04 September 2023
20 March 2009
Financial Judgment at Nuremberg
History repeats itself, but never exactly the same way. Remember the trials at Nuremberg? They decided whether Nazi leaders could escape guilt and punishment for starting history’s most destructive war and perpetrating history’s biggest genocide by claiming, “We were just following orders.”
Nuremberg’s answer, you may recall, was “no.” That ruling was a giant step toward international civilization and away from tangible barbarism justified by the abstraction of national sovereignty.
You also may recall that the chief architects of Nazi crimes were already immune from justice because they were dead at the time. Der fürhrer Adolf Hitler had killed himself in his bunker in Berlin before the Nazis’ surrender. So had Joseph Goebbels, the architect of the Holocaust. The men on trial at Nuremberg were lower-level leaders. They had “just taken orders” from these two, and their obedience was their “justification.”
If you want to know why ordinary Americans are ready to seize torches and pitchforks against AIG’s bonus takers, just think of Nuremberg. It’s a matter of accountability for colossal wrongs.
AIG CEO Edward Liddy’s testimony Wednesday was revealing on this point. Asked repeatedly to name those whom AIG has dismissed for perpetrating our current financial disaster, he could cite only one name: Joseph Cassano. Head of AIG’s derivatives unit, Cassano repeatedly assured all and sundry that his derivatives could not fail. AIG fired him a year ago, but he reportedly walked away with $315 million in pay and bonuses.
I know, I know. It trivializes World War II and the Holocaust to compare Cassano to Adolf Hitler, or even to lesser villains tried at Nuremberg. But if you’ll indulge my analogy for a few more moments, I have a point to make. The worldwide financial meltdown of which Cassano may have been chief architect has deeper similarities to the Nazis’ crimes.
Whenever gangs perpetrate great disaster on the rest of us, there is always a power struggle. Human conscience, decency and common sense survive and strive even within the most terrible gangs. The power struggle within the Nazi gang produced numerous attempts on Hitler’s life, the most famous of which was the subject of the recent hit movie Valkyrie.
The rarefied and far less violent world of global finance is no exception. A man named Joseph St. Denis—a mere AIG auditor—tried to warn others of the disastrous mis-valuation of derivatives on AIG’s books. Cassano contained him, and St.Denis had the integrity and good sense to resign. (Liddy mentioned him in testifying, although not by name.) But no one else, apparently, came forward to carry St. Denis’ torch, far less the bonus takers, who had everything to gain by keeping silent.
Individual conscience within gangs demands nourishment. Civilization cannot survive without it. Things like whistle-blower laws provide the carrots; civil and criminal sanctions provide the sticks.
That’s why Nuremberg was transcendently important. It taught us that individual conscience and intelligence matter. They matter especially in our modern age, when obscure institutions like AIG’s Financial Products Group exert unimaginable (and sometimes unforeseeable) leverage over everyday life everywhere. Nuremberg teaches that, no matter what the threats and blandishments of your gang, you must act like a human being—like Homo sapiens (which means “wise man”)—at all times. And if you don’t, you will be held accountable.
Half a millennium ago, Martin Luther tacked a manifesto to the church door, affirming the autonomy of every individual before God. Six decades ago, the Judges at Nuremberg took that principle a bit further. We all, they ruled, bear responsibility for our acts, not just to God, but to each other. And that responsibility transcends race, religion, nationhood, and national sovereignty.
Both Luther’s manifesto and the Nuremberg trials were seminal moments in human civilization. Both reduced the power of gangs. Both increased the importance of individual conscience and responsibility. It is curious that both occurred in the very same country, though under vastly different circumstances.
When 73 individuals walk away with $1 million or more each after helping to perpetrate what may be the second biggest financial catastrophe in human history, we all know what that means. They were no mere financial foot soldiers. You don’t earn $ 1 million or more for being a foot soldier: ask the folks in Afghanistan and Iraq.
Like the criminals tried at Nuremberg, the bonus takers were co-architects of or co-conspirators in the global catastrophe that their acts precipitated. Whether their acts were deliberate, like the Nazis’, or merely negligent doesn’t matter. They must bear responsibility and accountability for the results of their acts.
That’s why the House voted overwhelmingly to tax away their bonuses. That effort is bad tax policy. If applied retroactively to AIG’s bonus takers, it may be unconstitutional. House Ways & Means Chairman Charlie Rangel sagely warned against it.
But larger principles are at stake. The veneer of civilization is dangerously thin. It needs constant patching and reinforcement. World War II and the Holocaust taught us that. Periodic genocides like those in in Cambodia, Bosnia, Kosovo, Rwanda, Darfur and Congo give us useful refresher courses.
Assaults on civilization do not stop with bombs and guns. Financial depredation can do as much damage. It can even presage war. Some scholars believe that World War II and the Holocaust began with economic sanctions on Germany, the Weimar Republic’s resulting hyperinflatiom, and the Smoot-Hawley tariffs, which only made global financial matters worse.
There is no telling what might happen if we release the dogs of war today. Even now, the financial dogs are straining at their leashes. Voices here and abroad call for protectionism and building national walls. Many leaders who should know better refuse to pitch in to aid global recovery. One of the few bright spots—the U.S. bailing out shaky foreign firms through AIG—isn’t even recognized as a small light in the darkness.
Accountability will be served. It is just a question of when and how. After Pearl Harbor, the V-2 blitz of London, Warszaw, Stalingrad and Auschwitz, we had Dresden, Tokyo, Hiroshima and Nagasaki. In our nuclear age, collective reprisals like that could destroy civilization finally. The only effective antidote is the kind of individual accountability that Nuremberg demands.
So clawing back those bonuses is not just a matter of common sense and economic justice. It is not just a matter of fairness—making sure that we demand much from those to whom much is given. Far less is it a matter of the sanctity of contract. It is a matter of personal accountability on which civilization’s survival depends. In the world of finance, it is bringing al-Bashir to justice.
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28 November 2008
Why the New $800 Billion Bailout is a Non-Starter
[For comment on Paulson’s and Bernanke’s performance generally, click here. For a skeptical comment on the earlier bank bailout, click here.]
1. Been there, didn’t do that.
2. Let’s leave stupid, greedy people in charge.
3. Let’s make moral hazard official government policy.
4. Pricing complex assets is hard.
5. Keep it simple, stupid!
6. If you build it, they won’t come.
7. The Plan poisons the well for the incoming president.
Coda: Paulson, Bernanke & Co. and the Decline of American Industry
Life Mimics Art
While we were all preoccupied with the Obama presidential transition and the Thanksgiving holiday, the Bush Administration laid its latest egg. It plans to spend $ 800 billion dollars buying securitized credit—$600 billion for mortgages and $200 billion for car loans, student loans, and loans to small businesses (the “Plan”). The Fed, not Treasury, will buy these assets, using its unlimited authority to spend taxpayers’ money.
Here are seven reasons why the Plan is a terrible idea:
1. Been there, didn’t do that. Less than two months ago, Congress adopted the TARP (“Trouble Asset Relief Program”), appropriating a separate sum of $700 billion to buy toxic assets. Paulson & Company never spent the money for that purpose. Instead, they preferred to “inject capital” into troubled institutions, in exchange for equity and a degree of government control.
Buying bad paper was a bad idea then because it’s risky and gives the taxpayer little or no upside or and no control over management or events. Nothing in that regard has changed. It’s still a bad idea now.
2. Let’s leave stupid, greedy people in charge. As far as I’ve been able to tell, not a single private-sector manager who helped cause our economic meltdown has been replaced (or even demoted) as a result of government action. Citigroup’s Board elected Vikram Pandit its new Chairman months ago, before the government got involved. The government did make management changes at institutions it now controls, like Fannie Mae and Freddie Mac. But I’m not aware of any management changes even at Sallie Mae (Fannie’s and Freddie’s counterpart for student loans), let alone any management changes forced by government action in the private sector.
Insofar as still-private financial institutions are concerned, the new bailout would spend another $ 800 billion without forcing any changes in the people who brought us this mess. Instead, it would reward their misfeasance, malfeasance, greed and stupidity by giving them new money to manage badly.
3. Let’s make moral hazard official government policy. The Plan implicitly asserts that the government now effectively controls credit markets. No one will lend, the story goes, without government aid. Yet the government has refused to exercise its control by curtailing imprudent and predatory lending.
The government may have exerted some indirect control over lending through the loan securitization process that it, through Fannie and Freddie, now controls. But if private institutions make the loans and package the loan-backed securities that the government buys, private parties will set their terms. The same dumb, greedy people who brought us this debacle will be free to make the same imprudent, predatory loans.
4. Pricing complex assets is hard. An important reason for Paulson’s dropping the earlier asset-purchase plan was pricing. No one knows how to price securitized loans or their derivatives because no one knows (1) how many there are, (2) what kinds there are, (3) what their value is, or (4) what real risk they entail.
The “clever” mathematical models used before the collapse to estimate risk and trade these instruments were self-evidently based on false assumptions. For example, most didn’t even try to assess the risk of a downturn in the housing market. They simply ignored that risk as unlikely or too hard to estimate.
As computer folk used to say in the old days, “Garbage in, garbage out.” That’s what the Masters of the Universe used to manage risk and price these instruments: mathematical garbage.
The housing-market meltdown and the current economic maelstrom only exacerbate the risk and uncertainty. Price too low, and no private party will sell, so credit markets remain frozen. Price too high, and you exhaust the bailout fund early, encourage risky behavior, and waste taxpayers’ money in useless expense that we can never recover. Nothing about any of these points has changed since Paulson rejected using TARP money for toxic-asset purchases. Instead, the problems have gotten worse.
5. Keep it simple, stupid! The Plan presupposes perpetuating the complex, opaque and risky financial practices that brought us our multiple economic crises. It will securitize loans and resell them in private markets. There the same clueless rating agencies, investment banks and financial institutions, without further regulation, will split up the securities, rate the pieces, and guarantee them with an unknown amount of poorly understood credit-default swaps and other derivatives.
In other words, the whole opaque, complex and wholly unregulated house of cards that created this mess will continue to stand. Not only will it stand; we will make it higher and shakier with $800 billion of new taxpayers’ money.
The notion that new credit alone can halt the housing-price collapse is a doubtful proposition at best. Yet even if it has some merit, wouldn’t giving the same money directly to Fannie and Freddie be more effective?
Surely $ 600 billion of new loan money will support our catatonic housing market at least until President-Elect Obama takes office. Fannie and Freddie could use the money to make prudent loans on standard, sensible, government-prescribed and nonpredatory terms, that is, if anyone wants them. If necessary, Fannie and Freddie could securitize the loans and sell the securities later, after Congress had time to study the debacle and prescribe new, sensible regulations for securitization and derivatives markets. Shouldn’t we repair and rationalize these dangerous, failing markets before we dump the better part of another trillion dollars down the same rat hole?
6. If you build it, they won’t come. The Plan is based on the assumption that lack of liquidity is the only thing holding credit markets back. That assumption appears false. At least nothing resembling evidence or careful study supports it.
Common sense suggests that much more powerful forces are retarding our credit markets. No one is buying homes now because their prices are still in free fall. Who wants to take on so much debt, only to watch the purchase’s value drop? As for cars, people are holding back because: (1) they don’t want to spend money when they don’t (or soon may not) have a job and (2) they think the Big Three might go bankrupt early next year.
There may be a few people who want house and car loans and can’t get them. But many of the new home loans will be refinancings, which don’t help build anything or stimulate the real economy. Anyway, general economic uncertainty and fear are much bigger factors in the financial slowdown than unavailability of credit. The same holds true for small businesses. They are loath to take on new debt in the current economic climate.
The only exception might be student loans. Perfecting one’s education is always a good idea. It’s an even better idea when no jobs are available. But most student loans are already committed for the current academic year, and there is plenty of time to arrange new ones after January 20 and before next September.
7. The Plan poisons the well for the incoming president. As I write this, the government has committed over $ 2 trillion dollars to stabilizing credit markets. And that’s not counting guarantees, which bring the total close to $ 7 trillion. A trillion here, a trillion there, and soon you’re talking real money.
Judging the Bushies by their actions, not their words, a cynic might conclude that their motives are political. Are they are trying to deprive the incoming Administration of all financial flexibility and kill its chances for economic success? Or are they simply acting with all the haste and impulsiveness—and with the consistent disdain for deliberation, care, evidence and study—for which they are notorious?
I don’t lightly impute evil motives. But the Plan is so inconsistent with common sense and good governance as to invite conspiracy theories. If we wait but a few weeks, we can base economic policy on the broader expertise and more careful study and planning that the new administration promises.
In the interim, what can we the people do? We could raise holy hell, writing letters to the editor, fomenting on talks shows, and filling the streets with grass-roots protests. Many probably will. We could demand that the new Congress (which meets two weeks before President-Elect Barack Obama takes office), begin summary impeachment proceedings for Bush, Cheney, Paulson and Bernanke as its first order of business.
But there is no need to flail about. It’s the holiday season. Let’s enjoy it, secure in the knowledge that we will have rational government in a few weeks.
All we need do is remain rational economic actors and react to current economic conditions. Let’s sit on our hands. Let’s adamantly refuse, individually and collectively, to burden ourselves with new debt until our government does something—anything—to rectify the meltdown in the real economy. At least let’s wait to incur new debt until the new president takes office.
No doubt the financial system is important. But we have spent far too much time, effort and money on it already, much of it fruitlessly. If we continue to focus on shuffling loan paper (let alone derivatives), rather than putting people back to work and money in their hands, we will only make things worse.
We must have real economic activity to have any reason to borrow or lend. The new administration promises to take care of that, and its economic team is smart enough to tell cause from effect.
From now until January 20, let’s all help rationalize the credit markets by buying, if at all, only for cash. That’s not a bad habit to get into, especially for a nation that has gorged itself on credit for the last twenty years.
Coda: Paulson, Bernanke & Co. and the Decline of American Industry
Let me be clear. I do not believe Paulson, Bernanke & Co. have ill motives. Furthermore, I don’t doubt their expertise. Although he talks like Dubya (do inarticulate folk flock together?), Paulson is reputedly one of the smartest guys on Wall Street. Bernanke is a well recognized macroeconomic and monetary-policy expert. He made an additional specialty of what caused the Great Depression, which we soon may repeat.These are experts with relevant expertise. The problem is that their expertise is narrow and their team shallow. They have no one who represents or understands industry, let alone science.
If you hire a plumber and an electrician to build your house, you’ll get great bathrooms and lighting and lots electrical outlets, but little else. We are trying to rebuild our economic house with finance and banking alone. But what we need is new industry and new basic research. We also need an architect, someone with all-encompassing strategic vision.
By now it should be clear to anyone that we have holistic problems that demand holistic solutions. The collapse of our housing bubble tanked our construction industry. Our auto industry needs life support because it has high costs and has had bad management and virtually no innovation for half a century. Microsoft has become a sleepy, stagnant, unresponsive monopoly, like IBM in the 1970s. Boeing is nearly a year behind in delivering its fuel-saving “Dreamliner.” Kodak, although still in business, had lost its lead in cameras to the Japanese. Big pharma has produced no big new class of drugs (like the statins) in over a decade. The impact of DNA’s discovery, now half a century old, is still experimental. Google is a marvelous company, but it doesn’t make anything tangible.
What real domestic industry have we left but Apple with its Macs, iPods and iPhones? Our few remaining excellent industrial companies, like Boeing, Caterpillar, Cisco and the non-financial part of GE, seek growth abroad because their domestic markets are saturated and declining.
So we have simultaneous collapse or stagnation in finance, housing, cars, drugs, biotechnology, computers, aircraft, and cameras. We long ago outsourced consumer electronics to Asia.
Part of the explanation is lackluster investment in basic scientific research. Over the last three decades we have diverted our industrial research spending almost entirely into applied research. Even that money is aimed mostly at narrow, short-term product improvements. The great industrial basic-research laboratories of our Golden Age, such as the old AT&T Bell Labs and IBM’s materials science labs, are gone, or they are shadows of their former selves. In their place we have lemming-like venture capitalists chasing the latest Internet fad.
We have neglected the oldest fields of basic science: astronomy and physics. NASA focuses on popular “demonstration” projects like Mars missions, neglecting basic exploration of the Universe and our nearby extraterrestrial environment. CERN’s Large Hadron Collider—humanity’s latest and most impressive effort to explore basic physics—sits near Geneva, not in the United States. Nothing better illustrates our fall from global scientific leadership than that single troubling fact.
We desperately need to ramp up investment in basic physics, basic biology (including stem cells), and basic materials science (including research that might lead to good batteries)—among other fields. And we must do so under the management of real scientists, not political commissars. Spending $800 billion on securitized loans and financial derivatives without a new dime for basic research is about the most short-sighted thing we could do.
As if these troubles were not enough, the stupidity, short-term thinking, arrogance and greed that ruined our financial markets have infected our industry, albeit (we hope) to a lesser extent. How else can you explain all the backdating of stock-options in Silicon Valley (including Apple!), or the torrent of venture capital flowing into “me, too!” Internet “community” companies that are travesties of real industrial innovation?
We’ve put far, far too much emphasis on finance and software. It’s not just Paulson and Bernanke, Microsoft and Google, or all those look-alike Internet startups. Even Warren Buffet (except for his recent GE bailout) has devolved from real industrial companies to finance, insurance and reinsurance.
We’re at risk of becoming a nation of farmers and paper pushers (if you classify software as paper, which I do). We are forgetting how to explore our natural world and how to design and build real things. We have forgotten how to dream.
Although no industrialist or scientist himself, Barack Obama understands all this. That’s why he wants us to get back to basics like real science and real industry, including rebuilding and enhancing our infrastructure. That’s why he’s ready to mold industrial policy for, and invest money in, wind power, solar power, a new health-care infrastructure, a new air-traffic control system, and (I hope) nuclear power. He knows that we cannot maintain our wealth, our greatness, our world leadership, or even our standard of living, if we stop exploring our universe and designing and building things that have weight and heft. He is our architect in chief.
So with all due respect to Paulson and Bernanke and their frantic, sleepless effort to put their fingers in our economic dike, we need a new team. We need more industrialists and basic researchers and fewer financiers. We need a broader range of builders, and we need an architect in charge.
The best we can do for ourselves—in the short, the medium and the long term—is to put Obama and his team in place as quickly as possible, ready to hit the ground running. And we can best insure a successful transition by not spending all of our money before the transition comes.
Life Mimics Art:
This Ann Telnaes animation captures perfectly the spirit of the Bush Administration in its final days.permalink
03 August 2024
VP Harris: Please Give Us a Vision
22 February 2022
Vladimir Grozny (Владимир Грозный, or Vladimir the “Terrible”)
- Русь/Rus'
Битву кровавую
С сильной державою
Царь замышлял.
Хватит ли силушки?
Хватит ли золота? –
Думал-гадал.
A bloody battle
With a mighty empire
The Tsar dreamed up.
Would forces suffice?
Would the money last?
He thought and he speculated.
* * *
Русь не шелохнется,
Русь — как убитая!
А загорелась в ней
Искра сокрытая,
Rus’ won’t move
Rus’ lies as beaten!
But something in her strikes
A secret spark,
* * *
Рать подымается
Неисчислимая!
Сила в ней скажется
Несокрушимая!
The host arises
Numberless!
The might in her said
To be boundless!
26 August 2017
Gary Cohn and the Subtle Treachery of Self-Importance
Rex Tillerson: A Beacon of Hope from the Dark Tower
Charles Fried (pronounced “freed”) is a Harvard Law professor who was Solicitor General under President Ronald Reagan. He recently described President Trump’s appreciation and enforcement of the rule of law as follows:“You come with a certain level of constitutional literacy, and he is totally illiterate in these domains. You think every day it can’t get worse, and then it does.”Another law professor, Michael Waldman, President of the Brennan Center for Justice at New York University, described Trump’s attitude toward the rule of law as follows:
“When the president says, ‘Make sure to hit the heads of people on the door of the police car,’ or pardons a sheriff accused of racial profiling, it redefines the law as just brute force.”With all the lawyers now up in arms about the president’s casually negligent treatment of the rules that make our system great, there is something striking about Rex Tillerson. He’s the top appointed official in our Cabinet. As Secretary of State, he’s fourth in order of succession to the presidency, after three elected officers. Of the three ahead of him (Mike Pence, Paul Ryan, and Orrin Hatch), only two (Pence and Hatch) have professional postgraduate degrees. Tillerson is the only engineer among them. Unlike all but a handful of people in our government, Rex Tillerson is not a lawyer. He graduated with a degree in civil engineering from the University of Texas in 1975. In a steady rise of 31 years, he became the Chairman and CEO of Exxon Mobil—the American corporate behemoth that keeps the wheels of our cars and trucks turning. Why does this matter? Well, lawyers deal with verbal abstractions called “law,” which are subject to interpretation (by precedent and otherwise) and “spin.” Civil engineers deal with things made of rock, cement, and steel. They either work or they don’t. And when they don’t, the effects can be disastrous. There’s not much room for interpretation and “spin.” Take the Great BP Blowout and Oil Spill, for example. It killed eleven workers and polluted the Gulf of Mexico, probably for decades. To a lawyer or PR man, “damage control” meant convincing the public and juries that the disaster wasn’t so bad, and that anyway BP wasn’t responsible for all of it. To someone like Tillerson, “damage control” means building and installing oil-well blowout preventers that work, and so making sure the next such major disaster never happens. Thus it didn’t surprise me when, of all the senior members of Donald Trump’s government, Tillerson came out the strongest against hate. Like a blowout-preventer that doesn’t work, hate can’t be “spun.” If someone hates you because of who you are—your race, religion, national origin, gender, or sexual orientation—there’s no room for negotiation. There’s not much you can do to shed the yoke of hate. You can try to change your religion—if that’s what’s at issue—but even that’s no guarantee. During the Spanish Inquisition, Grand Inquisitor Torquemada (who was himself the grandson of Jews) condemned many converted Jews to torture and death for not having been converted “enough.” When the reason for hate is in the mind and imagination of the hater, the hated are never safe or free. Ask the descendants of Armenians who survived the Turkish genocide, the Jews who survived the Holocaust, the remaining Sunnis in Syria, or the remaining Rohingya in Myanmar today. Hate based on personal characteristics, rather than on actions or policy, can’t be “spun.” For the hated, it’s an existential call to resist, be oppressed for no other reason than being, or die. It’s just one short step away from a call to violence or to war. Leaders like Rex Tillerson understand this awful truth. You can “spin” yourself as a “white supremacist,” a “white nationalist,” a member of the “alt.right,” or even a “populist.” But if you believe that you are superior to others because of your racial or religious heritage or national origin, or just due to the color of your skin, you are a Nazi. Society needs a functioning blowout preventer to keep those like you from ever gaining a foothold of power in America. That’s why, when it came to repudiating the President’s awful vacillation on hate, Tillerson didn’t shirk his duty as a leader and a human being. He didn’t, like Gary Cohn, publish his dissent in a foreign periodical read mostly by the global financial elite. Tillerson went straight into the lion’s den, on Fox. Asked whether the president had spoken for American values, Tillerson was as straightforward as a blowout preventer that stops an undersea explosion before it starts. “The president speaks for himself,” Tillerson said. In addition to being a courageous rebuke by an underling, Tillerson’s reply was probably the single most pithy and accurate summary of Trump’s presidency so far, including his Tweets. Unlike Cohn, Tillerson is not a Jew. He’s nowise a “minority”—not a Muslim, Hispanic, African-American, or the descendant of refugees from the Middle East or Eastern Europe. But he’s an American who knows what that means. As an engineer who knows how bad blowouts can be, he knows that, once hate gets ahold of our body politic, we are lost. Not just the hated, but all of us, are lost. So keep your eye and ear on Tillerson. Right after special counsel Robert Mueller and (just by a smidge) the new FBI head, comes Tillerson. If Trump ever fires him, you will know that our Republic and our values are in grave peril. Endnote: The facts and quotations underlying this post can be found on page A12 of the New York Times, for Monday, August 28, 2017. Tillerson’s forthright response to Trump’s coddling of bigotry vindicates my initial assessment of the man. Over nine months ago, I judged him the best pick in all of Trump’s cabinet, both for his solid and unusual background and for his role, once he became CEO, in reversing Exxon Mobil’s denial of global warming in public while its scientists had proved it in private.
Catalogue of Popular Recent Posts
[For the consequences of the years of top-level ignorance and incompetence we face, click here. For President Trump’s six-month report card, click here. For comment on our weak Yankee defense against information warfare, click here. For other popular recent posts, click on the links below:]-
A Tale of Two Wars
E Pluribus Unum
What Awaits Us: the “Prophecy” of Cause and Effect
North Korea: will we make a pre-emptive nuclear strike?
Ignorance and Incompetence: the Big Risks
How Business Schools Helped Ruin America, and What to do About it
Nero of our Time
The Free World’s Female Leader
Our Political AIDS Infection
How the Clintons Destroyed the Democratic Party
Lawless Life under “Corporate Governance”
An Open Letter to Registered Voters in Georgia’s Sixth Congressional District
Is Trump a Traitor?
The Other Mitch
Is the end nigh?
How to “investigate” and totally miss the point [of Putin’s intervention]
Trump’s “Threefer” [in firing Comey]
Killing the Brutes, not Millions of Innocents
Women versus Fox
Decaying Empire
Implications of Trump’s Syria Strike
The Internet’s Most Deadly Spawn: AI and “Weaponized,” Individualized Propaganda and Fake News
Government by Showmanship, Bumper Stickers, Tweets and Blame
Trump Two Months
Out
Health Insurance for Dummies
Warren 2020
Republican Labor Hypocrisy
General Michael Flynn: Truth Bats Last
Down Under
Who is Steve Bannon?
Trump as Magician-in-Chief
Contradictions [in Trump’s acts and policies]
How The Economist is Killing its Children
Trump’s inauguration
A GOP Takeover of PBS
MLK Day 2017
Grading Trump’s Presidency: Benchmarks
Blocking Jeff Sessions
Russia and our Policy toward it.]
08 May 2010
“Intelligent Design” and Engineering: A Tale of Orwellian Word Theft
By itself, the term “intelligent design” is neutral and innocent. It means no more than a plan for something made by someone smart.
A foreigner who acquired English late in life could be excused for mistaking the term’s current meaning. He might think it describes the acts of engineers: people who design our cars, planes, highways, computers and software. He might think it connotes the work of an architect or draftsperson.
An especially insightful foreigner might even think the term describes the work of enlightened politicians or government administrators. When they use economic learning to craft new laws that exploit people’s natural, selfish incentives for the greater public good, isn’t that “intelligent design”?
Our Founders thought so when they wrote our Constitution. For the first time in human history, they designed a nation on rational principles. They built in freedom of speech and religion, the presumption of innocence, the promise of equality before the law, human rights and limited government. And they carefully calibrated checks and balances to keep bullies and tyrants in check. Our Founders were unabashed social engineers.
When we celebrate our Constitution on the Fourth of July, we will celebrate our Founders’ intelligent design. We will recall their social engineering of an entire society, the most successful yet in human history (although now in clear decline). We will laud the intelligent design of men, not God.
On hearing the term “intelligent design” for the first time, a foreigner to our culture could be excused for thinking about all that. But of course that foreigner would be wrong.
In cultural context, the term “intelligent design” now refers to a single thing. It connotes a politico-religious theory that evolution is wrong or unproven and that we―the human race―were designed by some supernatural Deity, just as an engineer at Toyota or Hyundai might design a car. Let’s call this meaning “Intelligent Design,” with capital letters.
Leave aside for a moment the philosophical debate. Leave aside the fact that believers disparage Charles Darwin’s work and its thousands of practical legacies, including our understanding of how bacteria develop antibiotic resistance and evolve into “superbugs.” Leave aside the fact that, in so doing, believers in Intelligent Design belittle one of the greatest collective achievements of human civilization: real understanding of biology and our own origins.
We’ll return to some of these themes a bit later. But for now, let’s keep our focus on words.
How did the neutral, positive phrase “intelligent design”―apt for any act of good engineering, social or otherwise―come to connote a religious view of reality based on faith and little else? Our country’s very plan, our Constitution, is itself a product of intelligent design by humans. So are our airplanes, cars, miracle drugs, computers, software, roads, bridges, TVs, radios, and the Internet. How did the radical right steal the phrase for an unproven religious theory, thereby removing it from the things we see, feel, use and rely on every day?
Right-wing propagandists are hardly masters of history, science, logic or math. But they are certainly masters of philology, the science of the meaning of words.
You might call their central weapon “applied philology.” They can take a positive word like “liberal,” which once meant open, tolerant, enlightened, generous and compassionate. In one generation they can turn it into an image of a promiscuous, atheistic, cowardly, drug-sodden freeloader.
They can take a movement like Nixon’s “Southern Strategy,” which was intelligently (and diabolically) designed around racism and regional resentment. Then they can“rebrand” it as a “Tea Party.” In so doing, they can expunge the stench of slavery and the Civil War and capture the positive aura of Northern Massachusetts, our most progressive state, and our Founding.
They can transform an adjective like “Democratic” beyond recognition. Not ten years ago it referred to a member (or the platform) of one of our two political parties, with neutral or positive connotations. Without anyone seeming to notice, they substituted the harsher and jarring noun, used as an adjective, thereby converting the party’s image into a barely concealed epithet: “Democrat.”
The greatest word theft was of “government.” In my childhood the word meant safety, stability, confidence and security. Government had just brought us through the Great Depression and our greatest war. It was developing an intelligent strategy of deterrence and containment, which would resolve a worldwide struggle with the Soviet Union peacefully. Government would go on to develop worldwide commercial air travel, tame polio, eliminate smallpox, create a universally admired system of higher education and research, put men on the Moon, and create the Internet and release it for commercial use.
Despite these monumental achievements, right-wing propaganda managed to convert “government”—our own democracy—into an inept, stupid, bumbling, incoherent, big-spending idiot. Government did make some big mistakes, including the War in Vietnam, but it didn’t really change much. What changed was people’s minds and the images in them. The government that had saved them from economic collapse, several different tyrannies, and dread diseases, and that had given them collectively the highest standard of living in human history, became their buffoon and their enemy.
This astounding transformation occurred through the miracle of right-wing propaganda and word theft. Now for many the word “government” is no longer a descriptive noun or adjective. It has become an epithet about which clear thought is impossible.
In politics words are weapons. They are most effective as weapons when the target doesn’t see them coming. That is precisely what is happening to our intellectuals. Not only don’t they resist this “rebranding” of common words and concepts basic to our heritage. They are complicit in it. Why? Because it falls below their radar.
Intelligent people, let alone great thinkers, think in concepts. To them, a word is like a label on a box. What matters is what’s inside the box, not the label. Their ability to think in concepts aids their acquisition of foreign languages, their development of leaps of imagination, and their own efforts at intelligent design.
So when someone changes or removes the label―no matter what their motive―smart people hardly even notice. With Shakespeare, they believe a rose by any other name would smell as sweet. They focus only on what’s inside the box.
But right-wing propagandists are smarter in one respect. They understand that most people are not intellectuals. They know how many never open the box to examine what’s inside, but just read the label.
Control the label, and you control the concept. Control the concept, and you control the thought. Control the thought, and you control the mind. That’s the right wing’s Orwellian formula.
The “rebranding” of words is one of the most powerful and effective tools of propaganda ever conceived. Most of us smart people hardly noticed. It is so effective that people can call a president they dislike (mostly because of his mixed race) a “Nazi,” “Communist” and “fascist”―sometimes even in the same breath.
The President’s detractors don’t even notice the logical contradiction. Ignorant of history, the don’t realize that these groups fought each other to the death, in the millions, during the last century. The logical contradiction inside the box doesn’t matter, either to them or to their puppet masters, as long as the label on the outside has a negative connotation.
So what does all this have to do with Intelligent Design and engineering? Plenty.
I mentioned social engineering first because our right-wing wordmasters have made that phrase pejorative, too. But our Founders knew exactly what they were doing, and their box was full of social engineering. That label didn’t appear on the box because it didn’t exist in Colonial times. But the concept was there, and our Founders enthusiastically endorsed it.
Engineering of all kinds―physical and social―was and is what has made our nation great. We tamed the wilderness by agricultural engineering, turning forest and prairie into field and pasture. We mastered the size of our huge new land with engineering, first of canals and waterways, then of railroads, and more recently of interstate highways, aircraft, and the Internet. We beat our enemies in the world’s greatest war by engineering the best weapons, including the very first nuclear weapons. We conquered the world’s greatest scourges, including sepsis, polio, diphtheria, tetanus, typhoid, smallpox and cholera, with engineered vaccines, antibiotics, and proper hygiene and sanitation. We tamed the Mississippi and its horrible diseases (including yellow fever) with locks, flood gates, levees, swamp drainage, and insecticides. We made our lives more healthy and comfortable and less smelly with intelligent design of artificial heating and air conditioning, flush toilets, and modern plumbing. These advances―among so many others―were products of human engineering, human intelligent design.
As with physical engineering, so with social engineering. Our forebears discovered early on that markets work better than monopolies, so we engineered our national economy based on free and open markets. We engineered our legal system, with antitrust law and intellectual property, to foster the competition and innovation that free markets are supposed to produce.
When free markets kept producing debilitating boom-and-bust cycles, culminating with the Great Depression, we modified our intelligent design. We invented the “mixed” economy, which relies on well regulated free markets. That single act let us emerge from the Great Depression, win our greatest war, and later produce the most meteoric rise in living standards in human history. We are now in the process of figuring out how to “re-engineer” our economy and our markets to prevent yet another great bust like the one still in progress.
Human intelligent design, i.e., engineering, is the primary source of our success as a people.
The theory of Intelligent Design steals the words and the concept, takes it out of our hands, and puts it in God’s. It warns us not to tinker with what God has designed―including us―lest we err and cause unintended consequences. It encourages fatalism, a submission to presumed supernatural authority that has always distinguished other cultures from ours.
Theft of the concept of engineering also has other pernicious effects. First, it encourages submission to worldly authority, our ruling class. If God is the only engineer, and if human social engineering is suspect, then who organizes things on Earth? Our largely unseen ruling class does: people like Bill Gates, Lloyd Blankfein, the Pope, Pat Robertson and other informal religious leaders and, yes, even the affable Warren Buffet. Abdication of public engineering is a surrender of democracy to those who pull the strings in private.
The second pernicious effect of stealing the concept of engineering is more subtle. By opposing the theory of evolution (the foundation of all modern biology) Intelligent Design creates a social and political reaction against science generally.
Democracy is popular rule. Engineering (intelligent design by humans) is the means by which democracy betters the human condition, socially and materially. Science, including economics and sociology, provides the theory and cognitive infrastructure that allows engineering to achieve that end. Undermine any of these links in the chain, and you undermine the ability of human societies to better their condition.
Who gains? The ruling class, of course, especially those whose wealth and power derive from the status quo. Someone has to control society’s direction. In a democracy, that’s someone is supposed to be us, the people. But someone also has to inform the people how to achieve their ends. Science does that by explaining how the world works, using rigorous observation, experiments, and mathematical analysis. Engineering shows the means, outlining alternative options and explaining their costs and benefits. (And honest engineering, like economics, never promises a free lunch.)
Are modern science and engineering complex? Sure. But one of the greatest modern physicists, Richard Feynman, once said something profound. No one, he said, understands a theory unless he can explain it to his three-year-old daughter in a way that makes sense to her. By that rule, any good engineer (or politician) should be able to explain the benefits of any social or physical program without resort to God, mystery, or authority.
You may not understand Einstein’s special theory of relativity, or the algebraic Lorenz Transformation that is its mathematical infrastructure. But you can understand that rapidly moving radioactive particles decay more slowly than those at rest, thereby proving a central (and counterintuitive!) tenet of that theory: moving clocks slow down. If you are interested enough, you can even see charts and graphs from experiments proving the point.
Follow the explainers; beware the mystifiers! That’s a good recipe for democracy.
But there are different levels of explaining. For thirty years, the right wing has “explained” economics with three principles. Free markets work best. Markets self-correct. Regulation confines and costs. But how do these principles work? That’s a mystery. The best the ideologues can come up with is Adam’s Smith’s “invisible hand.” In the final analysis, that hand, like God, is a matter of faith. The foundation of conservative economics is faith in mystery.
And so we had the extraordinary spectacle of Alan Greenspan. Trained in the best twentieth-century quantitative tradition, he could do the math. He had superb mathematical intuition. He spoke like an oracle, using convoluted, euphemistic sentences that required oracular interpretation.
But in the end, all Greenspan’s knowledge and skill boiled down to simple faith in the invisible hand. He confessed that his most important decisions—the ones that helped subvert our entire economy—were wrong. But his confession was not of mathematical error, which other economists might have seen and corrected. It was a much more insidious error of misdirected faith. Our chief economic engineer had “explained” himself not in logic, but in mystery.
The contradiction of Alan Greenspan epitomizes the last thirty years of American politics, since Ronald Reagan. On the one hand, it encourages the view the God is the only engineer; that organisms as complex as us could not possibly have arisen from accumulated random mutations, disparaged as “accident.” Yet on the other, it asserts that no human can successfully engineer a society or a market, that the accidental operation of unfettered free markets is more “intelligent.”
That contradiction is wide enough to steer an ocean liner through, but no one seems to have noticed. And even if intellectuals do, it’s subtle enough to be hard to explain to the masses.
So the ruling class’ logic is simple. “Intelligent Design” is for God, who Designed us. We humans are poor engineers, and especially poor social engineers. So don’t try to plan, design, engineer, or regulate. Let the rules that God put in place hold sway, especially in unregulated markets and unregulated commerce. Accept your fate, however sorry it may be. And if that plan somehow seems always to promote the ruling class’ own economic interests and retard others’ social and even physical progress, isn’t that God’s plan, too?
Is this a conspiracy? As I’ve explained before, I don’t think so. The ruling class is neither that diabolical nor (if the truth be told) that smart. Except in some businesses, it’s not a very good planner or engineer itself. It just wants to be let alone to pursue its own selfish ends.
The ruling class lets story tellers like Beck, Limbaugh and Rove spin their entertaining yarns, and watches. When an entertaining yarn, a creative lie, or a successful word theft catches on, the ruling class adopts and supports it. It does so just as it supports the Tea Party movement, not because it believes in that movement for a moment, but because that particular rabble serves to promote its continued dominance and transient economic interests.
Call it opportunism. Call it adaptation. Call it conspiracy if you like. But the right wing’s propaganda, word thefts, and lies present a clear challenge for those who can see. They support a desultory tyranny, made by half-reluctant despots over weak minds. However desultory, in thirty years that intellectual tyranny has served to enrich a small coterie of quite undeserving men beyond their wildest dreams and bring a great nation to its knees.
Words are not these half-reluctant despots’ only weapon. Money and fear are powerful, too. But twisted words have a power that smart people often underestimate, for they can control weak minds.
For those of us who think and write, words raise a special question. Are we going to let the right wing, for the economic advantage of a few, continue to steal our national heritage by reserving engineering for God and His representatives on Earth, whom the rich keep in their pockets? Or are we going to resist?
I, for one, am going to resist. I will use the word “Democrat” as a noun, only for an individual member of my party. For my party, its platform, and its principles, I will use the proper adjective “Democratic.” I will use that word because it is correct both grammatically and substantively. If the right wing claims that it is democratic, too, let them prove it by deeds, not words.
I will abandon the word “liberal,” which demagogues have stolen beyond retrieval. Instead, I will use the word “progressive,” which is more resistant to theft and distortion. Who can oppose progress?
I will not use the words “intelligent design” for the work of a Deity whom I cannot see or show to others. I will use it, synonymously with “engineering,” for all marvels wrought by human planning and regulation, which I can see and show to others, and which made our nation great.
When I use the term “social engineering,” I will use it not with diffidence, but with pride. For I know it is the essence of our two-plus-century experiment in democracy.
And I will never use either term to urge my fellow citizens―those who see the label but don’t look inside the box―to abdicate their Reason to some unnamed higher power. Why leave engineering to an Almighty, who usually turns out to be a mask for selfish and shortsighted interests of the ruling class?
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