Saturday, December 26, 2009

THE GOP’S FOUR TRUTHS AND THE ECONOMICS OF REALITY

For longer than my lifetime, the Republican Party has advocated Four Truths: small government, balanced budgets, low taxes, and free markets. Ironically, if it had made its wishes come true while it had one-party rule from 2001 to 2007, the federal government would have had neither power nor pelf to save a collapsing economy largely shaped by GOP desires to reduce regulatory oversight and enforcement. Whether any of these Four Truths hold true today is problematic.

The signal development of recent economic history has been economic globalization and the concomitant obsolescence of economic systems depending on insularity or protection. Post-war hubris blinded many Americans to these changing circumstances; they presumed that our economic growth throughout the century and especially after our victory over Germany and Japan forever vindicated the American nexus of laissez-faire government and free-market capitalism. They failed to grasp that reconstruction enabled those countries to modernize their industries, make them more efficient, and offer less expensive products. They did not realize that our industrial technologies had become conventional over time and adapted and improved in other countries, especially those on the western Pacific Rim. They did not recognize that advanced technologies like computers and telecommunications revolutionized the distribution of technological competence, and industrial and post-industrial capabilities.

Slowly, reluctantly, and contrary to the century-old orthodoxy of the Four Truths, the American business community has come to recognize and accept that the growth of competitive, foreign corporations has made government involvement in foreign as well as domestic economies necessary. Until then, business regarded government as the benefactor of first resort, which gave them land, water rights, subsidies, and tax breaks. Such involvement, traditionally and theoretically undesirable, remains politically useful to this community as a way of arguing for continued economic advantage. Thus, the GOP continues to advocate the Four Truths long after they require adaptation to the worldwide economic order. Worse, it continues to commend them to those who have little understanding of the complexities of this new economy or who live in ideological denial or socio-political nostalgia and want, according to their dreams and desires, a restoration of an economic and political regime no longer possible.

Unfortunately, politicians—lawyers, mainly—are usually temperamentally cautious, poorly schooled in economics and science, and thus tardy and reluctant to appreciate the fact of change and the need for reform. Even Obama, who knows much more than most politicians and promised transformational government, has proven to be a one-man inertial guidance system resistant to aggressive and effective actions which might alter the course of this country into the right direction.

Indeed, Obama’s economic policies are incoherent, not to say, unintelligible—which makes the charge of reckless spending an entirely plausible one to many. A trillion to the banks, a trillion for a stimulus—big bucks for all and very little show for it. The reforms of the financial system necessary to prevent another economic meltdown like the one which we are still living through have been precluded by the unconditioned distribution of funds to the banks, and by tolerance of the too-big-to-fail financial institutions now fewer in number but larger in size. The result is an increased risk to the nation from those who now know that they can indulge in high-risk gambles in reliance on a government—read: taxpayer—bailout. Some free market. Meanwhile, bureaucratic inertia and red tape have tied up funds for the stimulus and thus released them too slowly to do much good after much harm had occurred. The weak economy continues to threaten new or continued unemployment and housing foreclosures.

In such circumstances, the political differences captured in the facile and foolish dichotomy of capitalism and socialism are not only unproductive, but also counter-productive. America has a mixed economy. What it requires is not an “unmixing,” a retreat to, or advance toward, a “pure” economy, but a framework for appropriate relationships between government and business. Overbearing control or hostile opposition must be replaced by cooperative and constructive efforts to establish beneficial arrangements for both government and business. The government’s obligation is not to pick favorites, but to make a guided market serve buyers and sellers fairly. Business’s obligation is to accept that regulatory guidance serves its larger and longer-term interests. Taking sides, as both Democrats and Republicans are doing, does not serve the country’s long-term interests.

I confess that the preceding paragraph is all pieties and platitudes, too general to suggest specific devices for implementation in the present political climate. It hardly matters. For, instead of a breakout from the destructive dynamics of the recent past, we are likely to have a total political breakdown. No matter how the politics of the next midterm elections play out—who wins, who loses, and how many wins and losses occur—I have no reason to believe that anything in Washington will change. Republican gains, likely in any event and large if Obama’s approval rating continues below 50 percent, will make Republicans no less, and probably more (if more is possible), truculent than they have been. In such a setting of political hostilities, political dialogue to address the country’s economic and political needs is unlikely. More bipartisan demagoguery will simply leave the country adrift, its people angry or demoralized, and its political and economic systems endangered at a time when it needs clear direction and resolute efforts to address its deteriorating condition and determined competition.

I hardly dare to wish you a Happy New Year or to hope for one. Still, all the best to you in 2010.

Friday, December 11, 2009

WHAT TO DO ABOUT “ALL MEN ARE CREATED EQUAL”

The Declaration of Independence’s claim that certain truths are “self-evident” is a nice philosophical problem. A practical problem, quite apart from its latter-day political incorrectness in using “all men” to refer to all humans, is the extension of these truths to all humans.

I believe that Jefferson knew that, despite contemporary thought and feeling, he was laying the foundation for an expansion of rights beyond the original franchise, which extended full citizenship only to white men meeting a property qualification. Cynics might say that he and his co-signers thought that such lofty talk would inspire support for a revolution but would soon be forgotten. Indeed, 12 years later, the Constitutional Convention quantified the politics of contemporary racism and sexism by pointedly defining any black as counting three-fifths of any white man and silently dismissing any woman and any indigenous person as counting for nothing. Although never removing those insults to equality and freedom, we have since adopted Constitutional amendments and interpretations which establish racial, gender, and ethnic equality. Slowly and fitfully, we are moving toward equality of gender orientation.

I cannot think of a good reason for not arriving there. The logic of equality and freedom—which, in the Constitution, mean political equality and freedom—makes it a matter of indifference whether gays, lesbians, and others are so by nature or nurture. They are what they are, and it is not the government’s proper political role to deny them the rights of citizens because of legislation based on moral or religious beliefs about what they and their relationships should be.

But when it comes to differences of culture or lifestyle, we do only a marginally better job separating politics and morals or religion—that is, church and state—than Iranian mullahs and Taliban fanatics do. From the Puritan theocracy in Massachusetts to blue-nose Prohibition, legislating morals or religion has been as American as apple pie.

As some of our elders acted, so some of our “elders” still advocate. Despite ritualistic and theological differences, the Catholic Church and some fundamentalist Protestant sects seek to impose their moral beliefs, not only on their members, but also on everyone else, especially in matters pertaining to sexual orientation and reproduction. These beliefs may be acceptable within the context of their faith communities, but they are inappropriate to legislate within the context of a democratic polity since they would override its principles of equality and freedom. But such believers think that freedom is merely a secular, thus secondary, not a salvational, condition.

The same consideration applies to foreign policy. Does the American creed that all people are “created equal” require that we do something about it elsewhere? Does our belief in the universality of equality and freedom require that other countries accept our beliefs and or risk penalty or punishment if they do not?

When Bush shifted the rationale for the Iraq war from eliminating what turned out to be non-existent threat of weapons of mass destruction, he substituted another: freedom in Iraq and, he hoped by its example, in the rest of the Middle East. I agree with Bush that many people in many places desire freedom, but I question whether it is America’s job to bring it to them or impose it on them. After all, they are not likely to enjoy or even value political freedom if we force it upon them, especially if it undermines or violates traditional cultural values and social structures.

Because many Americans accept women’s equality, we proclaim that worthy cause throughout the world. But many societies, especially in the third world, officially reject it. How much should we push, or how much should we let international influences and internal dynamics pull, such societies toward something alien to them and unasked for? Muslims have traditionally—I do not say correctly as a matter of interpretation of Islam’s sacred texts—subordinated women and denied them rights and privileges equal to those of men, yet some Islamic states are slowly enlarging women’s opportunities in practice, if not doctrine.

Our efforts to accelerate change may be counter-productive, even self-defeating. For instance, some months ago, Secretary of State Clinton offered as a good reason to fight the Taliban in Afghanistan its opposition to women’s equality. The cause may be good, but the effect would be bad. For neither the Taliban, the Islamic priesthood of imams, nor the Afghan populace accepts gender equality. Local support for foreign troops is hard enough to secure without making it harder by linking our campaign against the Taliban to the cause of women’s equality, and thus risking setting both campaign and cause back. Indeed, Afghans would likely perceive this cause for us as part of a crusade against Islam—no way to win friends and influence people. Of late, on this cause, Clinton has been wise to remain silent.

In countries with different cultures and clocks, perhaps our policies should respect their equality and freedom among nations by going slow as the better way of making haste toward desired results in the long run. So, too, at home. We had enough trouble ending segregation with “all deliberate speed” despite the advantages of a culture with a Constitutional basis for political change. Attempting to go faster by using busing to end segregation probably set back racial progress even in parts of the country in which busing did not take place. Continuing voter rejection of hurried efforts to legislate equality of gender orientation suggests that hares still lose to tortoises.