Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

30 December 2011

George Washington and Vladimir Putin


[I hate to upstage my novel posts on Antichrists and the New York Times’ transparently yellow push for war. But this one already has waited too long after the Russian Spring.]

When I was young, Thomas Jefferson was my favorite Founder. I’m a writer’s son, and words matter to me. His glowing phrases, including “all men are created equal,” enchanted me just as they had ennobled our new nation.

But as a man, Jefferson was hardly a role model, let alone for equality. He was landed gentry, who lived for his time in extreme opulence, far beyond his means. He was a plutocrat of his day.

Despite giving us those glowing words, Jefferson kept slaves all his life. He never freed any but Sally Hemmings and her children, who we now know were his mistress and his own offspring. When he died, his great estate, his huge library, and his slaves were sold off to pay his enormous debts. Jefferson embodied the self-regard and horrible contradictions of our Southern aristocracy that still exist today.

George Washington I always took for granted. He was a man of great character and courage but few words, even fewer of which were memorable. About all we recall from his words today is his warning to beware foreign entanglements. (The famous story about the cherry tree is now known to be a myth.)

Washington survives in deeds, not words. He was a physical giant for his time—tall, immensely strong, and later full of courage and perseverance as our leading soldier.

He was not a particularly gifted strategist. Nor had he any formal military training before taking command of our rag-tag troops. During our Revolutionary War, he left a small trail in Brooklyn unguarded. That mistake cost our forces New York City and nearly the war.

But Washington was a good leader and motivator of men, always in the thick of battle and leading the way. Our six-year War of Independence was our longest until Vietnam. Through luck and learning, he eventually led his ill-trained, ill-equipped and generally miserable troops to a miraculous victory over the Western world’s then mightiest imperial power.

Washington and his officers all held a very realistic fear of being hanged as traitors if they had lost. Cynics might say that fear motivated their legendary perseverance. But without it we would not have become a nation.

Among Washington’s greatest traits were modesty and humility. His sheer height, strength, size and dignity attracted natural obedience. After the War, so did his perseverance, motivational skill, and success in battle. Like Caesar in Shakespeare’s famous play, he could have had it all. But like the fictional Caesar, he thrice refused the offered crown.

Washington and Jefferson were both Southern landed gentry. But Washington was among the leaders of the movement to outlaw aristocracy in our Constitution. When the time came to name our supreme leader, he pushed strongly against bombastic titles and for a simple, democratic, “Mr. President.”

Most of all, Washington stepped down. After two terms as president, he could easily have had a third. His party and many of his colleagues begged him to remain in office.

He declined. It was time, he thought, to let others continue the work he had begun. And he wanted to establish a firm and healthy precedent for term limits, long before they had the force of law. A presidency for life, he thought, resembled nothing so much as monarchy, even without the title.

Washington’s healthy custom of term limits lasted a century and a half, without legal force. It held until our greatest trials since our own Civil War—the Great Depression and two mighty, globe-straddling military tyrannies. Only then did we rely on FDR for four terms, during the last of which he died exhausted. Later we put Washington’s wise term limits into our Constitution.

As Vladimir Putin juggles Russian constitutional law like so many wooden matryoshki to stay in power, it is impossible not to make invidious comparisons.

I am no Putin basher. I have studied the Russian language for exactly fifty years now. In 1993, I spent four months in Moscow as a Fulbright Fellow teaching law, in Russian, at the same educational institute that trained Putin himself. While not a recognized Russian “expert,” I know Russia far better than most Americans.

With that knowledge, I have great respect for what Putin has accomplished. He consummated Yeltsin’s incipient (and often drunken) revolution. He purged Russia of the scourge of Communism without war, bloodshed or tragic misuse of nuclear weapons. He finished removing Stalin’s barbed-wire compartments, re-established peaceful trade with Germany, and made the Russian-German corridor one of the world’s most lucrative trade routes.

While keeping tight reins on government and so suppressing other, more dangerous strongmen, Putin gave Russia’s people more personal freedom and prosperity than they had ever known. And he used Russia’s natural resources, principally oil, to reconstruct a semblance of a normal economy that seventy years of fictional economic theory had destroyed.

For all these things, Putin deserves the gratitude of the Russian people and (given Russia’s huge arsenal of nuclear weapons) the world. In terms of sheer accomplishment, he is one of the most admirable leaders on the world stage today.

But people do not age like wine. They age like eggs.

Our FDR was a rare exception. Crippled by polio in his prime, he had little to live for but his people and his nation.

FDR literally gave himself to us. Watching old newsreels of his four-term presidency is like watching one of those horror movies in which fictional zombies steal people’s souls. The cares and stress of our most consequential presidency literally sucked the life out of him. And in the end, he failed adequately to anticipate the menace of militant, international Communism—a task that fell suddenly to Harry Truman when he died.

Not one leader in a million could duplicate FDR’s feat. Maybe you had to have suffered his unique disability even to try.

Putin obviously is not the one. As a young, visionary leader, he once spoke before the Bundestag—in fluent German!—about a peaceful, prosperous realm from the Atlantic to the Urals. Now he has become cynical and vulgar. He makes crude jokes, in public, about spit for us Yanks and condoms for his own struggling people.

These jokes are not just signs of a puerile intellect once disguised by great seriousness and dedication. They are signs of an increasing cynicism, loss of idealism and arrogance of power. They are whiffs of hydrogen sulfide from the rotting eggs that most of us become as we age.

Putin now has a choice. He’s about where Mao was after unifying China and resurrecting it from the devastation of world war. He can step down and let other, newer, fresher people build on what he has done. Or, like Mao, he can create a cult of personality, prolong his personal power, and set his nation and his people back decades. If he goes down that awful path, he could even become another Antichrist.

Putin seems to know better than that. Unlike nearly all Antichrists, already he has installed a potential successor. Dmitriy Medvedev is a modest, reasonable lawyer with an apparently real penchant for modernity and the rule of law. At the least, he could make a good transitional figure. He could continue slow progress toward democracy while political parties in Russia, which are only now beginning, sort themselves out.

But Putin’s personal choice is clear and stark. He can have his bright legacy or continue his personal power. He can’t do both. The delusion that he—or any man—is indispensable will only hurt Russia.

The choice Putin makes will fix the Russian people’s immediate future. It will mold their best chance soon to shed the serfdom they have known now for a thousand years. For their sake and for ours, may he make the same wise choice that Washington once made.

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28 December 2011

The Real Antichrists


[For a brief comment on yellow journalism and Iran’s threat to block the Strait of Hormuz, click here.]

Now that I’ve revealed who I am, readers good at digging on the Internet will have discovered that I’m the son of a successful storyteller. Maybe that explains my fascination with myth, despite a lifelong immersion in fact-based careers: science, engineering and law.

Myth’s enormous power for good and for ill intrigues me. The older I get, the more I believe that culture matters more than anything, including law and science. That’s one reason why I’ve written so many posts about American culture.

Culture makes law, not vice versa. And the more I think about culture, the more I believe it depends on myth. To rationalists like me, the Bible is just one long and successful myth. And it’s still a global best-seller after two millennia.

When I was growing up, writers and producers in Hollywood, most of whom were Jewish, made American myths on the big screen. I knew of them through my father. Many were refugees (or sons of refugees) from war-torn Europe or (later) from Nazism.

To a man, they loved America. They were immensely grateful just to be here, and not where they had been or their parents had come from. They painted us as a just, egalitarian society in which everyone got a fair shake eventually, and government and the law were on the common person’s side.

Of course that was a just a myth. Every non-white, female and foreign-born person of my age knows how hard we have struggled to make that myth real and how far we still have to go. But that myth fixed our society’s direction for most of my lifetime.

Today our big myths are quite different. They teach that “government is the problem” and “winner take all” will make us strong.

What a difference from my youth! Just ask yourself how many films you’ve seen in the last ten years in which a bumbling or downright evil military, FBI, or CIA was the villain, and a rogue individual cop or Green Beret with supernatural skill the hero. Such myths would have been inconceivable in the last century, when organized American government, industrial might and military power saved the world from Nazism and militant Communism.

Running a capitalist society without strong government is like running a footrace with one leg cut off. We are now in the process of discovering that truth, as formerly “backward” societies like Brazil, China and India overtake us. Even as I write this, Europe is struggling to make its government stronger, while we are still in the process of dismantling ours.

But I digress. There is a another, much darker myth abroad in the land. Today it lives mainly in an extremist underground. But properly understood and applied, it has the potential to improve the human condition. I speak of the myth of the “Antichrist.”

As a Jew and an agnostic, I don’t for a moment believe in the myth in its traditional, Christian religious raiment. I’m not an apocalyptic. As I’ve written, I’m glad we avoided earthly Armageddon in 1962, and I hope we never come as close again.

But the myth of the Antichrist is a powerful, seductive metaphor. We all know people—mostly men—who smile and put their arms around you while they stab you in the back—figuratively or literally—at the first opportunity. Sadly, most adults have met such a person at least once in their lives. When it first happens to you, it’s an eye-opening experience, one you never forget.

An Antichrist is just such a person, but one whose evil and treachery affect a whole society. In extreme cases they can ruin the whole Earth.

An Antichrist plays the common people’s friend but secretly pulls the rug out from under them, for his own or cronies’ benefit, or in pursuit of some abstract ideology or absolute power. He spouts lofty phrases of good but promotes evil. He is in league with the Devil, or—in the extreme case—is the Devil himself. His hegemony (if he achieve it) could turn the whole Earth to the Dark Side.

The traditional myth paints the Antichrist as singular. But students of history know there have been many. We all can recite the names of several just from the last century and our own time: Hitler, Stalin, Mao, Pol Pot, the ruling Kims of North Korea, the late Muammar Gaddafi, the Assad family of Syria, and Robert Mugabe. Vladimir Putin may be in the process of becoming one of them if he doesn’t soon step down.

Many of these Antichrists—notably Stalin and Mao—fit the myth almost perfectly. At first, they unified and strengthened their respective countries. They bid to raise the common person up from poverty and ignorance, at least in theory. Spouting stirring phrases of Communism, they goaded their people toward what they promised would be a new and better society. Stalin even promised a new and better human condition, a new “Soviet Man.”

Then, personifying Lord Acton’s truth that absolute power corrupts absolutely, they nearly destroyed their countries. Stalin did it with the Terror, the Gulags and his part in the mutually mindless Cold War. Mao did it with the Great Leap Forward and the Red Guards, plus the personal atrocities described by his doctor in his famous biography. Both did it with absolute centralization of power—anathema to any modern, diverse, multi-ethnic society built on business, technology and science.

Russians today still revere Stalin as a national hero and a savior of Mother Russia from German fascism. They do so although, analyzed rationally, almost every one of his policies (let alone his numerous paranoid acts) made Russia weaker and a less desirable place to live. Mao’s record in China is similar, at least after he unified it.

That’s what makes the myth of the Antichrist so powerful. It’s not the Evil alone: that’s pedestrian and mundane, an apparently irreducible part of human nature. What makes an Antichrist is the ability for a time—and sometimes a long time—to impersonate God or Christ while doing the Devil’s work. Just such men wrote the darkest parts of human history.

We know there have been Antichrists at work in the world at large. Until recently, nearly all of them have been abroad, not here at home.

But what about among us? What about the West? Do we have them, too?

Yes, we do. I would submit one name above all. And no, it’s not Dubya. He was far too much an innocent blunderer. If the truth be told, he merely completed a process set in motion by Ronald Reagan and by useful idiots like Newt Gingrich, Dick Armey and Phil Gramm. Even Bill Clinton was an unwitting accomplice to the financial deregulation that is busily destroying the West’s economies. And now Dubya is suffering a punishment to fit the crime: silently watching the country he sincerely loves decline, perhaps irrevocably, due in large measure to his own ineptness.

Nor is Karl Rove an Antichrist. He is a mere handmaiden of Evil. He missed half the myth: the veneer of good. He never pretended to have any goal but serving his masters by pandering to the basest human instincts, tribalism above all. In order to be an Antichrist, you have to have a plausible veneer of good. There is no way that Karl Rove could impersonate Christ.

No, my nominee for our Western Antichrist is someone whom most people seldom mention, except lately. He’s an old man now. His iron hand on his vast empire is weakening. But he has done more to destroy Western culture (and capitalism itself!) over the last two generations than anyone else I can name. He’s Rupert Murdoch.

Rupert fits the myth of the Antichrist almost perfectly. With his sensationalism, his gossip, his propaganda, and his daily “tit page” in the English tabloid The Sun, he put his arm around the common man and smiled. He said (and says), in effect, “I’ll give you what you want; I’ll make the ‘news’ interesting for you. And I’ll do it even if you have no interest in politics, business or anything serious.”

That’s how Rupert made himself enormously rich. He panders to humanity’s basest instincts. He serves gossip as policy, invasion of privacy as news, schadenfreude at famous people’s troubles and illnesses, and every possible disaster, foible and defect in industry and politics, no matter how minor or irrelevant. His propaganda organs make heroes of clowns like Sarah Palin, Michele Bachmann, and Rick Perry. Then they vilify, marginalize or destroy serious, dedicated people like the President, Jon Huntsman and Elizabeth Warren.

But while he’s titillating and entertaining us, Rupert has ulterior motives. He’s inculcating in us an entire world view—a gigantic myth—that is sheer fiction. He’s teaching us that democratic governments—the forces that make capitalism tolerable for the non-rich—are the common person’s enemy.

The kindly old man serving us those lovely tits daily is actually helping his cronies steal our substance, pollute our waters, poison our fish, and make the Earth’s skies look like Dickensian London. He’s working hard to return us to the hard and unenlightened times that Dickens described so well in his classics, with beggars on the streets and common folk dependent on largesse from their “betters.”

Even the few positive stories Rupert serves us are all designed to promote his own and his friends’ interests, as he sees them. He especially favors gas-driven cars (the bigger and faster the better) and fossil fuels—hence his constant denial of climate change, six years after the most prestigious bodies in the American scientific establishment confirmed it.

In Fox, Rupert has created human history’s greatest and most powerful propaganda machine. If Hitler, Goebbels, Stalin, and Mao were still alive, they could only sigh with envy at what he has wrought. None of them was smart enough to make propaganda such titillating entertainment, such fun. And none was audacious enough to try to inculcate in their victims an entire, internally consistent fictional universe, let alone throw large segments of society into a state of collective delusion.

In those feats, Rupert has become a myth-maker far more influential than Hollywood at its height. But his myths are leading us toward a very different and much darker society than the uplifting myths of my youth.

I have written a whole essay on how Rupert subverted and destroyed the Wall Street Journal, so I won’t belabor the point here. Suffice it to say that he took what was once America’s leading business newspaper (at least outside its editorial pages) and converted it into a tawdry and transparent propaganda organ, a sort of Pravda of extremist capitalism. He even took a page from the old Soviet playbook. Instead of calling his propaganda machine “truth” (pravda in Russian), he calls it “fair and balanced.” (If you actually tell the truth, you don’t have to say so; people will know. Only liars tout their own truth telling.)

Like the EU, Fox is something new under the Sun. The closest thing the human race has ever had was the emperors’ “bread and circuses” in ancient Rome as it declined. But the bread and circuses had nothing like the focus, power, nuance and dogmatic consistency of Fox. You would have to look to the Nazis or Soviets for comparison there.

No, Rupert is one of a kind. At first he seemed much like William Randolph Hearst from the last century—a man who practically single-handedly ginned up his own needless war (in Cuba and the Philippines).

But Rupert has outdone Hearst in all but Hearst’s obscenely opulent castle at San Simeon. Where Hearst was American only, Rupert sits astride most of the English speaking world, dominating media markets in his native Australia, the UK and the US. He’s now moving into India. Where Hearst was just a particularly powerful voice among many in a rich, highly competitive media market, Rupert controls one of a dying few. In most markets, his is by far the dominant voice speaking to the common person.

Most of all, Rupert has achieved a level of direct political influence that Hearst never did. The best measure of that influence is our wars in Iraq and Afghanistan, each of which Rupert supported and helped instigate, and each of which has been infinitely larger, more costly and less effective than the Spanish-American War that Hearst fomented. Rupert is indeed the Dark Prince whispering in the ears of global leaders.

With his knighthood and all the rest, Rupert has made the Dark Side respectable, just like the Antichrist. Whoever thought of granting him knighthood and American citizenship—by special act of Congress—should forever twist in purgatory.

He is a boy who, figuratively speaking, never stopped pulling the wings off flies. Today, even in his dotage, he is strong enough to pull the legs off presidents and prime ministers. One can only hope that the recent scandals and his advancing age presage the downfall of his Evil Empire.

But don’t for a moment underestimate him, even now. An Antichrist’s work is never done.

Footnote 1: No, I’m not a prude. I enjoy seeing breasts as much as any male. But their proper place in media is in art, appropriate movies and even specialized erotic publications like Playboy and Hustler. Tits are not news. Like gossip, their display in news media debases the media’s prime function of telling people what they need to know to survive and prosper in an impossibly complex and ornery world. I mention tits here only because they provide a striking visual image of Rupert’s modus operandi: distract, delude, and destroy.

Footnote 2. Sorry. I can’t bring myself to use the word “news” in the same sentence with Fox. And I can no longer use the cutesy term “Faux News” or my own “Fox Propaganda.” They trivialize the Antichrist. So I’ll just use “Fox,” which, like “the Antichrist” is sui generis and defies easy marginalization. It also reminds us that, so far, this particular Antichrist has outfoxed all the better angels of our nature.

Our Banks, Our Media, Oil and War

You would hope that the Antichrist Rupert and the greedy and stupid bankers who are doing their best to create a second Great Depression would just shut up.

But no, they still want to be heard. They now are trying to goad our exhausted military and population into a new war with Iran. And the New York Times—once a responsible newspaper—has apparently taken up the cudgel.

The reasons appear today in an article ostensibly on oil prices—a classic example of fuzzy thinking. The Times does acknowledge what has been obvious for at least 3.4 years: except for fluctuations due to recessions and maybe a new depression, the price of oil is going nowhere but steadily up. Yet the article leads with the absurd notion that a recent threat of Iran to block the Strait of Hormuz to oil traffic is to blame.

After a two-sentence lead on rising oil prices, the Times’ second paragraph states the thesis in a single sentence:
With Iran threatening to cut off about a fifth of the world’s supply of oil by closing the Strait of Hormuz and unrest in Iraq [also] endangering [the world’s oil supply] . . ., financial analysts say” that global crude oil prices “will average from $100 to $120 in 2012.”

Nowhere does it mention who these unnamed “financial analysts” are. If they are indeed financial analysts, and not energy analysts, they are probably the same greedy morons who insist that further massive gambling at our “too big to fail” casinos is essential to advance our failing economy.

The Times does report the real reasons for rising oil prices later in the same article. It notes that “Markets seemed to shrug off Iran’s threats.” Even later, on the second on-line page, it notes that economists expect oil prices to stay high “because global demand for oil—especially diesel—is escalating and outstripping supply.”

Duh! Using Economics 1A and simple arithmetic, this blogger has repeatedly predicted as much for the last 3.4 years. (See 1, 2 and 3). Sage oil analysts have been predicting Peak Oil for decades.

Now that Peak Oil has arrived—as confirmed by Exxon Mobil’s deeds, not just words— prices are going steadily up, except for brief drops occasioned by economic crashes. The reason is simple: China and India, which account for one-third of the world’s population, are just now reaching the exponential part of their middle-class growth and consequent car use. And the rest of the developing world is hard on their heels.

But some idiot bankers predict the West’s threat to boycott Iran’s oil will make things even worse in the short term. What nonsense! There will always be countries to which Iran can sell its oil. There isn’t enough oil in the world to keep prices low on today’s global market, let alone future markets with emerging economies building new cars and new roads just as fast as they can. China will probably shun any boycott, as might South Korea and Japan, because they all desperately need oil to keep their economies running, let alone advancing.

If the truth be told, the President’s quixotic effort to create a global boycott of Iran’s oil is just a ruse to reduce the pressure for war. We have to look as if we’re doing something (and everything) about Iran’s push to create nuclear weapons. But the most effective actions still are: (1) clever sabotage, including the Stuxnet virus, (2) isolating Iran from the international banking system, making it hard for Iran to purchase materials and supplies available only (or most easily) from the West, (3) pressuring Russia and China to try to prevent a conflagration in the Middle East that would ruin the global economy, and (4) preparing drones and non-nuclear missiles to destroy Iran’s nuclear facilities in the worst case.

As for Iran’s nuclear program, some day we might have to bite the bullet and accept it. The only rational use of nuclear weapons is to deter others’ first strikes and conventional invasions. (See 1 and 2.) They are not offensive weapons. They never have been used as such, even by Pakistan or North Korea’s Kims (unless you consider our own use to end the world’s most disastrous armed conflict offensive). Just like the Soviets in their day, Iran’s leaders are smart enough to know this, despite all their bluster.

And if it comes to that, a single American or Russian nuclear submarine, hiding unseen in the oceans near Iran, could utterly annihilate Iran’s major cities—Tehran, Qom, Isfahan and Masshad—in less than fifteen minutes. Israel’s air force could do the same in a bit longer time: a few hours. So if Iran’s leaders are stupid enough to waste the money, time and effort, and incur the global opprobrium, of developing nuclear weapons, the rest of the world just may have to sigh and let them.

Our choices are quite clear: (1) a totally unnecessary hot conventional war now or (2) perhaps a new cold war later. Long before Iran develops the technology to pose anywhere near the military threat that the Soviet Union once did, its present leadership will likely succumb to something like the Arab Spring, and Iran will become a much more normal country. At least old age and natural death will change the players.

Fomenting another unnecessary conventional war would only delay that process. It would be utter folly. And blaming Iran’s idle threats for the steadily rising rice of oil is as inaccurate economics as 2 + 2 = 5.

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24 December 2011

Jon Huntsman: A Good Man Ignored


[For a brief note on a small ray of light in our media darkness—Time Magazine—click here.]

I don’t know much about former Utah governor Jon Huntsman. But everything I know I like.

Nearly six months ago I noted two unique things about him. First, as Obama’s former ambassador to China, he speaks fluent Mandarin. That means he can deal well with our nation’s most important business partner and rival (by far!) and the nation most likely to overtake us economically in the next two decades (earlier if the big banks blow up our economy again). It also means he can uniquely command the respect of a nation that for millennia considered itself the center of human civilization.

Second, Huntsman is a diplomat. He knows how to say things—even important things—without getting people needlessly riled up. That’s what diplomats do, and that’s apparently what Huntsman did.

Diplomats only make the news when they screw up. We never heard about Huntsman as ambassador to China. So he must have worked quietly and well, just like the President.

These things alone make Huntsman—by far—the most serious Republican as a candidate to govern our nation.

But the media ignore him because he’s a real candidate. He’s not an amusing buffoon like the succession of inexperienced, not-Romney morons whom the media have anointed as “leading” contenders so far (except for Newt, who has plenty of experience, all bad).

Now we learn a third positive thing about Huntsman, just this week. Leading Time columnist Joe Klein reported it in his personal “Teddy” (political courage) awards. First Klein praised Huntsman for believing in evolution and global warming, like all sane people but unlike nearly all of his Republican rivals. Then Klein dropped this little bombshell:
“Huntsman [has] proposed the only plan offered by any candidate, including Obama, to break up the big banks and move our economy, in the long term, back towards productive investment and away from speculation.”
One of our biggest and gravest national problems (a large part of number nine out of ten on my list) is our media. They are a joke. Recently the New York Times buried the EU’s caving to gamblers and casinos in a single sentence, with a double negative, hidden in the middle of a long story. Now we hear of Huntsman’s real solution for a very real problem in a bit of year-end fluff (although, coming from Klein, more thoughtful fluff than most).

That story was big news because Huntsman is the only serious candidate for president on the Republican side. Romney is a jerk and unelectable and, with only one gubernatorial term under his belt, would be the most inexperienced President in American history. But much more important, breaking up the big banks is the best way to stop their gambling and swindling and protect our fragile economy from the very real threat of a second Great Depression.

As every economist and antitrust lawyer knows, structural solutions are often the best way to deal with serious economic problems, especially long-term, structural ones. Cutting the big banks down to size so they are no longer “too big to fail” is a far better solution to their collective financial depredation than trying to watch their every move through multiple competing federal agencies. I have proposed specific means (which I think could be made perfectly legal) to break them up and prevent another utterly gratuitous financial catastrophe, which would make China the world’s leading economic power far ahead of its already-ambitious schedule.

So if Huntsman says “break the big banks up” and so prevent the coming second Great Depression, that’s big news that every voter should know. It’s big news even if its only effect is to drive the President and his advisors to a similar conclusion.

But would all who heard about Huntsman’s proposal before reading this post (or Klein’s “Teddy Awards” piece) please raise their hands? The media have grossly underreported this story, and Huntsman’s candidacy generally, because they are either: (1) in Wall Street’s pocket or (2) simply incompetent.

Resurrecting Time

While on the subject of our failing media, I’d like to note a rare counterexample: Time Magazine.

When I was a kid, Time was part of the old Luce media empire. It was consistently, and often stupidly, right wing, virtually a Republican house organ. I can’t remember how many times my father threatened to (or did; I don’t recall) cancel our subscription for bias in reporting.

How Time has changed! My wife has had a subscription for many years. And lately, I’ve been reading it more than usual. I’m making the transition between an obsolete netbook and a new MacBook Air. I can’t bear to risk getting food on that beautiful machine at the breakfast table. So when we recently came back from over six weeks away, I eagerly attacked our small pile of unread Times.

The collected issues had a few misses, like a shallow, cover-page psychobabble piece on anxiety. But they also had some reporting and analysis that I’d found nowhere else.

At the top of the list was a story on the success and relative moderation of Turkish president Recep Tayyip Erdogan. Coming at the national height of Fox-inspired Islamophobia and paranoia about the Arab Spring, it was a real eye-opener. A second story—equally unusual and equally important—discussed the dangerous alienation of our abused armed forces and what they face when they come home to a nation that didn’t really know it was at war. The headline read, “The Other 1%.” Time also re-introduced me to an old friend, Van Jones, who is now an organizer with Occupy Wall Street. It’s nice to know what’s happening to unafraid activists like him.

That was not all. Time has columnist Joe Klein, a superb writer and thinker. Now that Bob Herbert and Frank Rich of the New York Times have retired and Paul Krugman repeatedly writes the same column over and over again (“more stimulus!”), Klein may be the best in the business. With his honesty, his insight and his good turns of phrase, he is certainly a pleasure to read.

Finally, Time’s year-end piece, made “The Protestor,” worldwide, “Person of the Year.” That stroke of genius reflected real understanding of our zeitgeist, backed up by in-depth reporting and superior analysis.

It collected stories from the Arab Spring and all over the world. It showed how no one (perhaps outside of China) is satisfied with government. And it told how the Arab Spring’s techniques and procedures went viral globally, finding their way into some very unlikely places, including Russia and here at home.

These pieces are great journalism—fine reporting coupled with probing analysis and succinct, clear and often inspired writing. Many of them provide information that is readily available nowhere else.

Time is now on line, so I can cite and link to its superb journalism. Except for its thick year-end edition, I worry sometimes about emaciation of its weeklies. But maybe—unlike most media—when Time doesn’t have anything to say it doesn’t say it. What a concept!

So, no, unlike my late father, we won’t be canceling our subscription anytime soon. We’ll be recommending Time to friends. And I’ll be linking to it repeatedly on this blog.

Time is the best antidote to Fox. It comes in a compact and convenient weekly package. You don’t need power or long battery life to read its print version. And its good journalism just might help save our Republic. The next time you fly, buy a copy at the newsstand. It’ll give you a whole new and more accurate picture of the world out there.

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17 December 2011

The Casinos Won, so Buckle Your Seat Belts


[For a 12/18/11 update on market volatility and what it means, click here.]

In an earlier post, I reasoned that nothing important has changed in finance since the Crash of 2008. We still have unrepentant casinos getting ordinary banks and investment houses to bet billions and trillions on uncertain future events.

The total tab is now around $600 trillion. That’s the amount of outstanding derivatives, most of which represent this sort of bet.

Instead of evaluating loans and investments on their business merits, as banks used to do, they now go to the casino for “risk management.” They buy “innovative” financial instruments, called “derivatives,” which are supposed to protect them against any downside. They hope to foist the real risk of their businesses onto clueless buyers, who know nothing about the banks’ businesses and do even less “due diligence” than the banks themselves do.

The sub-prime-mortgage fiasco, which caused the Crash of 2008, is just a special case of this exploding practice. So our global “financial” system has become little more than a gigantic, high stakes casino.

When you look at it closely, the casino analogy is actually quite good. The casinos are the “elite” investment banks, led by Goldman Sachs and its many spawn. The gamblers are the ordinary banks and lesser investment banks who place bets in the vain hope of gambling away the real risks of their businesses.

Remember the rule from ordinary gambling that “the house always wins”? Just so for these casinos. The’re very good at what they do, and usually they guess right. When they’re uncertain, they sell bets to gamblers on both sides and take a commission. When they’re confident but their gamblers are weak, they take collateral to make sure that losers can pay. When even the collateral fails, they get governments and taxpayers to bail them out.

So the casinos can’t lose, because they or the gamblers they fleece are “too big to fail.”

Lest you think I exaggerate, I offer three pieces of evidence, all within the last two months. In October, an obscure European bank named “Dexia” became insolvent and had to be rescued by the governments of Belgium and France. The reason: Goldman Sachs, with whom the bank had placed derivative “bets” on risky instruments, made a collateral call. Readers with good memories will recall that’s exactly what triggered the Crash of 2008: Goldman making a collateral call on companies “too big to fail,” including AIG.

In 2008 Goldman got its money, and the threatened financial system stabilized because the US Treasury bailed everyone out. This time Goldman got its collateral, and Belgium and France bailed Dexia out. But we don’t yet know the rest of the story because we don’t know how many other Dexias are out there.

My second piece of evidence came out in the New York Times last Thursday: the complete story of the debacle that was MF Global, former New Jersey Governor Jon Corzine’s baby. Anyone who invests in the markets should read this story three times and compare it with the debacles of Lehman Brothers and Bear Stearns in 2008.

The highlights are three. First, as CEO of MF Global, Corzine “pushed through a $6.3 billion bet on European debt—a wager big enough to wipe out the firm five times over if it went bad[.]” Second, the firm made the bet using an obscure form of derivative called a “repurchase-to-maturity,” which allowed the bet to be kept off the firm’s balance sheets. (The firm’s auditors, PricewaterhouseCoopers, insisted that it disclose the bet in a footnote in the annual report.) Third, “[s]ome $1 billion in customer money remains missing[,]” and thousands of clients may have lost up to a third of their money.

But here is the kicker. In testimony before Congress a week ago, Corzine had the gall to say, “There actually were no losses.” He was referring to the firm’s big debt bets, not the unexplained losses of customers’ money. Those bets had actually made money for the firm, although too late to save it. Corzine is a Goldman spawn; he used to be its co-CEO.

My third piece of evidence comes from a recent NYT story on the new EU bailout fund led by Germany’s Chancellor Merkel. The story buries the following key sentence in the middle, as if to hide it. But the sentence is so important and so troubling that it deserves highlighting:
“The [EU] leaders sent an important signal to the bond markets by scrapping a pledge to make private investors absorb losses in any future bailout for a euro nation.”
In other words, the EU and Chancellor Merkel—who I had hoped would save global finance from itself—caved in to the casinos.

That’s all I know the about EU’s apparent capitulation, just that one buried sentence. But it’s enough. Who else but a reporter from New York, the den of Wall Street, would bury it in the middle of a story and try to make it sound positive?

The bottom line is this: it’s all going to happen again. Sooner or later the whole house of cards is going to fall. Why? Three reasons.

First, no individual positioned to do anything about it cares about the big picture, and no one at all really understands it.

No politician—including the current President and the last two presidents—understands any of this. President Obama delegates to Goldman Sachs’ alumni like Tim Geithner, just as Dubya did to Hank Paulson. Bill Clinton, no doubt on the advice of similar worthies, signed into law the Gramm-Leach-Bliley Act that started the whole collapse off [search for “single event”]. And if presidents don’t understand this stuff and therefore don’t care about it, do you think anyone in Congress does?

Let’s face it. Banking is a dull business. It’s a bunch of boring numbers, without content. Even the hardiest policy wonks can fall asleep in a discussion of finance. It appeals only to greedy people for whom the fact that those numbers are dollars makes them interesting. That simple truth has allowed rogue bankers to steal the wealth of our otherwise thriving industrial economy and drive it into the ground.

As for the people making the derivative trades, they have every incentive not to understand the big picture because they are making too much money ignoring it. Willful ignorance is their modus operandi.

Second, there have been no consequences to any casino, or any big gambler for that matter. No one responsible for any losses has gone to jail. None has lost his job. After all the government bailouts, no one has even lost money. The big casinos are still running the show, and their collective tab is up to $600 trillion.

The two big SEC suits so far—against Goldman and just this week against Fanny and Freddie, are essentially suits for fraud: telling investors one thing while thinking and writing another. There have been no suits against casinos or gamblers as such. Why? Apparently because, in our fantasy world of freedom-as-license, gambling with our economy is not illegal, although it destroyed the economy once three years ago and is very likely to do so again.

Making it illegal is the job of the Dodd-Frank legislation and regulations under it. But the casinos and gamblers, using Wall Street’s control over the nation and now foreign governments, have been highly effective in watering the legislation down and diluting, delaying and avoiding regulations under it. And they haven’t yet even begun to stonewall and litigate.

By the time the legislation and regulations under it have any real teeth, the next crash likely will already have occurred. All this makes rational people envy China and its ability to rule by decree.

The only people who might have a clue about what is about to come down are Ben Bernanke and the folks at the SEC. But they are under incredible pressure not to disturb “The Markets,” which of course are just fallible human institutions, now controlled by the bankers and Wall Street. So if you think a man on a white horse is going to ride in from any direction, think again. All the gates are locked and barred.

Finally, the casinos so far have been making piles of money. Like all of their kind, the gamblers have the illusion that gambling will bring their businesses greater security. What incentive do either have to stop?

So who are the losers? Just as in Las Vegas, they are us, the rubes. Unbeknownst to them, they are also all the industrial capitalists and shareholders, whose earnings and substance are being dissipated in this orgy of gambling. In the end, they are the governments and taxpayers who bail the gamblers and casinos out in a vain attempt to keep them afloat. They are countries like Belgium, France, Greece, Iceland and their taxpayers, who bail out the losing side, while the winners count their money.

Oh, and did I forget to mention us Yanks and our drowning-in-a-bathtub government? Sorry! How quickly we forget, in our manic news cycle of irrelevancies and willful malefactors like Newt!

This is all really, really sad. Outside of rotten finance, the global economy is puttering along well. If rogue banking casinos hadn’t upset the applecart, we could be looking at a new global Golden Age, just as I speculated seven years ago. Our excellent “ABC companies,” as well as their counterparts abroad, are doing good business making real things. Even our cars are selling again.

But the bastards in finance are going to blow the whole thing up again.

The did it a little less than a century ago, kicking off the Great Depression. Our industrial economy was booming. Electric power, with all its uses in homes and industry, was just reaching it growth peak. The revolution in radio, which later would morph into television, was just beginning. But along came finance and upset the applecart. Our economy didn’t get back on track again for seventeen years.

And funny thing. The immediate trigger for the Crash of 1929 was just another so-called financial “innovation”: buying securities on margin. That “innovation” was a simple one for simple times. It was so simple that even the rubes could use it and be burned. J.P. Morgan famously said that he sold out when his cab driver started giving him stock tips.

Today’s financial “innovations”—derivatives—are infinitely more complicated, so much so that only professionals use them. But the same principles apply. The huge pyramid of derivatives, to which no one is paying any attention, is just as bound to collapse as the huge pyramid of margin sales did under margin calls in 1929—and as the pyramid of subprime-backed mortgage securities did in 2008. The play and results don’t ever change, only the names of the players and their “innovative” instruments of financial mass destruction.

So the house of cards will fall again. You can bet on it.

How certain am I? About 70%. People don’t change their behavior without consequences. And for the small clique of supremely selfish and self-confident men who’ve made themselves enormously wealthy by gambling away the substance of the West’s industry, there have been absolutely no consequences so far.

And should they expect consequences? They control or know all the right people. As “experts,” (never mind the inherent conflict of interest) they have the ear of all the West’s leaders. So where is help going to come from, outer space?

Lest readers think I’m just alarmist, I’ll mention how I saved my own retirement fund the first time around (2008). I did it with a futile search for an honest man in American finance, which I called the “Diogenes Test.” But the immediate trigger was the sudden collapse of a real estate firm in Australia, where I happened to be at the time. I sold everything.

You don’t have to rush to the exits right now. No one can tell precisely when the next crash will come. Certainly I can’t. It could come next week, next month, next year, or in two or three years.

But one thing is pretty clear right now: the global gambling won’t stop until there are really unpleasant personal consequences for the casinos and gamblers. And with the collapse of my hope that the EU would stand up, there is not the faintest sign of such consequences on the horizon, anywhere in the world. Apparently there won’t be any until after something like a replay of the Great Depression.

So I wouldn’t urge you to sell everything that might go down in value and buckle your seat belts. But that’s what I did in late 2007. And that’s what I’m doing now.

This week’s market dive was not necessarily the next crash. Most probably, it was people selling to realize year-end losses for tax purposes. Investors also want to spend time with their families during the Christmas season, without always glancing over their shoulders at volatility induced by unregulated programmed trading.

But make no mistake about it. When the next crash comes—and barring some deus ex caelo, it will come—it will be much, much worse.

Concluding Thought: Gambling is a vice. We deride it in gentle Chinese ladies playing mahjong, while we gamble away an economy based on two centuries of science, technology and industry. Gambling is tolerable only when the gambler (1) can afford it and (2) can control his/her impulses. The mahjong ladies can do both; we, apparently, can do neither.


Footnote 1: You should read the footnotes to financial statements before you read the balance sheets. Why? Because footnotes usually mean the auditors wanted something on the balance sheet that the firm under audit would rather not disclose. A footnote is the usual compromise: the law requires disclosure but doesn’t say exactly how.

Update 12/18/2011:

It’s nice when, as is happening ever more frequently these days, mainstream media corroborate my analysis within a few days of posting. That’s what happened today, when Bloomberg.com published a must-read story on volatility in the stock markets.

Two key facts were among the gems this piece revealed. First, the three-month historic measure of volatility, derived from the VIX volatility index, reached “a record 191.59 on Oct. 31, above the 92.56 median over the past decade and surpassing the prior peak of 190.44 from December 2008.” Second, the correlation of individual stocks in the S&P 500 index to the index itself last month reached 0.86, on a scale in which 1.0 would reflect perfect correlation, i.e., all stocks moving in lockstep.

This second fact means, in essence, that general economic conditions—i.e., fear of a new meltdown—drives 86% of the movement of stocks. The companies’ respective business, management, prospects and profits account for only 14%. As the story reports, even seasoned stock-pickers are complaining, because their expertise just doesn’t matter any more.

The doubling of volatility from its median over the last decade reflects the same phenomenon. In general, no company’s fortunes or real business prospects change often and rapidly enough to create that kind of volatility, which some hedge-fund managers describe as the greatest they’ve seen in their entire careers. (One hedge fund even shut down because of it.)

The only thing that can create that sort of volatility is alternating greed and fear about the general economy. In this case it’s evanescent hope for some gargantuan bailout of the casinos and gamblers (the manic phase), followed by a more realistic fear of what happens when the music stops and governments and taxpayers are asked to pick up trillions in gambling losses (the depressive phase). Get used to our new, bipolar markets.

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14 December 2011

Our Ten Grave National Problems: How Long Have they Festered?


As readers of this blog know, I like to tie things together. Hyperlinks make that easier than ever before. So the list of ten grave national problems in my last post will be my mantra for the duration of this electoral season.

For the next eleven months, you can expect to see many hyperlinks to that post. I’m going to measure every candidate on a simple scale. Does he or she have serious solutions to some—or any!—of those grave problems? And does he or she have the brains, character, patience and political skill to make them work?

That’s what any rational, informed voter who wants to arrest our nation’s decline would do. Sometimes I’ll also discuss foreign policy. But, except for our endless wars, it’s not on the list. Why? Now that those endless (and needless) wars are winding down, our biggest problems are at home and of our own making.

How long have these problems festered? Here is a brief table listing the rough chronological origins of each problem and its longevity so far:
No.Problem“Origin”YearLongevity
1Foreign Oil DependenceSecond Arab Oil Embargo197338 years
2Infrastructure DecayMinnesota I-35W Bridge Collapse20074 years
3AEconomic InequalityGrasso Pay Controversy20038 years
3BFinance Going RogueGramm, Leach, Bliley Act199912 years
4National DebtOff-Budget Iraq War20038 years
5Public-Education LagReportA Nation at Risk198328 years
6Endless WarsBush Declaration200110 years
7ImmigrationImmigration Reform and Control Act198625 years
8Decline of ScienceCanceling Superconducting Super Collider199318 years
9Broken GovernmentRoutine Use of Filibuster197536 years
10Global WarmingJoint National Academies’ Statement20056 years

The column on problem “origin” requires some explanation. In most cases, the “origin” I have listed is not the cause or inception of the problem, but the first dramatic public notice of it. For example, our dependence on foreign oil did not begin with the Second Arab Oil Embargo of 1973, but that event made the American public—and even politicians—painfully aware of it. Likewise, the decline in our public schools did not begin with the National Commission on Education’s shocking report in 1983, but that report made the public aware that our presumed “Number One!” status was in jeopardy.

Sometimes a single event, in retrospect, appears to have been the primary cause of a problem. An example is passage of the Gramm–Leach–Bliley Act, officially known as the Financial Services Modernization Act of 1999. Financial deregulation began as early as pre-emption of state [anti-]usury laws in 1989. It continued after Gramm-Leach-Bliley, notably with the Commodity Futures Modernization Act of 2000, which deregulated most derivatives other than commodities futures sold on regulated exchanges.

But expert observers now believe that the key mistake was the 1999 Act’s partial repeal of the Glass-Steagall Act, allowing commercial banks, investment banks, and insurance companies to merge. That mistake, along with related mergers, turned venerable financial institutions like Citibank, Bank of America, Chase Manhattan Bank and the once-solid international insurer AIG into big gamblers or big casinos. That enormous change in our financial landscape, in turn, led directly to the Crash of 2008.

As for broken government, the primary cause is routine use of the filibuster, which allows the minority party to block any initiative of the majority party with a mere 41% vote in the Senate. The result is minority rule or (more accurately) minority-induced paralysis of government.

The longevity of this practice surprised even me. But the Senate has kept careful records. From 1917 through 1972, senators used the filibuster to block legislation exactly twelve times. That’s an annual average of 12/55, or less than one-quarter of a block per year! And lest you think that was a placid period, consider that it included the Great Depression, the Second World War, the civil rights movement of the 1960s, women’s liberation, and most of our highly controversial War in Vietnam.

In the 93rd Congress, 1973-1974, blocking rose to nine times, or an average of 4.5 times per year, twenty times the earlier average. From that time on, blocking never dropped below nine times per Congress, or 4.5 per year, except in the 95th Congress (1977-78), when it averaged 1.5 per year.

In the last two years of Dubya’s administration and the first two years of President Obama’s, blockage averaged 31 per year, or 142 times the average from 1917 through 1972. But the precedent for this extraordinary explosion of legislative gridlock had already been established.

In most cases, I have tried to be conservative in estimating the longevity of a problem. The extreme case is infrastructure neglect. The public first became generally aware of the problem when the I-35W bridge suddenly collapsed in Minneapolis, killing several drivers. But the decay that caused that tragedy obviously had been going on for decades, as the report of American Society of Civil Engineers reveals.

Similarly, neglect of basic science has been ongoing since the 1970s. I know this from personal experience. But notwithstanding this long-term secular decline, I have picked the much-later cancellation of the Superconducting Super Collider as the key event in our government’s turning its back on basic science. The Collider, on which we would have spent some $11 billion, would have cost less less than three months’ worth of the War in Iraq.

The problem of global warming is similar. Indicative research goes back well into the eighties, and Al Gore famously made an issue of it in the 2000 campaign. But I picked the short, Web-published statement of our own, prestigious National Academies (including the National Academy of Sciences) as a point where rational argument should have stopped. Denial after that point, by people (such as Senator Inhofe of Oklahoma) with absolutely no scientific knowledge or training, is like an illiterate Taliban fighter presuming to instruct the College of Cardinals on Catholic doctrine.

The hardest problem for which to pinpoint an “origin” was economic inequality. (That’s one reason why, in the table, I split it off from financial depravity, although lumping both together in my original list of ten.) Ordinary folks’ wages have been stagnating and CEOs’ pay skyrocketing since the late 1970s. But public awareness came only slowly. So I rather arbitrarily picked 2003.

That was the year in which Dick Grasso’s contracted-for $188 million annual pay as head of the New York Stock Exchange created huge public controversy. Grasso’s job was to be a marketer for the exchange, but his most important function was to regulate it and keep it honest. For that job, he was to earn hundreds of times what his counterparts in government (for example, the SEC) would earn. His excessive pay rapidly became an example and a metaphor for injustice then consuming our society.

No wonder plutocrats want to privatize everything! If your salary went up hundreds of times by that simple act, you’d want to privatize everything, too! But life doesn’t work that way for most of us: when things privatize, the folks at the top get more, and we get less.

Perhaps you can quibble with some of my dates of “origin,” or how much the public really knew or knows, and when. But even if you quibble in one two cases, this table amply demonstrates how long-lived our biggest problems are. None of them arose, or even first came to public notice, within the last three years.

The average longevity of the eleven problems in the table is 17.5 years—nearly a generation—with no solutions in sight! Surely we as a nation can do better than that.


By and large, our biggest problems are longstanding, of bipartisan concern, and often of bipartisan origin. That’s especially so with regard to the disastrous effects of impulsive financial deregulation. The worst legislative changes occurred on Bill Clinton’s watch, and he signed them into law.

Bill Clinton was one of the most intelligent presidents in American history. But brains alone are not enough. Finance is an obscure and esoteric field, and he was no expert. After the public recantation of the most powerful expert, Alan Greenspan, he can claim innocent ignorance.

But if the most disastrous economic mistakes in nearly a century could happen on his watch, doesn’t that argue for the caution and deliberation of an equally intelligent man like the President?

Character matters as much as intelligence does. I have seen no one in national public life since JFK to match the President’s character, prudence, deliberation and judgment. Some call him “dithering” or “weak.” But I think we’ve seen quite enough of the impulsive kind of “strength” that makes endless, unnecessary wars and the impulsive deregulation that creates wholly gratuitous financial catastrophes.

Anyway, blame is not the issue; there is plenty to go around. Since our mistakes and problems, by and large, have been bipartisan, shouldn’t both parties be looking for intelligent, pragmatic solutions, rather than placing blame? And shouldn’t we voters start thinking about who, if anyone, offers real solutions, instead of tired ideological dogma, frat-boy one-liners, and “hot button” distractions from what really matters?

Footnote 1: In 2001, shortly after 9/11, Dubya declared any nation who harbors terrorists our enemy. As I’ve pointed out at length in another post, that announcement implicitly declared war on some sixty countries, most of which were innocent and inept (like Somalia) or our ostensible allies (like Pakistan). It led directly to our now-ten-year senseless and ineffective war in Afghanistan.

Footnote 2: I and my classmates in physics graduate school got our Ph.D.s in the late sixties and early seventies, just as the bottom dropped out of federal support for basic science. Several classmates left the field of science and became lawyers (like me), a medical doctor, an investment advisor, or various administrators.

That outcome wasted the time and effort required to get a doctor’s degree in science—typically five years of study—which in my era were heavily subsidized by federal support. For example, a National Science Foundation Fellowship supported my graduate education until I began working on my thesis, after which I got other federal support for essentially full-time research work. I would rather have stayed in science—if I could have made a decent living doing so—but society pushed me (like many others) toward my choice by making a law career much more comfortable, and a career in science poor and insecure.

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10 December 2011

Why Obama Should Win (and Why I’m Donating Again)


[For a brief note on my hero for today, which is uncannily apropos of the following post, click here.]

A little less than half a year ago, I wrote a post entitled “Why Obama Will Win Again (and Why I’m No Longer Donating).” That post was largely about politics, not substance.

People who are homeless, out of work, underemployed, or working harder for less may soon begin to think about substance. So may people like me, who wonder whether our precipitous national decline has an end, or whether we will soon see the banana standard replace the Stars and Stripes. In the hope that politics-as-entertainment can’t last forever, I think it’s time to remind people what’s at stake in 2012. I’ll be as brief as I know how.

Here, in rough order of importance, are real, substantive national issues that we must resolve, or at least begin resolving, if people younger than I are to have any realistic shot at a decent life in this country, let alone the “American Dream:”

1. Our oil “tax.” At present prices, we spend about $950 million per day on imported oil. That’s about $347 billion per year, or $3.47 trillion over a ten-year period. That “tax” directly affects every American. It could get dramatically higher if there’s another revolution or a war in the Middle East, or simply if the global economy recovers strongly.

2. Our decaying infrastructure. In 2009, the American Society of Civil Engineers estimated that we needed to invest $2.2 trillion [see page 7] within five years, in our infrastructure (roads, bridges, railroads, airports, and water and sewer systems) just to fix dangerous and longstanding deficiencies.

3. Our economic inequality. Virtually complete control of our finance sector by Wall Street has produced the greatest economic inequality since the Gilded Age a century ago. That inequality is in the process of destroying our productivity and our social cohesion. And Wall-Street’s stranglehold on our nation has given us a $600 trillion unregulated derivatives casino that could replay the Crash of 2008 at any moment, perhaps triggered by a sovereign default in Europe. The opposition party’s response to this risk overhang has been to filibuster a universally admired candidate (Ohio Attorney General Richard Cordray) in order to “re-litigate” the organization of a new Consumer Financial Protection Bureau as it had passed with bipartisan support last year.

4. Our national debt. The Congressional Budget Office estimates [see table page 2] that our public debt will be 73.9 percent of our GDP at the end of fiscal year 2012. If we don’t reveal a credible plan to reduce it, our credit rating will suffer and our deficit will increase with debt service. The only reason this isn’t happening right now is that much of the rest of the world, including Italy, Japan and Spain, is in as bad or worse shape.

5. Our education. Once among the best in the world, our primary system of public schools now ranks 14th among OECD countries in reading, 17th in science, and 25th in math. Our colleges and universities are daily losing ground to comparable institutions in Europe and Asia. If we don’t fix this decline quickly and decisively, nothing else will matter. We will continue to lose ground on all the rest of the problems described here, both in real terms and in comparison with competing nations.

6. Our endless wars and our alienated troops. We are winding down our eight-year war in Iraq, but we won’t wind down our ten-year war in Afghanistan for another three years. Over a hundred thousand troops will come home, many wounded, to a society of scarcity in which scoundrels will try to skimp on their dearly earned care. They will be at odds with the society they have risked all to protect, which doesn’t know what they did and didn’t share and therefore doesn’t appreciate their sacrifice. Unlike their earlier counterparts (who were drafted and therefore perhaps less qualified), these troops are overwhelmingly conservative and Christian. Some are angry, and many have good justification. If you don’t think these facts could produce social upheavals, maybe even revolution, you’d better read some history.

7. Our immigrants. We have twelve million illegal immigrants in this country. While nearly all are gainfully employed and pay taxes, they have become a political and economic football, exploited by businesses for economic advantage and by politicians for electoral advantage. Under the wrong circumstances, this national shame could produce social unrest or exacerbate an economic downturn.

8. Our decaying science establishment. We have ceded the fields of high-energy physics and human space travel to other countries. Now that the Hubble Telescope is finished, our space science is in abeyance. We have relegated most other fields of science to private industry, with its short-term profit mentality and quarterly reports. Our excellence in basic science, which helped us win World War II and made us the global leader for most of a century, is waning. Even medical science, at which we still excel, suffers budget cuts virtually every year. If we continue on this course, we will be a second-rate power in science by the end of the 2020s.

9. Our broken government. Congress isn’t working. The presidency has no power to fix the country and all power in the world to make foreign wars without anyone’s consent. Our judiciary approves rich people’s and corporations’ control over our broken political system. Our press is a joke, which no longer even tries to report and expose the things that matter, including the other problems outlined here.

10. Global warming. Meanwhile, global warming of human origin continues inexorably, without our leadership or even our participation in a solution. Extreme weather is becoming the norm. Tropical pests and diseases march relentlessly northward. And at any moment the Ross, Antarctic or Greenland Ice Sheets could shift or break, converting this vast product of human neglect from a slow-moving train wreck to an immediate catastrophe. The only reason this problem is last on the list is that we only suspect (but don’t actually know) that it could impact terribly the lives of people now living, both here and abroad. By the time we know for sure, it will be far too late.

Clever readers will note that none of these problems has anything to do with abortion, gay marriage, the Ten Commandments on courthouse lawns, the use of languages other than English in our country—or any of the other irrelevancies that demagogues have used to distract us from what really matters and win elections.

We have words for people who “hold out” for an ideal spouse. We call them “spinsters” or “bachelors.” They don’t reproduce. Recent medical research tells us that they suffer poorer health, have lower income, and die earlier than married people. The winners in the marriage game are those who pick a real spouse from real candidates and make the inevitable compromises to make their marriages work.

Just so in politics. While the right has spent the last three years bashing Obama just because he’s there (and because, you know . . .), much of the left has piled on because he’s not the ideal. If the left continues that course of action, we’ll find out what happens when an entire country becomes figurative spinsters and doesn’t reproduce.

I’m not worried for myself. I’m 66 and in comfortable retirement. By the time the shit really hits the fan, I’ll probably be dead.

But if you’re younger than I am, you have more than an even chance of finding out from personal experience what the Great Depression, Germany’s hyperinflation, or even the Russian Revolution were like. Take it from me, whose proudest vote was for Hubert Humphrey against Richard Nixon, that voting for “the lesser of two evils” is better. (Today Nixon, who proudly raised taxes and signed the Clean Air Act into law, would be far to the left of anyone running for the Republican nomination.)

And as you consider who’s the lesser of two evils, recall a few points. Mitt Romney’s last political experience, as governor of Massachusetts, ended three years ago. It constituted a single term as governor. Were Mitt elected president, that record would make him the least experienced president in American history.

President Obama had a learning curve, but he’s three years in. Do you really want a newbie with even less (and less recent) experience to be running our nation at the most critical time in our post-war history?

No doubt Mitt is a smart guy. But he’s not smart enough to see that the health-care plan he put in place in Massachusetts, which everyone acknowledges is working just fine, is a dead ringer for so-called “Obamacare.” He thinks if he lies often enough and flip-flops long enough, people will forget the truth.

Mitt’s much-lauded business experience as a consultant was mostly in downsizing failing companies. And we know he wants to downsize government; that’s his and his party’s mantra. Do we really want him to downsize our failing nation? Shall we sell off Mississippi or California?

And as for Newt, all I can say is anyone who would even think of voting for a man who kissed off his wife in the hospital where she was being treated for what turned out to be terminal cancer deserves what they get. If Newt gets the nomination, take a good, close look. Examine his wretched character, his Jupiter-sized ego, and his obnoxious smirk. Then have a nice vomit and reconsider.

As for me, I’ve started contributing again, to the campaigns of Elizabeth Warren, Senator Claire McCaskill in Missouri, and the President. I’m not doing it for me; I’m doing it for you. I have this quaint idea that, because this country has been good to me, I ought to try to leave it in better shape when I go.

I hope you’ll all do the same. But for God’s sake, don’t stay home. Just read the St. Crispin’s Day speech from Shakespeare’s Henry V (or my own modified version from 2008) and vote.

Voting is less dangerous and bloody than battle. And anyway history doesn’t reward bystanders. You wouldn’t want to say they stole your country and your birthright and you didn’t even show up. Would you? Make up your mind right now and go register, if you aren’t registered yet.


Endnote: My Hero for Today (12/12)

My hero for today is a gay, smoking Vietnam veteran named Bob Garon, from Epsom, N.H.

He’s 63, a bit younger than I. But he’s obviously just as skeptical of politics in general and Mitt Romney in particular. As reported today in a New York Times blog, Garon got Mitt Romney to admit that, because he believes marriage is “between a man and a woman,” he does not support marital benefits for gay servicemembers or veterans.

Only then did Garon reveal his own point of view. He is gay and legally married to another man under New Hampshire law. And he berated Mitt for wanting to deprive him of his constitutional rights.

If you love politics and hate what it has become here, you must read the story. Garon’s simple human dignity, in contrast to the pol’s sliminess, will make you smile, maybe even laugh out loud.

For me, it illustrated three essential truths. First, most politicians are slimy bastards, and you have to be cagey if you want to find out what they really think. In this respect Garon did better than nearly all of our media (the reporter who wrote the piece excepted), and much, much better than the spineless nebbishes who moderate so-called presidential debates.

The second truth is even more important: you can’t have it both ways. Politicians can only flip-flop, prevaricate and evade “hypotheticals” for so long. Hats off to Garon for making Mitt-the-Olympic-class-flip-flopper take a clear position on at least one issue.

The final truth is why neither Mitt nor any Republican will be elected president next year. The GOP has become a party of extremists, of all stripes, on this issue as on so many others. A healthy—and I do mean healthy—majority of Americans support the rights of Americans to marry whom they want and do what they want between the sheets. Even those who are a bit uneasy about it recognize that gay marriage won’t destroy the Republic, whereas the problems I’ve listed above might.

So no Republican can win today because he or she has to take extreme views on most issues in the primary. Then he or she must justify that miserable and all-too-recent record to the entire electorate in the general.

As Garon said to Mitt, “Good luck.” I’m still eager to see how Democratic ad makers will use that neat vignette of all Republican candidates raising their hands to oppose a budget-deficit solution with ten parts spending cuts and one part tax increases.

After Garon said he wouldn’t vote for Romney, the reporter asked him whether he agreed with Romney on any issues. “I kind of liked his health care plan in Massachusetts,” Garon said. He didn’t have to say what most New York Times readers already know: it’s much the same as the President’s plan for the nation.

God bless you, Mr. Garon. You do your state and its first primary honor, as well as your country. Merry Christmas and long life to you and your spouse! And may reporters everywhere take notice of your courage and your techniques.

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05 December 2011

My (Never-Given) Matriculation Speech


[The following post may be of interest to college students. It’s a little late for matriculation, but it’s not too late for planning next semester’s courses. I wrote it and published it to a small circle a couple of years ago, and anonymity kept me from publishing it here. Here it is, with some minor updating and correction of a few errors.]

Life has many oddities, when you think about them. One of them is the so-called “commencement” speech. Colleges and universities get famous people to lecture to their students just before giving them diplomas. These leading lights are supposed to reveal their secrets―in Doug Adams’ famous words from A Hitchhiker’s Guide to the Galaxy― of “life, the universe and everything.”

Now this is more than passing strange. Young folk sitting in the audience have read thousands of pages, all assigned by their professors. They’ve done experiments in the laboratory. They’ve written essays. They’ve taken tests. If all this wasn’t supposed to teach them about life, the universe and everything, what good was it?

Maybe all those leading lights giving commencement speeches know more about life, the universe and everything than professors. That’s certainly possible. But if so, and if the kids can get what’s important out of a forty-minute commencement speech, why spend four years and incur over $100,000 in student debt? Why not just cut to the chase?

And if the commencement speech is just a good summary―a sort of Cliffnotes’ Cliffnotes―of all that came before, is it really more than a chance to practice the skill of sleeping in class without snoring?

No, I think the commencement speech is a bit of blather out of time. When students really need to know the secrets of life, the universe and everything is when they matriculate, not when they graduate. They need to know what’s really important beforehand so they can plan their schedules, their majors, their careers, and their lives. In the best of all possible worlds, the first two would match the last.

In that spirit, I’ve prepared the following matriculation speech. My credentials are simple: I’ve had three careers: physicist/geophysicist, lawyer, and law professor. So, except for investment banking, which I learned something about indirectly in my last two careers, I’ve had pretty rigorous training in all the things that our society has valued most since the last great war: science, law and commerce. If you think I’ve got my priorities wrong, then by all means, write a matriculation speech of your own.

Dear matriculants,

I call you “matriculants” both because it’s a long word and a neutral one. It might be more accurate to call you “subjects” or “victims.” But that might annoy or scare you. It’s better to use a long word that many of you will never have heard and will have to look up. Using the dictionary, whether on line or on dead trees, is a good skill in college and in life.

So, dear matriculants . . . Here’s my advice on starting college. There are only four points, so you won’t have to take detailed notes. But please remember the four and think about them.

First, you are about to enter the most intense educational experience of your life. Many of you will have gone through execrable high schools. So you won’t know what “execrable” means, and you will have trouble writing a coherent sentence, let alone an incisive paragraph. The dictionary can help with the strange word, but learning to express yourself well in writing can take a long time.

That’s one reason why college takes four years. While you think you are learning other things, what you are really learning is how great minds thought and wrote, and how to emulate them.

Colleges stow much of this lore under the general heading of “English,” although journalism and other courses teach it, too. But “English” is such a narrow, boring title. It’s also misleading. You think you already know English, right? You’ve been speaking it for most of your life.

But you don’t really know English unless you know Shakespeare’s English, the King James Bible’s English, a rapper’s English, an ad-man’s English, the President’s English, and a corporate manager’s English. And you don’t really know English unless you can take all these differing genres apart and explain why and how they differ.

Most of all, you don’t really know English unless you can tell when a speaker or writer is lying or deliberately trying to mislead you. For that, you can take clues from the speech or writing itself. But to see quickly when someone is trying to mislead you, you have to know a little of life, the universe and everything.

That’s another reason why college is so long. Context is everything. If you know little or nothing, it’s easy to lie and mislead you. The more you know, the harder it gets.

Liars usually lie about more than one thing. So the best way to identify a liar is to know lots of things. As a liar says more and more things you know are not so, you begin to lose credulity and identify the speaker as a liar or propagandist. That’s one of the most important skills that college or anyone can give you. It might even save our democracy.

How do you acquire these skills? Well, as boring as it may sound, you take courses in English. You read a lot. You write a lot. And you might consider taking a basic course in journalism, “communication,” or political science―especially one that focuses on propaganda and totalitarianism―even if those subjects don’t appeal to you in general.

So as you plan your schedules, be sure to take courses that force you to write. That’s a good strategy even if you plan to be a mathematician, scientist, engineer or dentist. You never know where life will take you, especially at your age. Good command of English is always an advantage, and poor command a disadvantage, in any occupation.

Let me give you an example. When I first started teaching law, they forced me to teach a course in beginning legal writing. I didn’t much like teaching that course―just as many of you won’t like struggling to write assigned essays. But I tried to do my best. I marked up students’ papers carefully, explained to them their many errors, and consulted personally with each student at length.

One young woman seemed pleasant, bright and earnest. But she wrote execrably. (There’s that dictionary again.) As she became frustrated with her slow progress in the course, I asked about her background. She had been an accounting major at a state university. So I asked her how much she had written in her entire college career. After some thought and some prompting from me, she came up with the answer: “four pages”—one per year.

I explained to her that, in my freshman English course in 1962, I had written ten pages every week four fourteen weeks. That was just one course, and I was a physics major. “How,” I asked her gently, “could you expect to be good at something if you never do it?”


You can never know enough about your own language, how to use it effectively, and how others in the past have used it to ennoble or corrupt. Perfecting your language is a task that never ends. You can begin, if you don’t already know them, by looking up the words “matriculant,” “execrable,” and “credulity” and internalizing their meanings.

My second point may seem remote from the first, almost contradictory. But it isn’t. After mastering your own primary tongue, your next most important task is math. Why? Because just as English (in this country) is the language of life in general, math is the language of science (including economics), business, investing and daily commerce.

I don’t mean to imply that you are a loser and a failure if you don’t excel in math. We all know that higher math requires special aptitude. Some people have more, and some people have less. Some people have such genius that we can only view their work and minds with awe.

But whatever aptitude or skill you have in math, take it as far as it goes. You won’t know why it’s important at first, just as you won’t know at first why it’s important to read and appreciate Shakespeare. But you will with time. I guarantee it.

If you’re considering becoming a scientist, engineer, economist or financial planner, your need for math is obvious. But math goes way beyond that. If you buy a house or car on time, only math can tell you what your monthly payments will be, how much interest you will ultimately pay, and how much it helps you to pay off more quickly. If you invest in stocks, bonds or other intangibles―as more than half of Americans do today―only math can help you compare them as investments and choose the best one.

Most of all, math helps put things in perspective, even in politics. Once you’ve learned enough math, you will acquire something that people who use math a lot call “mathematical intuition.” Without actually doing calculations in detail, you will know when something doesn’t make quantitative sense.

For example, suppose a national politician rails about a ten-million-dollar waste. If you have mathematical intuition, and if you know that we have a 15 trillion dollar economy and over 14 trillion dollars of national debt, you will know that he is either (1) an idiot or (2) trying to distract your attention from something more important. And you’ll know so without even doing the arithmetic and calculating that what he is railing about amounts to less than one millionth of our national economy or national debt.

So never slight math. Take as much as you can stomach. And always seek the teachers with the best reputations for making it simple. Like sour-tasting medicine, or like “pumping iron” even after your muscles start to burn, math is good for you.

As an adjunct to math, take a course or two in economics, and make sure it has some math in it. The great economist John Maynard Keynes called economics a “dismal science.” But it is indeed a mathematical science, more so today than in his time. Every citizen should know something about economics and the mathematical logic behind it, if only to protect their own economic interests and recognize politicians’ lies.

My third point may seem in tension with my first. Take the time in college to learn a foreign language well, fluently if you can. Doing so will broaden your learning and your opportunities in life more than almost anything else you can do.

While English is everybody’s favorite second language, we who speak English as our first or only language are only about ten percent of the world’s population―one out of ten. The other nine out of ten speak, think, write and grow up with other languages.

Unless you learn another language well, you will never know how much your own language influences the way you think and feel. Every language has its own unique way of expressing certain things. Some are better, shorter or more current than others.

We Americans say “violà,” in French, because we have no similar word. The rough equivalent “behold!” is too old fashioned, and “look here!” sounds too angry or dictatorial. And we have no equivalent to the Spanish “adios!” It means “goodbye” for a long time or forever, while our single word “bye” works both for forever and a telephone call to someone about to meet you across the street.

These are just tiny, overly simple examples. But as you learn a foreign language well, you will begin to appreciate a whole new way of thinking, feeling and expressing yourself. You will absorb a new culture along with the language.

Doing that will open you up to appreciating foreigners here and abroad in whole new ways. It might also bring you a new career, a foreign place of residence, a new spouse or new set of friends. There is nothing potentially more broadening.

When you pick a foreign language to study, don’t just pick the one you think is easiest. Think strategically. More than 1.3 billion people speak Mandarin, and China is likely to become the world’s economic and technological leader in your lifetime. So don’t dismiss Mandarin just because it’s hard to learn. Also consider languages that cross national boundaries, such as Arabic, French, Portuguese, Russian and Spanish.

And if you already have a tongue other than English, think twice, maybe three times, before abandoning it in a headlong rush to become fully American. The experts say you can’t learn a language without an accent unless you start before you are eight years old. So learning a foreign language as a baby gives you a big head start over other Americans, who start in high school or college. Don’t give that advantage up without a great deal of strategic thought about your life and the state of the world. If you can, keep studying and mastering your native “second” language in college, whether or not besides another non-English tongue.

Your linguistic strategy won’t always be right, but it may lead you to strange and wonderful places. My father, a native-born American, spoke fluent German. As I was growing up, he and I always assumed that I would learn German, because it was then the language of science and I wanted to become a scientist. But in 1959, the Soviet Union launched Sputnik, and overnight Russian became the second language of science. Two years later, our public high school―which was a good one!―hired a native Russian speaker to teach it, and I began to learn.

The Cold War kept me from visiting Russia, and later I switched careers from science to law. But I had taken a course in Russian literature, in Russian, in graduate school, and I never lost my love of Russian literature and poetry. In my new law-teaching career, I got a Fulbright Fellowship and taught law in Moscow, in Russian, in 1993. There I watched the Russians shed their confining skin of Communism and create a more modern, freer society. My time there was far from a vacation, but I would not exchange those four months for any others in my life.

If you have still not taken this chance to hone your skills of sleeping in class, some of you may have noticed something strange. So far, all my advice has been about means, not ends. English is a means of communicating. Math is a means of calculating. It’s a primary subject only to mathematicians; the rest of us use it only as a tool. Foreign languages are similar; they are the equivalent of English to foreign people and a means of communicating with them.

So don’t I have any advice on “substantive” subjects, things that are not just means or process? The answer―besides touting economics as an adjunct to math―is only one.

You yourself will choose the right “substantive” courses as you explore the world of knowledge and chart your life’s course. You will know what they are. Some of them are required for your eventual goals, even in your first year.

But the subjects I have named so far―English, math with economics, and a foreign language―are fundamental. They are the basis on which you will build the rest of your life and life’s knowledge, including knowledge of whatever foreign cultures you may be thrown into. They are the foundation for everything else.

As for specific subjects, I would recommend only one: history. That advice may seem odd coming from a physicist who became a lawyer and later a law professor. It might seem odder still when I confess that I personally hated history until I was well into my advanced years. In college I tried as hard as I could to avoid it. In law school I got the worst academic grade in my life, a D, in English Legal History after I couldn’t bring myself to read the boring assigned tome.

But history is a bit like English and math. It’s a foundation. It underlies what we are today―our culture, our politics, our national preferences and our quirks. It does the same for every other people on this planet. Language alone―even a foreign language―is not enough. You cannot fully understand another people, or even your own, without knowing something about their history.

Ignoring history can be harmful to your health. We lost the War in Vietnam―and over 50,000 Americans―because we didn’t know Vietnam’s history. We didn’t understand how long its people had been hell bent on achieving independence from both China and Western colonial powers. So we didn’t see that our “domino theory,” which viewed Communism in Russia and China as a dangerous motivating force, was just a paranoid delusion. We are now having trouble in Afghanistan because we failed fully to appreciate that mountain realm’s history. Though seemingly primitive to us, it had repelled every foreign invader since Alexander the Great, including the British and the Soviets. We might have acted differently if we had understood that history better and thought longer about how we might be next.

So now, in my retirement years, I think history is one of the most important subjects and one of those most consistently undervalued in our college curricula. Fortunately for me, my childish distaste didn’t render me completely ignorant. My university forced me, like every other student, to take one course in American history and another in “institutions,” which had a lot of history in it. I’m still learning world history as I age.

Like math, history is not something you have to steep yourself in if you don’t like it. Take only as much as you can comfortably carry, and seek out professors who make it interesting and fun. But at least take one course in American history, so you can recognize present-day domestic lies, and one course in world history, so you can put your globalized world in perspective. As an American in a globalized and multipolar world, you are going to have to deal with foreigners whether you like it or not, and you might as well know something about who they are and how they got that way.

If enough of you take history seriously, it might even save your or your child’s life. There might be enough Americans who understand what really happened in the past to think twice or more before entering foreign wars rashly.

So that’s it: a matriculation sonata in four parts: English and writing, math with a bit of economics, a foreign language and history. The rest is up to you.

But don’t forget to spend enough time and college credits to learn that foreign language fluently. If you can, take a semester or year abroad to perfect your foreign-language skills. Doing so will enrich your career and your life more than you can now imagine. And finally, don’t forget to perfect your own language―English―by practicing writing and using that dictionary every chance you get.

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