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

29 July 2015

The Four Top Economies: A Goldilocks Tale


[For the letter I have sent to my representatives in Congress on the Deal with Iran, click here.]

1. Introduction
2. Regulation: Adjustment or Micromanagement?
3. Fixing the watch without moving its hands
4. The problem of labor
5. The effect of enterprise size
6. Conclusion

Introduction

Today everyone knows the four top economies. In order of precedence (and excluding the EU as a whole) they are: the US, China, Japan and Germany.

All but China profess to be capitalistic. And despite the anachronistic name of its New Mandarin Party, China really operates a highly regulated form of capitalism. To be sure, it has residual elements of state capitalism, especially state-owned enterprises (SOES). But unlike Russia, which appears to be steadily augmenting its state sector in the form of thinly veiled crony capitalism, China is trying to wind its SOES down.

So, in essence, the top four economies globally are all mostly capitalist. Free markets are the primary sources of their prosperity and economic power.

But are they all the same? Of course not. If we examine just the last three decades, we can see huge differences in performance.

About a decade ago, the US was on a roll. Not only was it on top. It looked poised to stay there for a while.

But increasingly our own peculiar Yankee form of capitalism is coming to resemble the laissez faire capitalism of our Robber Barons. Ever since Ronald Reagan, we’ve been unwinding the regulatory state that FDR had built into the world’s strongest, wealthiest and happiest nation ever.

The unwinding took almost three decades. And it had ebullient cheerleading to match. No less than our Yankee regulator-in-chief, Alan Greenspan, believed that markets regulate themselves—a blunder he later recanted in Senate testimony. Congress unleashed the dogs of banking, and the Crash of 2008 followed as night the day. Because the US was the big dog, the whole world suffered. China, following its special own rules, perhaps suffered the least.

But now China is having major troubles of its own. Its stock market—once a major source of fascination and profit worldwide—is melting down. And China’s answer, at least at the moment, appears to be direct and indirect price supports. China is meddling in its markets not just by supporting a few SOES, but by direct intervention to save investors money. The prognosis is not good.

Japan has its own unique take on capitalism. Unlike Germany, it never quite unwound the interlocking, cross-owned network of zaibatsu that had facilitated its belated industrialization, and which had formed the backbone of its heavy industry and its preparation for World War II. As new industries like computers and consumer electronics arose, the conglomerate octopuses just reached out, sometimes growing new arms, to embrace them.

And so we have the same Japanese names, and a few new ones, running the gamut from mobile devices, to cars and trucks, and international trade: Fuji, Hitachi, Honda, Komatsu, Ishikawajima-Harima (IHI), Marubeni, Mitsubishi, Nissan, Toyota, and a few others. These octopuses grow, morph and occasionally swap body parts the way bacteria swap genes. But none ever seems to disappear. Is it possible that at least some of Japan’s oft-remarked stagnation since the 1980s derives from these facts, and not just an aging population?

In contrast, Germany is quite different. It still has a few zaibatsu look-alikes, such as Bayer, Siemens and ThyssenKrupp. But for widespread success and prosperity, Germany today relies on smaller parts to a bigger puzzle: its so-called Mittelstand, or small and medium-sized industry.

Furthermore, without a lot of fuss and angst, Germany has given labor a key role in its industry. Perhaps as a result, the ratio of its CEOs’ pay to that of the average worker is about ten. In America, it’s now over 400. Could it be that Germany’s “solution” to the divergence of interests between management/owners and labor is most effective?

We won’t know the answers until we analyze. But we do know one thing right away. While the US and Japan have stumbled badly, and while China is stumbling right now, Germany just seems to keep on ticking, like a fine Swiss (or German) watch. It’s now the undisputed economic master of Europe, having achieved through peaceful, smart organization what it could not achieve through war. And it has achieved that status despite massive residual suspicion and distrust for having started, and having viciously prosecuted, the most horrible war in human history.

So let’s do some analysis. Like Goldilocks and the Three Bears, let’s try to see which brand of capitalism is too hot (too little regulated), which is too cold (too much regulated, or burdened by custom, culture and tradition), and which, if any, is “just right.”

2. Regulation: Adjustment or Micromanagement?

The first thing to understand about regulating capitalism is that a free-market economy is like a fine watch, albeit infinitely more complicated. It’s a complex mechanism with many moving parts.

You can wind it up and let it go. If you’re lucky, it will keep good time. But if things go wrong and it runs fast or slow, you can’t just move the hands to show the correct time.

You can, but the watch will still run fast or slow. So you’ll have to reset it several times a day. And eventually, your moving the hands against the watch’s internal movements will wear out the mechanism, and it will stop working altogether.

That, in essence, is what happened to Soviet Russia. Soviet central planners wanted to fix economic results—the time of day, in our metaphor—by decree, regardless of the mechanism by which economies and businesses operate. The result was a slower and slower watch, which eventually stopped working altogether.

China’s Communist system was similar, with the added burden of Mao’s capriciousness in his dotage, in such bizarre blunders as the Great Leap Forward and the Cultural Revolution. Once Deng Xaioping adopted pragmatism as China’s state religion, jettisoning Maoism and his accompanying cult of personality, it didn’t take more than a decade for China’s growth spurt and “economic miracle” to begin.

Today, with modern economic theory and a bit of math, you can explain these events with rigorous logic, graphs of supply and demand curves, and just a bit of calculus. You can prove, for example, that monopoly produces higher prices and lower output than competition (except in the field of insurance, where pool size matters). Communism, BTW, was all about state monopolies.

You can also show that price regulation can cause private business to lose money continually. The ultimate result is lower efficiency, lower quality, lower output and even bankruptcy, or the need for continual government subsidies to make up the losses.

I used to have fun by subjecting my students in antitrust law to these mathematical-graphical proofs during the first week of class. I did it just to show them that modern economics is not all mumbo-jumbo or, as the great economist John Maynard Keynes once put it, “a dismal science.” There are some things that we now know about economics, and that we can prove rigorously under carefully stated assumptions.

One thing we now know is how to adjust the watch. If you wan’t to change an economic result or outcome, you can rarely, if ever, do so directly. That would be like moving the hands on the watch. You have to go inside the mechanism, understand in detail how it works, make intelligent adjustments, and watch for unintended consequences. Virtually all the last century’s enormous progress in making capitalism work better has been by these means.

The most salient example is what our Yankee Fed and other central banks worldwide now do. After a few centuries of boom-and-bust business cycles, financial panics and all sorts of associated popular misery, we now know how to tame the average boom-bust cycle. When things get too hot, the central bank raises interest rates—the cost of money—to cool things down. When money gets scarce, as it did in the aftermath of the Crash of 2008, the central banks reduce interest rates so that money, the lifeblood of commerce and industry, can flow.

The vital point here is that central banks don’t set interest rates by decree. They don’t tell private banks, or anyone else, what interest rates to charge in lending or to accept in borrowing.

All they do is provide a big new source of money, at interest rates they determine. In good times, private parties come to rely on that source, and so the central banks’ rates become a de facto standard—a cog and gear in the real economy. When times are tough, the central bank becomes the only source of money for many borrowers, so its rates are decisive. This is clever adjustment, not fixing economic results by decree.

Make clever adjustments, with expert help. Don’t try to “fix” the economy by moving the hands on the watch. That’s the basic message of economic learning from the entire last century, including the self-evident failures of Russian and Chinese Communism.

It’s not a difficult message to understand. But most pols apparently have a hard time assimilating it. Richard Nixon, of all people, tried wage and price controls to tame inflation in the seventies. They failed. In 2008, Hillary Clinton proposed freezing mortgage interest rates for five years—another type of price control. That may be partly why she lost; Obama better understood how economies work.

Pols’ yearning for the power to control results directly is understandable. They spend their whole lives dealing with the most unreasonable people, and often coddling and pandering to them, just to get in a position to have some power to do some good. No wonder they want economies to obey them, like recalcitrant campaign flunkies, once they finally win power.

But the world just doesn’t work that way. No matter how powerful you think you are, you can no more “fix” an economy by ordering a result than you can fix a watch by moving its hands to show the correct time. You have to understand the mechanism and make clever adjustments.

We Yanks used to be good at that, when “do it, fix it, try it” was our national credo. Now, it seems, we’re afraid to try anything seriously, whether it’s a moderate adjustment (called “Obamacare”) to a self-evidently broken private health-insurance system or the same sorts of subsidies for wind and solar energy that coal, oil, gas and nuclear energy have long enjoyed.

3. Fixing the watch without moving its hands

People trained as scientists and engineers, including economists, have an intuitive feel for what constitutes adjusting a delicate mechanism, and what, in contrast, is just moving the hands to dictate a result. Unfortunately, the vast majority of political leaders have little or no training in science or engineering.

So they have no such intuitive feel. They may not even understand the metaphor.

They only notable exception is China, which typically has a number of scientists and engineers on its ruling seven-member committee. Once, when the committee had nine members, six of them had scientific or engineering training and one was a lawyer doubling as an economist. (I couldn’t find the biographies of the other two, who were probably military or security personnel, with bios kept secret.)

That being the case, it’s worth some ink to explore our metaphor a bit with a few examples. What constitutes adjusting the watch’s mechanism, and what constitutes just moving the hands?

Before we get to specific examples, two abstractions may be useful. First, the parameters of market performance—price, output, flexibility, risk—are like the hands of the watch. They comprise economic output, or market “performance” in economic terms. Trying to vary, fix, limit or dictate them directly is like moving the hands of the watch. You can try that, but in nearly every case you will have to move the hands again. And in moving the hands you’re likely to damage the delicate gears, cogs and springs inside the watch.

The second useful abstraction is the distinction between incentives and commands. The very notion of free markets depends on voluntary, uncoerced transactions among individuals—usually a lot of them. The collective effect of large numbers of individual, voluntary transactions is what economists have in mind when they talk about Adam’s Smith’s “invisible hand.” So it shouldn’t be a surprise that incentives work better to “adjust” markets than commands, especially if the pols doing the commanding don’t quite understand what they’re doing.

Now we’re ready for some simple examples. Two good ones come from our own Yankee stock-market Crash in 1929, which kicked off the Great Depression.

As the Crash deepened into the Depression, some banks began to fail. So depositors, afraid of losing their money, began to line up outside banks to withdraw it, in a classic fear stampede. Their doing so even put economic pressure on banks that were in no immediate danger of failing. Paradoxically, it created a risk of failure where none or little had existed before.

When FDR first took office as president, he declared a “bank holiday.” That was a command. Depositors couldn’t take money from closed banks, to be sure. But the banks had to open again, some day, and the lines of frightened depositors would appear again. So closing the banks was just moving the hands on the watch.

What eventually “solved” the problem of runs on banks was federal deposit insurance. The government guaranteed personal deposits, up to a certain amount. When a bank failed, it took over the bank, squeezed all the liquid assets out of its carcass, and used them, plus federal money, to make depositors whole.

That was an incentive, not a command. It encouraged depositors to be patient and discouraged their standing in long lines for hours, taking their money out and putting it under their mattresses, where it might be found and stolen.

Not every useful market intervention involves incentives. Some involve regulation. Regulation is not the same as trying to command the markets as King Canute sought to command the tides. Regulation doesn’t mandate a particular result. Instead, it keeps people from doing stupid, risky, self-defeating and dangerous things.

Limits on “margin” for buying securities were a good example. The stock-market “bubble,” or (more accurately) greed stampede, that preceded the fear stampede and Crash of 1929 had been fueled by buying securities on margin, i.e., with borrowed money. So after the Crash, Congress set up the Securities and Exchange Commission (SEC), which put strict limits on how much margin securities buyers could take, i.e., how much they could buy securities with borrowed money.

Those limits couldn’t stop the Crash, which had already happened. Nor could they fend off the Great Depression that followed the Crash. But they could help prevent another similar crash from happening again. So those limits on margin remain in effect today.

You don’t have to have technical training to recognize the difference between moving the hands and fixing the watch. Anyone can learn to do it.

Hillary Clinton is an example. In her 2008 campaign for the presidency, she proposed a five-year freeze on mortgage interest rates. That would have been just moving the hands.

Interest rates are the prices of money. If there’s one thing we know about free markets, it’s that government fixing the price of anything virtually insures unintended consequences. In my antitrust course, I used to show graphical-mathematical proofs that fixing low prices for goods has one or more of three undesirable consequences: (1) bankrupting the firm(s) that make the goods, (2) causing shortages, in which consumers trade time wasted standing in lines for lower prices, or (3) private business devouring massive government subsidies (“corporate welfare”) to stay afloat.

Price is the most basic parameter of market performance. So “fixing” it by decree is just like moving the hands on the watch.

In 2008, Hillary, like many pols, didn’t understand this basic economic point. But she has learned. Her recent major economic address came a long way from trying to command the tides like King Canute. Among other things, she proposed a useful change in our tax codes: lengthening the holding period for paying lower taxes on long-term capital gains. That change would create an incentive system, with the differential between higher taxes on “ordinary income” and lower taxes on long-term capital gains driving investors to make longer-term investments and eschew speculation and get-rich-quick schemes.

This proposal was hardly original with Hillary. I have made it twice on this blog. (See 1 and 2.) But it shows her evolution from a Soviet-style command pol to a leader with some sense of how the economy works. Whether she or anyone else has the political skill to fight Wall Street and quell the speculation that drives it is another matter, more one in Hillary’s ambit of expertise and skill.

Before leaving the subject of not just moving the watch’s hands, we must tackle one final issue: risk. Risk is inherent in free markets. Differing perceptions of risk are what drive voluntary transactions and make free markets possible. So trying to eliminate risk completely is not only impossible and unwise; merely trying to do it usually has serious unintended consequences.

Nevertheless, it’s a legitimate goal of regulation to keep people from being stupid, i.e., taking on excessive and obvious risk. FDR was right to insure personal deposits to avoid bank runs, if only because standing in line to get one’s money out before the next guy would only cause additional, perhaps unnecessary bank failures. Similarly, today, the Fed is right to impose significant capital reserve requirements on our “too big to fail” banks. That’s especially so after those banks showed disregard for risk by taking “liar’s loans,” packaging them and selling them as securities, and then writing insurance on the securities in the form of so-called “derivatives.” In retrospect, at least, it’s absolutely clear that no one in the banking industry had the slightest idea of (or concern for) the systemic risk involved, or the big picture.

So the Fed now “rides herd” on the big banks, making them keep sufficient capital reserves to cover at least foreseeable risks. We can all only hope the Fed does its math right, because those reserves are the strongest, if not the only, barrier holding back another Crash of 2008. The bankers and their friends in Congress have all but pulled the teeth of Dodd-Frank.

Then there’s China. It’s ruling committee has scientists, engineers and economists, not just lawyers. Its New Mandarins, aka the “Communist Party,” may be one of the biggest and most effective political meritocracies in human history. But China’s leaders—perhaps because of their almost complete control over politics—still haven’t learned to fix the watch without moving the hands.

In trying to foster a thriving but risk-free stock market, they made two key blunders, both of which led to the current fear stampede and crash. First, they tried to remove the inevitable (and necessary!) risk from investing by picking winners and even setting the prices for initial public offerings of stock. Since risk and price are both basic market-performance parameters, this was moving the hands, not fixing the watch. Second, they made the very same error that led to our own Yankee Crash of 1929: allowing an orgy of buying stock on margin. If we humans cannot learn from each other’s own not-too-distant mistakes, how can we advance?

4. The problem of labor

Another fundamental economic problem is not how to fix a broken economy, but how to reconcile the divergent interests of managers, owners and labor. This problem is never going away. The conflict of interest and tension that drive it are parts of the human condition.

As long as some people work and others own the workplace and manage and direct their work, there will be conflicts between labor, management and owners. There will be disputes over working hours and conditions and how to share the fruits of what labor, capital and management produce, working together.

Tension and conflict are not only inevitable. They are part of our biological evolution, from the time when we lived in clans of about thirty individuals led by an alpha male. The alpha male (an now an occasional female) may call most of the shots, but how does he or she take care of the rest? Is the clan a happy family or an unequal tyranny? As we Yanks and our culture morph from one to the other, this may be the most important social issue of our time.

When you think of how fundamental this conflict is to our human nature, it seems odd that we’ve done so little to resolve or ameliorate it. We’ve put men on the Moon. We’ve solved the mysteries of the atom and learned how to extinguish our own species. We’ve conquered most diseases caused by pathogens, and we’re on the way to beating cancer, a disease of aging and corruption of our own DNA. We’ve even learned how to tame the boom-and-bust cycles of free-market economies, at least most of the time. (We Yanks dropped the ball in stopping a fear stampede based on worthless mortgage securities and misguided derivatives, but maybe our regulators will have greater skepticism for lucrative, mumbo-jumbo financial “innovations” next time.)

Yet for all this progress in other fields, our species still hasn’t yet begun to solve the most basic human problem of a free-market economy: how to split the pie between labor, management and capital. Not only don’t we have a solution or even a good theory. We don’t even have consensus on a few good things to try.

All we have so far are two extremes. The Communists said the workers must rule, in a “dictatorship of the proletariat.” As I’ve analyzed before, that deceptively simple phrase contains a hole of riddle and contradiction large enough to have sunk two huge national economies: Russia’s and China’s. The other extreme—letting unfettered markets rule, come what may—has produced our new Yankee Guilded Age, with all its extreme inequalities and other discontents.

It’s absolutely amazing how often these two tried-and-failed “solutions” still appear in so-called “serious” politics. In fact, it’s so amazing it reminds us of Albert Einstein’s definition of insanity: trying the same thing over and over and expecting different results.

No serious thinker believes that Communism, a dictatorship of labor, or laissez faire capitalism is a solution to the age-old human problem of reconciling the interests of labor, management and owners. If you think otherwise, just sit back and watch inequality increase, workers get more and more miserable, and our much-vaunted middle class diminish and maybe disappear, as the current GOP uses all its considerable political talent and power to bring back the Gilded Age of a century ago, and to pander to the new Robber Barons, mostly from Wall Street and the fossil fuel industries. All they are doing is impoverishing the middle class and putting Henry Ford’s Model T in reverse.

In the middle of the last century, we Yanks thought we had a solution: collective bargaining. Let workers join together and haggle collectively over their own working conditions and their share of the pie. Isn’t the essence of free markets voluntary agreements on business and economic affairs? Since each worker individually has negligible power to bargain, let them unite and make deals with management and owners collectively.

That was a good idea for a while. The socioeconomic system built on collective bargaining, and the series of laws that implemented it, worked fine for about half a century. They gave us Yanks the richest and least unequal economy in human history.

What killed them was globalization and new technology. Workers can’t bargain collectively when there are other workers, elsewhere in the world, who can’t or won’t bargain, collectively or otherwise, and are willing to take whatever they can get. American business defeated collective bargaining simply by going offshore.

Technology didn’t help. When you have an industry as complex as the auto industry, with millions of workers in assembly plants and parts suppliers, it takes years, if not decades, to work out fair collective bargaining agreements. The process created and requires vast union bureaucracies, and sometimes gave union leaders too much power and an incentive to abuse it.

The whole structure was simply not sustainable in a technological environment in which products, corporations and even whole industries can arise, compete and subside in a few years. Personal computers could rise and peak, for example, and be largely replaced by hand-held mobile devices, in a mere two decades. In comparison, a single industry-wide bargaining agreement lasts about five years.

So globalization and the explosion of technology, working together, killed off collective bargaining. Today, only about a tenth of workers in the United States are unionized. Most of them work in state or local government, whose work cannot be offshored. Other workers resent their generous pension and benefit packages. The bosses, owners, and their bought pols are now using that resentment to divide and conquer—a longstanding and trustworthy plan of the managing and owning classes.

Collective bargaining worked so well for half a century. But it no longer works. Worse yet, socioeconomic thinkers have come up with nothing to replace it. The best they can come up with today is raising the minimum wage.

Don’t get me wrong. I support a raise. I would vote right now to raise the minimum wage throughout the United States to $15, as Seattle has done and New York City has done for fast-food workers.

But raising the minimum wage is basically moving the hands on the watch. It’s not making an intelligent adjustment to a changing, hard-driving, free-market economy. It’s a temporary expedient that, in the best of all possible worlds, will assuage worker suffering at the bottom and give more workers more money to buy the things that they and their fellows produce.

But raising the minimum wage will undoubtedly have unintended consequences. I’m not sure precisely what they will be, and I’m pretty sure that conservative think tanks’ prediction of a precipitous drop in low-wage jobs is overblown.

Nevertheless, this pricey and sudden expedient is sure to put some small businesses out of business and to stress others. More important, to the extent it’s not universal (and most proposals I’ve read about so far are not) it will pit the favored low-wage workers against others.

In the end, raising the minimum wage may only create more granular inequality and more opportunity for the selfish managers and owners to divide and conquer. I support it now because it’s the only solution anyone can see to already ludicrously wide and widespread economic inequality, which is growing like a cancer. We have to do something, and moving the hands on the watch may be all we can do right now.

Germany may have found a better way. German corporate business has one or more labor representatives on its boards of directors. So labor is, in a very real way, part of management. Except in labor-owned businesses, which exist but are very rare, we Yanks have nothing of the kind. We consider labor a separate constituency, inherently and irremediably antagonistic to management.

We Yanks have a lot of talk in law and business schools about employees and customers being “stakeholders” in business. It’s good and useful talk. But it’s notable, and often discordant, because our traditional Yankee view is that business exists to make money for shareholders. If that’s your view—and it is for many, many in the business and political communities—it’s hard to escape the conclusion that lower wages and more miserable working conditions (if they cost less) are good things.

Can we draw a straight line between Germany’s labor representation on corporate boards and its about-ten ratio of CEO’s to average worker’s pay, while our ratio is over 400? Probably not. But the issue is worth some study. After all, it was not some dreamy socialist who figured out how to build a consumer society in which workers could afford to buy the good things they made as laborers. It was Henry Ford.

5. The effect of enterprise size

The size of enterprises also likely makes a difference in both the effectiveness of capitalist enterprise and the treatment of workers. Germany’s forte is Mittelstand: mid-sized business. In contrast, in America we have gigantic corporate behemoths that span the globe. At the same time, we idolize the sole proprietor and small business with ten or fewer employees. So unlike Germany, we tend to focus on the extremes of size.

As I’ve outlined at length in another essay, corporations are a vital step in human social evolution. They bring economic activity down to a size of organization closer to the one we know from our biological evolution: a clan of about thirty governed by an alpha male.

At least modern corporations are much closer to that biological paradigm than the impossible (and often ungovernable) size of modern nation-states, with their hugely diverse populations, often widely differing cultures, and tens or hundreds of millions of voters. If corporations didn’t exist, we would have to invent them, just to get things done efficiently and in a way that feels right to us as we evolved.

But if that’s the socioeconomic function of corporations, then isn’t Mittelstand the optimum size of business? Aren’t gigantic corporations with tens or hundreds of thousands of employees and thousands of offices or locations too big? And isn’t the sole proprietorship or two- or three-person partnership too small, too much like a family with a single, dominant, often bullheaded leader?

If these speculations are right, then Germany may be onto something, and not just lucky in the history of its culture.

I’ve discussed elsewhere the discontents of conglomerate enterprises, and I won’t repeat the discussion here. But it’s worth noting that conglomerates have two big disadvantages. First, they are too big to govern easily or well, simply as a matter of number of people. Second, and more important, they are by definition too big to focus on “sticking to their knitting.”

In fact, they have no knitting, other than the vague and general goal of making money. That’s why GE has rejected finance (except for buyers of its own products) and is in the process of returning to what it does best: designing, making and maintaining advanced heavy-industrial products. That’s also why GE’s stock price is slowly increasing in tandem with its de-conglomeration. Conglomerates simply lack the optimum size and the subject-matter specialization that make incorporation a vital step in human social evolution.

So on a scale of size of enterprises, which of the four economies best meets the Goldilocks test? It’s certainly not Japan, with its business largely organized in huge conglomerate zaibatsu. While these interlocked and cross-owned enterprises have some advantages in resilience (due to the possibility of cross-financing of sudden needs) they have definite disadvantages in ease of governance, nimbleness, and focus.

The United States is probably not the Goldilocks society, either. We Yanks have a lot of businesses of all sizes. But once they get to middle size—if they are successful—they often get gobbled up by a larger enterprise. The tendency to build empires and add needed technology or personnel by acquisition is strong here. Even start-ups, if successful, tend to grow big quickly. Just look at Amazon, Apple, Google, or even Tesla today.

As for China, it’s hard to say. I’m not aware of any authoritative study of business formation in China. China still has too many SOES, and many of them are too huge and diverse. Much of its corporate empires are conglomerates that mimic Japan’s zaibatsu or South Korea’s chaebol. And many of them are built on the achievements, personality and idiosyncrasies of a single leader, usually an alpha male.

So as we look at the world’s four leading economies, only Germany stands out as taking the middle road, not just in the size of its enterprises, but in the degree of genuine concern and accommodation for labor. Although the smallest of the four in absolute terms, is Germany the Goldilocks capitalist economy?

6. Conclusion

Part of the answer comes from comparing the four on a per-capita basis. Here, in tabular form, are the fours’ 2014 GDPs, midyear 2015 populations, and calculated GDPs per capita:

The World’s Four Leading National Economies

Nation2014 GDP
(Trillions of 2014 US Dollars)
Midyear 2015 Population
(Millions)
GDP Per Capita
(US$)
United States17.42309$56,375
China10.361,338$7,743
Japan4.60128$35,938
Germany3.8581.8$47,066


Glancing at these figures makes one thing clear. Germany has by far the smallest population of the four leading economies. It’s not the heavyweight by any means. China is.

But on a per-capita basis, Germany is right behind the United States. And, in the last few decades, Germany had to rebuild itself from the physical devastation of the war it started and lost, the economic devastation caused by Soviet occupation and Communism, and the wrenching changes of reunification after the Soviet Union’s collapse. You might say that Germany, in recent decades, has had a few obstacles to overcome.

But look at Germany today. Is it just a coincidence that it has, by far, the lowest CEO-to-average worker pay ratio, that is, the lowest earnings inequality? Is it just a coincidence that Germany focuses on enterprises of a size that mimics our biological evolution and avoids conglomerates and mega-corporations? Is it just a coincidence that Germany, of all the four, has some specific and unique solutions to getting managers and owners to focus on the needs of labor?

In the last century, state capitalism, laissez fair capitalism, and Communism fought each other to the deaths of tens of millions. Conglomerates still operate worldwide, mostly to satisfy the biological-evolutionary empire-building proclivities of individuals managers and owners. Our species hasn’t, it seems, yet learned much from the mistakes of the past. Under these circumstances, might Germany’s “solutions” be worthy of more careful study?

Letter to Representatives in Congress on Deal with Iran

Following is the text of a electronic letter I have sent to my two Senators and representative in the House, supporting the President’s and Secretary Kerry’s nuclear deal with Iran. Please feel free to copy and modify it for your own use:
I am a constituent and supporter and a contributor to your campaigns. In my life, I have seen my country undertake three unnecessary wars: in Vietnam, Iraq and Afghanistan. Not only were these wars unnecessary; they are also the longest in our nation’s history. I don’t want to see another with Iran.

I am also Jewish and a supporter of Israel. Yet I believe that Prime Minister Netanyahu, like Dubya for us, is a bully devoid of subtlety, finesse, and sometimes even common sense. On the Iran Deal, he is simply wrong, as history will judge.

Our visionary President has cut a good deal with Iran. He is trying to set a precedent of using peaceful sanctions and hard diplomacy to replace the half-hearted, interminable and domestically corrosive wars that, since the Korean War, have become our dismal national signature.

This is one of the most important issues you will ever face in Congress—something that might, in the long run, change human history for the better. A successful deal will almost certainly change our American history for the better.

There is no credible alternative to the deal the President and Secretary Kerry have cut. Please support them, not just with your vote, but with your voice on the floor. My future support will depend on your action on this vital world-historical issue.

Sincerely,

Dr. Jay Dratler, Jr.


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22 July 2015

Twenty Minutes that could Change War Forever


Twenty minutes. That’s all it took. The Islamic State’s financial guru, so-called “Abu Sayyaf,” lay dead. With him lay a dozen others, probably underlings and bodyguards.

Our elite troops captured the guru’s wife, a probable accomplice. They freed one Yazidi slave. There were no US casualties. Our ninjas also captured a treasure trove of intelligence: computers, cell phones, and written records, not to mention the wife.

All in twenty minutes. This was war at its finest and most sophisticated. If we must have war, this is how it should be waged.

The last century’s Germans were a bit premature. They called their then-new, highly-mobile brand of war “blitzkrieg” or “lightning war.”

But lightning strikes in only a single place, and a rather small one at that. In contrast, Nazi blitzkrieg struck on a broad front, with all the usual wide devastation and massive civilian casualties. It was in the mainstream of the kind of mechanized war that had begun about a century before, just more mechanized, more mobile, and faster.

No real lightning ever worked like that, unless it started a forest or a city fire. What our elite troops did in May is much more like real lightning. In fact, it’s a kind of lightning never before seen: controlled and directed lightning. It got the bad guys and no one else. It got an important leader and a massive trove of intelligence. It didn’t even destroy much property.

Just for contrast, consider our fire-bombing of Dresden and Tokyo in World War II. Tens of thousands of innocent civilians died, and whole swaths of otherwise innocent cities burned. Something similar, but even worse, happened in our nuclear destruction of Hiroshima and Nagasaki. Then think about what Dubya did: invading and occupying two sovereign nations for about a decade each, just to avenge the killing of some three thousand innocent civilians here, and to prevent a recurrence.

Don’t even think about what almost happened in October 1962. It would have killed hundreds of millions. It might even have destroyed the Earth’s biosphere, killing all life on our planet, except maybe for microbes. How can anyone believe that what happened in May was not much, much better?

Our military analysts downplayed the event. No leader is irreplaceable, they said. The hydra will grow another head.

But of course they would say that. Our military folk are not stupid; they’re not pols. They don’t brag about our best weapon. They want to use it, secretly, in surprise, effectively and seldom, but as often as they can.

Notwithstanding our video coverage of “shock and awe” in Baghdad, or our perpetually “embedded” reporters, war is not a spectator sport. It’s an all-out struggle between two clans of humans. Recently it has been based primarily on religion or ideology. But often it’s just based on tribe.

War is a dismal form of struggle that has exhausted all civilized means. It’s Von Clausewitz’ politics by other, bloody means. It’s best carried out quickly and in secret, with a minimum of bloodshed and “collateral damage.” Hence those twenty minutes.

This new type of warfare is the least destructive, and therefore the “best,” type ever invented. But in general application, it has a problem. Over a millennium of history has firmly established the doctrines of sovereign and diplomatic immunity. You don’t kill other states’ leaders, because they might kill yours. That would be bad for leaders and leadership, and ultimately for civilization itself.

Likewise, you don’t kill others’ diplomats or emissaries, even if at war, because they would kill yours. Then who would carry messages, wage diplomacy, and negotiate the terms of peace?

Yet despite its hubristic name, the Islamic State is neither Islamic nor a state. It’s a loosely organized, self-perpetuating band of extremists and terrorists using a grotesque caricature of Islam as a mask and propaganda tool. In reality, it’s just a criminal gang, like the Mafia but worse. So its leaders are fair game for our ninjas, or for anyone else’s.

Leaders matter. Today, skilled propagandists matter most of all. Look at Fox. Without its incessant propaganda, we Yanks would have an entirely different and much better nation.

That’s what bin Laden was, a propagandist. He was a miserable fighter, maybe even a coward. He was an abysmal leader of men on the battlefield. Almost every time he went out into battle personally, he and those he led barely escaped death.

But he was, by all accounts, a brilliant propagandist. He made every narrow escape from death, even those due to his own incompetence, “proof” of Allah’s protection and support. He did this with the aid of his family money and modern media. (As with Fox’, bin Laden’s propaganda didn’t have to make sense; it just had to attract attention and turn a few weak minds.)

Yet where was Allah when our Seals dispatched bin Laden? And how credible is all his brilliant propaganda now?

As you may have noticed, since bin Laden’s death, Al Qaeda Central has fallen back into the general noise of the millennial Sunni-Shiite agony. But it still spawns terrorism repeatedly and spastically, like some monstrous dinosaur laying eggs of death.

Why is that? Bin Laden’s sidekick Al Zawahiri is a well-educated medical doctor and probably a far better planner and strategist than bin Laden ever was. And he’s still at large, whereabouts unknown. But he doesn’t have a fraction of bin Laden’s skill at propaganda. So Al Qaeda Central is losing ground to terrorist upstarts like IS and more “normal” civil wars like those in Syria and Yemen.

They say our President was reluctant to approve our ninjas’ mission. Of course he was. He’s an empathetic man. He doesn’t like to kill people.

Colin Powell was reluctant, too. They called him “the reluctant warrior.” But his reluctance and consequent careful planning brought us Yanks our single clearest, simplest, cheapest and least bloody victory since World War II, in our “Gulf I” War against Saddam.

You might say that was our only clear Yankee victory in war since World War II, except in tiny Granada. Powell also had the good sense to advise Bush Senior not to invade Baghdad, and to keep Saddam contained with air power (remember the “no-fly zone”?). That strategy worked brilliantly for well over a decade, until Dubya’s Oedipal madness replaced it.

Leaders matter. Propagandists probably matter most of all. Next come the finance men: you can’t wage war without money.

Kill the skilled leaders, and the enemy grows weaker. Kill the most extreme and brutal ones, and the enemy grows more civilized. Kill enough of the worst, and the so-called “Islamic State” might become a real state, or at least something like Hezbollah or the Palestinian Authority—entities amenable to reason at least some of the time.

Then we might begin to see the other side of Von Clausewitz’ coin. Politics and diplomacy might begin to replace all the senseless beheadings, enslavements, blood, gore and devastation. Some day, the unhappy people of the Middle East might figure out that the fewer people you kill publicly and brutally, and the fewer you enslave, the weaker resistance you encounter. They might even start making deals.

As for us Yanks, thank God we have a supreme leader who is both empathetic and smart. Thank God we have the technology and expertise to train and equip the best ninjas in human history. And thank God, most of all, that the century of horrors driven by the absurd notion of “total waris finally ending. Better late than never, our species is coming to recognize that war, like politics and diplomacy, can show some subtlety and finesse, and that “collateral damage,” aka the wanton murdering of innocents, is just not a good tactic, let alone an effective strategy.

Footnote 1. This characterization of bin Laden comes from Lawrence Wright’s The Looming Tower, undoubtedly the most thorough and detailed study of bin Laden ever penned outside secret intelligence circles. See Lawrence Wright, The Looming Tower: Al-Qaeda and the Road to 9/11 at 110-120, 137-141, 222-223, 232-234, (Alfred A. Knopf 2006).

Footnote 2. World War I began in Europe on July 28, 1914, about 101 years ago. In the number of its casualties and the obscurity and stupidity of its causes, that war was probably the single most senseless in human history.

It—and not the later Nazis—spawned the sui-genocidal notion of “total war.” The century that followed saw the most horrible war in human history, the Holocaust, the first use of nuclear weapons (against civilian populations), the forcible division of Germany and Korea, the Cold War, which nearly “resolved” in species self-extinction, our abject Yankee loss in Vietnam, two wars in Afghanistan, a close brush with nuclear war between India and Pakistan, and our still-ongoing war in Iraq. Let’s let the passing of that wretched century serve as a marker. Please.

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16 July 2015

What the EU and the Eurozone Really Mean


[This essay is a companion piece to a recent post on why the last three weeks have been good ones for our human species.]

“The internal market [of the EU] shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the [governing] Treaties.” Consolidated Treaty on the Functioning of the European Union, Article 26(2).

One of our species’ chief character flaws is taking monumental achievements and hard-won blessings for granted. We Yanks do it with our Bill of Rights and our Civil War Amendments, which abolished slavery and assure all citizens fundamental rights and equal treatment under law. Europeans, especially the Brits, do it with their EU and the common currency in the Eurozone.

What we humans all tend to forget, as we go about our daily business, is how durable are our many cultural pathologies, and how fragile the political institutions that try to cure them. To effect durable cures, we humans must continually nurture those institutions like delicate flowers, lest they wither. In the best of all possible worlds, we ought to expand and spread them.

If we don’t, from time to time we relapse into pathology. That has been our consistent history. And that will be our species’ destiny unless we exercise eternal vigilance.

Our Yankee phrase “equal justice under law” is literally graven in stone. It appears on the facade of our Supreme Court building, above the massive marble columns that support the roof.

But stone doesn’t govern the affairs of men. Culture does. Law tries to, but law only reflects culture. Culture can and does circumvent, twist and change law. In the long run, culture trumps law every time.

The whole history of the American South is proof positive of that. Think not? Then travel on Federal Highway 1, which runs down the Eastern Seaboard from Virginia to Florida. Who’s it named for? Jefferson Davis, the president of the Old Confederacy, who fought the bloodiest war in our Yankee history to preserve slavery and racism.

So which symbol is more important? The motto “equal justice under law” that crowns the Supreme Court Building’s facade, or the name of (Eastern) Highway 1? Most US citizens see the Supreme Court building only once or twice in a lifetime, if at all. But millions drive the “Jefferson Davis Highway” to work and back every day. They see its many naming signs once or twice a day. So the name of a man who fought against equality, and for slavery, aristocracy and bossism is ever-present before them, if not ever in their consciousness.

With these sad truths in mind, it become easier to understand the recent spate of police killings of unarmed African-Americans in America. It becomes easier to understand the recent murder, in cold blood and with malice aforethought, of nine good and innocent “black” churchgoers bending their heads over the Bible.

It took their unspeakable premature deaths, and their survivors’ divine forgiveness, to take the Stars and Bars—the very symbol of racial hatred and slavery—down from the state capital in South Carolina at last. But it wasn’t stone mottos or law that accomplished that much-desired end. It was people, who are slowly changing the culture of our American South.

To see this, you have only to admire the photo of the signing ceremony for the bill that took the Stars and Bars down. There was South Carolina’s Governor, Nikki Haley, amidst a sea of mostly darker faces. A woman of (East) Indian descent, she could no more have become governor of South Carolina a mere few decades ago than she could have become prime minister of South Africa during its Apartheid era.

But there she was, in 2015, smiling as she signed a bill to take down a symbol of inherited hate and put it in a museum, where it belongs.

What made this cultural miracle possible? It wasn’t law, and it certainly wasn’t stone mottos in Washington D.C. It was people. It was the migration of retirees and workers from North to South, coming in search of better weather and better opportunities. As they came, they brought with them new ideas about tolerance and equality. And they promulgated those ideas by joining sympathetic native Southerners and living with them day by day.

This is how cultures change: by exchanging people and, with them, ideas. Just as some Southerners would like to re-fight our American Civil War, the Serbian tyrant Slobodan Milošević wanted to refight the battle Kosovo Pole from 1389, over six centuries ago. That was the impetus for the recent Balkan Wars, which left the Balkans still simmering with hate.

Old hatreds die hard, but new blood can soften them. Biological evolution takes many generations. Social evolution takes decades or centuries. Voluntary migration of people is much, much quicker.

That’s why the EU’s “free movement of goods, persons, services and capital” is so vital to our species’ future. Like our Yankee Constitution’s “privileges and immunities of citizens,” it permits free migration anywhere within the larger entity. It allows free migration of people to smooth over the rough edges of the tribalism and parochialism to which our species is ever prey.

Some day, free migration from North to South will erase all the residual hatred and tribalism from American Southern culture. Some day, migration into and within the United States will make “equal justice under law” a reality, not just a slogan.

Some day, the Balkans’ pathology will be cured in like manner. Some day, Turkey will become a member of the EU, and its historic enmity with Greece will begin to fade. Its voters’ recent rejection of Erdogan’s attempt to “pull a Putin” was a giant step in that direction.

Some day, retirees and other migrants from Germany, Holland and Finland, coming in search of better weather, will begin to change Greece’s culture. They will bring their willingness to pay taxes, their thrift and hard work. They will exert influence not by imposing austerity on a suffering people, but by being there, participating in the local culture, and changing it by their participation.

Some day, even Serbs and Russians will acknowledge the genocide at Srebrenica, just as today’s Germans acknowledge the Holocaust. Once that happens, similar atrocities will become much less likely.

In 2009, I had the privilege of giving some lectures on law in Strasbourg. That was five years after the EU had admitted ten new members.

Knowing of the EU and some of its history, I didn’t bother with national borders in planning the trip. I landed in Frankfurt and took a train directly through Karlsrühe, still in Germany, to Strasbourg, now in France. While still in the airport in Frankfurt, I got some Euros from an ATM machine, knowing they would be good in France and throughout my journey.

I am blessed, or maybe cursed, with a vivid imagination. As our train approached the German-French border at the Rhine, I thought about the many wars over Strasbourg and its province, Alsace. I recalled the Franco-Prussian War, World War I and World War II, all of which started in Europe. I imagined the Rhine filled with blood, not water.

Then, as our train slowed to cross the bridge over the river, I blinked and came back to modern reality. I found myself sitting in a comfortable, modern train, drinking a glass of wine, staring into bright blue water, and wondering at the absence of any border crossing, border guards, customs forms and indignities, or men with automatic weapons.

All I saw was a beautiful, stately river, the bright sun of a gorgeous early May day, and a tidy, orderly roadway without a piece of trash in sight. My sense of wonder and joy only increased later, when I found that most educated people in Strasbourg speak both German and French, and many passable English, too.

That, my friends, is the meaning of the EU and the Euro—the common currency that makes travel, trade and migration infinitely more convenient. They are both vital steps in curing the vicious tribalism that has made our species its own worst enemy throughout human history. They are big stepping stones on our way to cultural homogenization and the stars.

The alternative we can see clearly now, if we just look a little further south. We can see it in Libya, Somalia, Sudan, Syria and Yemen. The EU is different because it passed that stage of historical development centuries ago, at a time when human weaponry was not nearly so ubiquitous or so destructive.

With us Yanks still winding down our own Civil War, which ostensibly ended a century and a half ago, the EU is the new last, best hope of mankind. So no, it’s not just about money. Not at all. You don’t know how priceless peace is until you no longer have it. And then it’s too late.

Footnote: There is also another Federal Highway 1, which runs up the West Coast of the United States. In keeping with the West’s relative distance from dismal history and tribalism, it bears no common name, let alone one of a long-ago-defeated rebel leader. Colloquially, part of it bears the name “Big Sur Highway,” for a stretch of scenic and unspoiled near-wilderness along California’s rugged coast.

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14 July 2015

A Good Three Weeks for Our Species


There’s a lot to lament in our modern globalized world. Our species spends far too much money on arms and armament, preparing to murder each other. Apart from Germany, we spend far too little on the global Energiewende that we all know is inevitable. Our rich are far too rich and arrogant, and the rest of us far too confused and powerless. In the midst of all this misplaced energy, a gross and vile buffoon named Donald Trump is “seriously” running for president of the world’s number-one economy and chief superpower.

So if you have a pessimistic bent, you can easily justify a good despond.

But sometimes, once in a while, we humans get things right. The last three weeks have shown what we can do if we’re smart, dogged and humble, much like Pope Francis.

The most important event occurred this morning: the long-awaited deal with Iran. If it sticks, it will be the crowning achievement of Obama’s presidency. In the long run, it will be more important even than “Obamacare,” which already has given over twelve million ordinary people new access to the world’s leading medical science and technology.

Why so? The Iran Deal shows that we humans have learned a vital lesson: treating a nation—any nation—like a cornered rat is not good policy. Economic isolation and sanctions can work as deterrents, but they don’t work as punishment for past behavior. They work only if the target has the power to remove them by changing its future behavior for the betterment of all mankind.

We learned this lesson the hard way about a century ago. The victorious World War I Allies punished a defeated Germany collectively, kicking it when it was down. Our then president, Woodrow Wilson, was a thoughtful ex-professor, just like our current one. He strongly urged the Allies not to do that.

They didn’t take his advice. So what they got was World War II—a massive exercise in collective self destruction. Had the Nuclear Age arrived a little earlier, it might have extinguished our species. For almost half a century, the whole world suffered for the Allies’ blunder. About fifty million people died prematurely.

But our species can learn. And so we have the now-concluded Iran Talks, which turned the collective punishment of sanctions into an effective deterrent. No war. No wanton destruction and murder. No entrenchment of the natural hatred that flows from murder and mayhem as blood from a wound. Just hard pressure—the stick—plus the carrot of letting a proud, ancient and capable people rejoin the modern world.

Never mind that this problem was largely of our own Yankee making—maybe our biggest foreign-policy blunder after Vietnam. Never mind that it all started just over half a century ago, when we and the Brits engineered a coup to depose Iran’s duly elected prime minister, all over oil. Never mind that we made things worse by inciting Saddam to wage a murderous war against Iran that accomplished nothing but killing an estimated one million people on both sides.

Today Iran, after a half-century detour, is very close to being a democracy again. Today peace and rapprochement with our one-time Big Cold War ally are no longer fantasies. Today the end of our senseless and tragic Little Cold War with Iran is in sight. As Winston Churchill once said, we Yanks always do the right thing, after exhausting all the alternatives.

Our species’ next big achievement was the deal between Greece and the EU. Few recognize how vitally important that accord was and is. Most think it’s all about money.

But it’s not. The EU is one of our species’ most glorious and noble creations ever. In a way, it’s even more important than our own Yankee nation, especially in our current state of mental and emotional frazzlement.

Unlike our nation, the EU is a melting pot of entirely different cultures, with different languages, religions and long and enduring histories. Many of them fought each other for centuries, over territory, religion, cultural differences and imperial ambitions. Now they are at peace and increasingly productive, despite their durable differences.

That is the EU’s significance and the significance of the somewhat smaller Eurozone. Now the German, Dutch and Finnish taxpayers have agreed to pay more, and the Greeks have agreed to work harder, to maintain the integrity and preserve the future of one of the most significant political achievements in human history. The effort is not just worth the money and the suffering. It’s priceless.

Next to these two monumental achievements, the two remaining ones of the last three weeks may seem small potatoes. But in the long run they, too, will have their salubrious effect. Having passed the one-quarter milestone in fully renewable energy, Germany shut down its first-to-close nuclear power plant on its way to Energiewende. And our own confused and beleaguered nation maintained its leadership in human tolerance and equality by allowing same-sex marriage nationwide.

To be sure, there is still the possibility of backsliding. But the President has his veto pen, not to mention right and history on his side. If Europeans stop thinking for just a moment about money and start thinking about their own miserable history and human progress, they will stop doubting their European Project and double down on our species’ most constructive inter-cultural effort yet. The Germans, with their fine engineering and dedication to purpose, will continue to lead the way in renewable energy.

And we Yanks, once the world’s undisputed leaders in just about everything, will continue to lead the way in human tolerance, equal treatment of individuals, and personal liberty. If so, some day every human may, along with Pope Francis, shrug his or her shoulders at behavior that has no direct effect on him or her and ask “Who am I to judge?”

So take some time, this week or next, to do what we self-named Homo sapiens do best: celebrate. Raise a glass and congratulate our species for taking some giant steps in growing up.

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08 July 2015

Presidential Election 2016: The Lessons of 1968


It would be hard to invent a worse system for picking a supreme leader than what passes for “democracy,” these days, in our Yankee presidential elections.

Think about it. Who chooses our president, and how?

With the two parties in rough parity, it’s the “independents,” who are mostly “undecided.” Why are they undecided? Mostly because they aren’t interested enough or well enough informed to have an opinion until a couple of weeks before the election. In short, they don’t know and they don’t care.

When they start to care, just before the election, what moves them? Negative attack ads, the most effective of which have nothing to do with national policy. Instead, these ads push “social-issue” buttons like abortion, same-sex marriage, guns, and religion, or (in foreign policy) paranoid views of the IS and the Russians—ridiculous visions of terrorists or Muscovites breaking into our bedrooms.

These things move real people to vote when they are too busy, too disinterested or too lazy to care about what really matters. I have met some of them. They seem to have absolutely no idea why the super-rich are getting richer and they are getting poorer, more stressed, and more harrassed.

Just for fun, contrast China. Its 80 million New Mandarins (misnamed “Communists”), all join the Party because they love politics. They have no lack of interest in it, and eventually no lack of knowledge. They compete against each other in a lifelong meritocratic struggle. As they rise in leadership, the top dogs get to know each other intimately, from close personal interaction and long observation. They know each other as well and as deeply as members of a family know each other.

None of them, like our average independent voter, learns about a candidate’s history, intellect, character and competence through Internet slanders or TV attack ads. None of them would ever think, as hordes of our “independent” voters still do, that one of their top leaders was disqualified from office for not being a citizen. (John Boeher may be an absolute cretin on everything economic. But he’s a passably smart politician. He never repudiated this lie because he knows it gets his party votes.)

In our good old days, as recently as the sixties, it was not thus. Experienced, savvy party elders picked the short list in smoke-filled rooms. They determined for whom the people got to vote.

Then the campaign season was not an eighteen-month orgy of gossip, trivia and video slander. There were a few months of campaigning and a few serious debates, followed quickly by the national choice. (If you want to know what real debates were like when they focused on policy and substance, not personality and gossip, take a look at the Nixon-Kennedy debates in 1960. They were as different from today’s sham shows as a play by Shakespeare is from mud-wrestling.)

So I’m not really sanguine that our 2016 elections will chose the best candidate for president, let alone for the right reasons. But it’s the only game in town.

In playing that game, it useful to consider an analogy with 1968. Then, as now, the Dems had been in power for almost eight years. Then, as now, the Dems’ presumed nominee (Lyndon Baines Johnson, or LBJ) had both strong positives and strong negatives. Then, as now, there were serious challengers for the Democratic nomination and party leadership.

There were important differences, too. Everything about Johnson then was bigger than Hillary now.

Before becoming president, on JFK’s assassination, Johnson had served twelve years in the House, twelve years in the Senate (including seven as majority leader), and three years as vice president. That’s 27 years, as compared to Hillary’s twelve—eight years in the Senate and four as Secretary of State.

The gap in achievement, both good and bad, is even more striking. As Senate Majority Leader, Johnson had pushed through the Voting Rights and Civil Rights Acts that ultimately put President Obama in the White House. Johnson couldn’t have done that, of course, without Dr. King’s courageous moral leadership, but Dr. King couldn’t pass laws by himself.

These feats of Johnson seem even more stupendous in retrospect. We know now, half a century later, how thoroughly racist our nation is and has been. Then it was even more deeply racist, and much more overtly so. Yet Johnson got our voting and civil rights laws passed—with the votes of Southern Democrats!—just a year or two after Democratic Governor George Wallace of Alabama had stood on the statehouse steps and declared: “Segregation now, segregation tomorrow, segregation forever!”

Like the man himself, Johnson’s bad side was also larger than life. Although JFK had begun escalating our military involvement in Vietnam, he reportedly had been reconsidering when assassinated. With little experience in foreign policy or military affairs (and apparently little interest in them), Johnson let pride and Texas machismo rule him. He kept doubling down on our blunder in Vietnam until it had become our first losing war and our most serious error in foreign policy ever.

Next to LBJ’s huge successes and huge blunder, Hillary’s entire history seems tepid. Her time in the Senate was so unremarkable that I can’t recall any highlights, let alone a significant peice of legislation that she so-authored. Her biggest success was as Secretary of State, getting UN approval for foreign intervention in Libya, just in time to save the rebels and eventually oust Qaddafi. (The ultimate outcome of that tactical success is, of course, still uncertain.)

On the bad side, Hillary has nothing to match Johnson’s War in Vietnam. But she did support Dubya’s needless (and seemingly endless) War in Iraq. She supported it too unthinkingly—without even reading the National Intelligence Estimate—and for far too long. Another of her errors in foreign-policy judgment may have been partly responsible for the untimely death of Benazir Bhutto, who, if not assassinated, might have been Pakistan’s first-ever female leader.

Of course no historical analogy can ever be complete. But we are not yet done with the similarities between 1968 and 2016.

For very different reasons—a needless, losing war in one case and economic mismanagement and inequality in the other—the Dems’ putative front runner enjoyed less than universal support. No one thinks that Hillary will be the relentless champion for the middle class that Bernie Sanders would be or that Elizabeth Warren can be when she is ready. Despite all the racism, no one (least of all I) believes that Hillary is the grandmaster strategist that President Obama is, who can get something, including Obamacare, out of nothing but mindless opposition.

In the end, President Johnson acknowledged the opposition to his blundering in Vietnam by stepping down. He declined to run. Hillary will do no such thing; nor should she. Her errors of judgment were mostly harmless, as she was never in a position to carry them through. And she’s learned a lot about foreign affairs since then, both in evaluating her own candidacy and as Secretary of State.

In a sense, everything about 2016 is more tepid than 1968. Yet the strongest aspect of analogy remains valid. In each case, the Democratic front-runner was wrong, or not strong enough, for many Dems on a key issue of the times: the War in LBJ’s time and economic inequality and injustice in Hillary’s.

So what’s a poor Democratic voter to do? The answer is simple but requires some discipline. Understand that primary contests are the time to vote your heart and, if you wish, to “send a message.” General elections are the time for Dems to close ranks and stand with their party and its choice of leader, lest the generational extremism of today’s GOP get yet another chance at bat.

That’s exactly what I did in 1968. In the primary, I voted for Gene McCarthy, the earliest and most vehement opponent of continuing our needless War in Vietnam. Yet in the general election, I voted for Hubert Humphrey, despite his vacillation on the war and his appearance of wimpiness. If more people had done the same, we never would have had Dick Nixon to kick around. Nor would we have had his “Enemies List,” his Watergate Scandal, his vile and racist “Southern Strategy,” or his ignominious resignation under threat of impeachment.

The very same approach is appropriate today. Just as the War in Vietnam was the predominant issue in 1968, economic equality and justice are today. In fact, economic equality is much more important today. In less than a generation, we managed to heal the scars of our first losing war, although our military took longer. If we let our inequality reach a tipping point, to which it’s very close, we could lose our social cohesion and our American Dream forever.

Then we could become another country entirely. We could end up like China, with an elite aristocracy defined by wealth, education, family connections and corporate power taking the place of China’s New Mandarins, aka “Communists.” If that happens, we might take generations, if ever, to recover. We could replay the fate of ancient Rome.

This is not an idle fear. My recent post on the dramatic rise of corporate power globally was descriptive, not prescriptive. That rise is a fait accompli, a fact of life in our twenty-first century. Now that the TPP seems greased for passage, perhaps even with the abomination of “pay for rules,” that power can only grow faster.

Yet whether we allow corporate power to subvert democratic government, dissolve our safety nets, and subvert rules that protect our health, safety, environment and planet is still, to some extent, up for grabs. The hour is late, but the tide is still turning.

There may be time to turn it back. Pope Francis evidently thinks so.

I understand and sympathize with the yearning of women for a supreme leader of their own gender. I also understand what that means at the polls, where many people, especially the perennial “undecideds,” vote on impressions and emotions, not analysis. So if Hillary wins the Democratic nomination, as now seems likely, I will vote for her, support her and maybe even contribute to her campaigns.

But philosophically I’m an engineer. My analytical brain knows that our Yankee society now has potentially fatal design flaws.

They are many. But perhaps the most corrosive include: (1) Citizens United, (2) filibusters and the so-called “Hastert Rule” in the House that effect minority rule in Congress, (3) banks that are “too big to fail,” (4) bailouts and the promise of bailouts that even our rich society cannot afford, (5) a health-insurance system that works well for the rich, comfortably for the comfortable, and abysmally for the rest of us, (6) police that kill unarmed kids repeatedly, expect to get off on “self defense,” and too often do, (7) so-called “mainstream media” that are celebrity-struck, gossipy, scatterbrained and largely irrelevant, (8) a laser-focused private propaganda machine called “Fox” that is more effective in perpetuating these design flaws than ever was Josef Goebbels in perpetuating the Third Reich, and (9) economic and social inequality to match that of our Gilded Age, that is growing rapidly and shows no sign of abating.

Curing even a single one of these design flaws—let alone all of them together—will take an electoral revolution and perhaps a constitutional amendment or two. It will take new and bold thinking. It will take people as self-confident, as unafraid of the future, as our Founders.

For all her good intentions and (mostly vicarious) experience, Hillary is not such a person. She’s a go-along-to-get-along leader, a “triangulator.” She charts her course among known political islands, but she cannot lead in a new direction. She simply doesn’t know how.

That’s why I supported the President over her as early as March 2007. And that’s why I’m looking for someone better now.

For all his age and his regional New-England patina, Bernie Sanders may be that person. He speaks the truth that we all know but are afraid to say. He understands how far we have fallen, as a society, from the justice, reason, egalitarianism and social cohesion that prevailed in our immediate post-war period, our so-called “Golden Age.” He has called for breaking up the big banks—the only solution to “to big to fail” that might actually do some durable good. Like Barack Obama in 2008, he is beholden to nothing and no one; so he will be as uncorrupt and incorruptible as our current President.

When your society has nine major design flaws, you don’t need a tune-up. You need an overhaul or a redesign. You need radical, fundamental, comprehensive change.

I’ve had a good run and live in comfortable retirement. I want to leave the nation I was born into closer to the intelligent system it was, with the wonderful promise it had, when I was born in 1945.

So I’m voting for and supporting Bernie in the primaries.

Maybe he can’t win. Maybe the game is rigged too far already. But I support him because he’s far closer than Hillary to what I think we need to fix our society’s potentially fatal design flaws. I also want to send Hillary herself a big, bold message.

We’ve got to nudge her in the right direction, which today means to the left. We’ve got to convince her she doesn’t have it in the bag. We’ve got to get her to pick Joe Stiglitz and Paul Krugman—both Nobel laureates—as her chief economic advisors. We’ve got to push her to recruit and announce early foreign policy and economic advisers as capable as Zbigniew Brzezinski and Henry Kissinger in their primes—people whose stratospheric intelligence and strategic ability are self-evident the minute they open their mouths. We do that by voting for Bernie in the primaries.

Bernie ought to have a far better chance of winning the Democratic nomination than did Gene McCarthy in 1968. Then the antiwar movement was at most four years old. It consisted mostly of kids. Unlike most others, they had the leisure to contemplate the wrongness of an American colonial war and a strong motivation to do so: avoiding being drafted to fight in it. The rest of the nation was just beginning to focus on the issue when the chaotic 1968 Democratic Convention and the fall election came.

This time, things are different. By election time 2016 it will have been over eight years since the Crash of 2008 revealed our current societal design flaws. Those flaws have touched the vast majority of our people directly and personally.

Today almost everyone knows how badly things have gone wrong. And today there’s nothing comparable to the lure of false patriotism in wartime to prevent them from seeing that. Not even the GOP really has great enthusiasm for escalating of own Yankee roles in the continuing wars in Iraq and Afghanistan, or against IS.

In a strange way, even our extended and largely inane campaign season helps us. It gives us Dems longer to coalesce around a truly revolutionary leader, to grit our collective teeth and square our collective shoulders, and to resolve to do what must be done.

We live, or ought to live, in revolutionary times. The people are ready for a revolutionary leader who can take us back to the fair, cohesive, rational, practical society we once knew. We all owe it to ourselves and our progeny to make revolutionary change now, peacefully, before things get so bad that another French Revolution becomes possible.

I will support and vote for Bernie because I think he could lead that change. I will contribute to his campaigns, as I’ve already started to do.

But if Hillary wins, I will do again what I did in 1968. I will close ranks with others behind our party leader, despite my misgivings, and support her fully. For better or for worse, she will then be our champion.

We Dems simply cannot abide a GOP president today, let alone another Bush. Nor can our nation. Such a president would not be a Richard Nixon who, for all his faults, opened us up to trade and economic relations with China and signed the EPA and OSHA into law.

Today’s GOP president would come from a party so extreme that it would consider Nixon a radical left-winger, which he most certainly was not. At his best, he was the type of pragmatic leader the that GOP will never see again until it manages to reform itself thoroughly. Doing that will push the clock way past 2016.

Footnote. The biggest and truest rap against Hillary, in my view, is that she has a good heart but just isn’t that smart. She’s not as smart as her husband, and she’s not as smart as the President. She might beat that rap by picking for her team people who are smarter than she and letting us know who they are or will be before we vote. I hope she does so; she would improve her campaign prospects and, if she wins, her governance.

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