution of wealth from rich to poor:

“I am not here to beg. I am here to say New York doesn’t need a handout - we need a hand back,” he added, noting that New Yorkers pay far more in taxes to Washington than they get in return.

But New York is a rich state and, according to his fellow partisans, should be sharing its wealth with poorer (often redder) states.  Not only does this philosophical difference put him at odds with Sen. Obama, but so does his opposition to any tax increase:

“We have agreed that any taxation right now would only exacerbate the problem,” Paterson said.

“If anything, we need to lower taxes for some of our businesses that would hope to create jobs, so that hundreds of thousands of New Yorkers don’t leave the state, as they do every year, for other areas where the life quality is better.”

So Gov. Patterson also opposes raising taxes since it would hurt economic recovery.  Being the governor of New York puts him particularly at odds with Sen. Obama, since a disproportionate number of New Yorkers are high earners and would thus end up paying more in taxes under an Obama tax plan.

In summary, Gov. Patterson

  • cites a Randian admiration of economic risk.
  • believes wealth redistribution from rich to poor is unfair.
  • believes that no taxes should be raised at this point.

David Patterson has unwittingly endorsed John McCain.

Our Faith in Reason

October 20th, 2008

Michele Houellebecq’s 1998 novel Les Particules élémentaires (published in English in the U.S. as The Elementary Particles) was hailed as modern nihilistic work, and Houellebecq (pronounced well-BECK) is lauded as a Camus of the late-twentieth century.

Houellebecq punctuates the fictional story of two French half-brothers with insights into modern Western society, which, in Houellebecq’s view, is vapid, sad, and materialistic.  Among his pessimistic (and largely dubious) interpretations of modern decline, Houellebecq does deliver some much-deserved criticism.

He points rightly to the West’s dogmatic adherence to rationalism, one of the key components of the modern era and a principle of all Enlightenment thought on which much of the current political and social order is based.  We love rationality so much that we are willing to sacrifice everything for it:

There is no power in the world—economic, political, religious or social—that can compete with rational certainty. Western society is interested beyond all measure in philosophy and politics, and the most vicious, ridiculous conflicts have been about philosophy and politics; it has also a passionate love affair with literature and the arts, but nothing in its history has been as important as the need for rational certainty. The West has sacrificed everything to this need: religion, happiness, hope—and, finally, it’s own life.

Yes, this prognosis is a tad exaggerated, but even when we are irrational, we deceive ourselves into believing we are rational.  Even when we admit our irrationality, we wish it were otherwise.

As for Christianity, Houellebecq thinks Europe’s future will be even more post-Christian than its present:

I remember a boy in the première [in grade school] when I was sixteen. He was very confused, very tortured. His family were rich, extremely traditional; and actually he completely accepted their values. One day when we were talking he said to me, ‘The value of any religion depends on the quality of the moral system founded upon it.’ I stood there, speechless with surprise and admiration.  I didn’t know know if he’d come to the conclusion by himself, or whether he’d read it in a book somewhere; all I know is that it impressed me deeply.  I’ve been thinking about it for forty years, and now I think he was wrong.  It seems impossible to me to think of religion from a purely moral standpoint… I’ve come to believe that religions are basically an attempt to explain the world; and no attempt to explain the world can survive if it clashes with our need for rational certainty.

Houellebecq too easily upholds the popular dichotemy of Christanity and reason opposed.  There are many interpretations of the relationship between the two, and, more generally, of the relationship between faith and reason.  Christian reason does require a foundation of unreasoned faith, but further scriptural and spiritual meditations can employ reason (see Saints Augustine and Aquinas).  Surely there are the Christian mystics and obscurantists, but the philosophers outnumber them.

Houellebecq, however, is sure that in the end, Christianity is doomed.  Thus spake Houellebecq.

Racism

October 18th, 2008

There I said it.

Admittedly Al Jazeera’s reporting has a bias just as all media do, but the fact that the reporter found it so easy to find such sentiments is worrying.  Let us hope such sentiments exist only on the fringe.