Leaders and the "common good"

On day one I give my foreign policy class three "laws" that explain ninety percent of what states do:

1. What people *believe* is real determines what they will attempt.
2. What *is* real determines what will work.
3. Leaders will do whatever is in their power to stay in power.

There are other factors, but these are the big ones.  It's odd how the hardest one to get people to believe is rule #3.  Now the Economist publishes an interview with Alastair Smith (New York University) in which he gives some great examples of what I've been talking about all these years.  For example,

It is virtually impossible to find any example where leaders are not acting in their own self interest. If you are a democrat you want to gerrymander districts and have an electoral college. This vastly reduces the number of votes a president needs to win an election.  Then tax very highly. It’s much better to decide who gets to eat than to let the people feed themselves. If you lower taxes people will do more work, but then people will get rewards that aren’t coming through you. Everything good must come through you. Look at African farm subsidies. The government buys crops at below market price by force. This is a tax on farmers who then can’t make a profit. So, how do you reward people? The government subsidises fertilisers and hands it back that way. In Tanzania vouchers for fertilisers are handed out not to the most productive areas but to the party loyalist areas. This is always subject to the constraint that if you tax too highly people won’t work. This is the big debate in the US. The Republicans are saying that the Democrats have too many taxes and want to suppress workers. But when they were in power five years ago they had no problem with taxing and spending policies, but now it’s taxing their supporters to reward Democrats. 

Or, as Harry Browne is supposed to have observed, the state breaks your legs, gives you crutches, and claims credit for the fact you can still get around.


And what about the common good?  I don't deny there might be one, but I'd never count on it being the basis of policy.  As Smith observes, "If you’re working for the common good you didn’t come to power in the first place. If you’re not willing to cheat, steal, murder and bribe then you don’t come to power. "

No room to cut the "defense" budget?

Of course, comparing expenditures is a crude measure of capabilities, but

I think there must be SOME room to trim.  Pity that if the DoD has its way the cuts will probably protect the pork at the expense of the things (like training) that are really needed.

The failure of the establishment

Walter Russell Mead does it again (from his blog on The American Interest):

I don’t want to make this a habit, and I suspect he doesn’t either, but Paul Krugman and I are once again in (very) partial agreement. We both think the American elite has intellectually and morally lost its way, and we agree that the problems our country faces today have more to do with elite breakdown than popular stupidity.

***

That is not what the elite thinks, by and large. To listen to many bien pensant American intellectuals and above-the-salt journalists, America faces a shocking problem today: the cluelessness, greed, arrogance and bigotry of the American public. American elites are genuinely and sincerely convinced that the American masses don’t understand the world, don’t realize that American exceptionalism is a mental disease, want infinite government benefits while paying zero tax, and cling to their Bibles and their guns despite all the peer reviewed social science literature that demonstrates the danger and the worthlessness of both.

***

[In reality] The American people are less prejudiced, more globally aware and more willing to meet other cultures and societies halfway than ever before. Minorities today are better protected in law and more fairly treated by the public than ever in our history. No previous generation has been as determined to give women a fair chance in life, or to attack the foul legacy of racism. The American people have never been as religiously tolerant as they are today, as concerned about the environment, or more willing to make sacrifices around the world to promote the peace and well being of humanity as a whole.

By contrast, we have never had an Establishment that was so ill-equipped to lead. It is the Establishment, not the people, that is falling down on the job.

Here in the early years of the twenty-first century, the American elite is a walking disaster and is in every way less capable than its predecessors. It is less in touch with American history and culture, less personally honest, less productive, less forward looking, less effective at and less committed to child rearing, less freedom loving, less sacrificially patriotic and less entrepreneurial than predecessor generations. Its sense of entitlement and snobbery is greater than at any time since the American Revolution; its addiction to privilege is greater than during the Gilded Age and its ability to raise its young to be productive and courageous leaders of society has largely collapsed.

It's worth a full read.

Playing Chicken

From The Economist:

"This newspaper has a strong dislike of big government; we have long argued that the main way to right America’s finances is through spending cuts. But you cannot get there without any tax rises. In Britain, for instance, the coalition government aims to tame its deficit with a 3:1 ratio of cuts to hikes. America’s tax take is at its lowest level for decades: even Ronald Reagan raised taxes when he needed to do so.

And the closer you look, the more unprincipled the Republicans look. Earlier this year House Republicans produced a report noting that an 85%-15% split between spending cuts and tax rises was the average for successful fiscal consolidations, according to historical evidence. The White House is offering an 83%-17% split (hardly a huge distance) and a promise that none of the revenue increase will come from higher marginal rates, only from eliminating loopholes. If the Republicans were real tax reformers, they would seize this offer.

Both parties have in recent months been guilty of fiscal recklessness. Right now, though, the blame falls clearly on the Republicans. Independent voters should take note."

Bernanke op-ed in the Wall Street Journal

Ben Bernanke wants to assure people that the Fed isn't just throwing money at the current problems, unaware of the long-term impact on inflation.

My colleagues and I believe that accommodative policies will likely be warranted for an extended period. At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road. The Federal Open Market Committee, which is responsible for setting U.S. monetary policy, has devoted considerable time to issues relating to an exit strategy. We are confident we have the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner.

Gee--is everybody confident now? A few observations:

1) The chairman of the Federal Reserve Board is worried enough about confidence that he chooses to make this statement.

2) He does so in a form that allows no questioning or rebuttal.

3) To the extent that he discusses the tools to contract the money supply, it's all pretty much the same as before. We've learned they aren't nearly as all-powerful as he want us to believe.

4) Bernanke says almost nothing about the international dimension--including foreign exchange and the impact on what has been the world's reserve currency.

5) All these promises miss the political dimension altogether. Are we really to believe that those who have been personally helped by recent policies--bailed out banks, investment houses, Fannie Mae, Freddie Mac, etc.--are going to sit by and watch the Fed crank up the pain? The relation of Congress and State governments to the stimulus package is similar to that of an addict to cocaine. The American people will want their freebies, and they won't want to pay for them.

I'm supposed to feel more confident after reading this?

Bernanke Op-ed in WSJ: The Fed’s Exit Strategy - WSJ.com

The American military budget (and I use the word "budget" loosely)

I teach American foreign policy, and every semester I run into the problem of trying to estimate how much money the government spends on the military. So I'm glad to see Mother Jones running a series on the budget. For a start, see what happens if you add other military expenses (like the Coast Guard role in the DHS, or the nuclear weapons facilities under the DoE, but not Veterans Affairs).

This doesn't include budgets for the intelligence community (other than those hidden within the DoD budget), so the total funding for "national security" is higher.

Shock and Audit: The Hidden Defense Budget | Mother Jones

Conservativism I could live with

Jonathan Rauch , in a review of a book by Allitt that's going on my wish list, examines the rise and decline of the conservative movement into today's "zombie party." And what's that?

We know what happens when movements or parties continue to stagger forward after running out of ideas: They become zombies. Zombie parties are a recurrent feature of electoral democracies. Unable to articulate any coherent or workable governing philosophy, they mindlessly jab at cultural hot buttons, mechanically repeat hardwired tropes ("cut taxes, cut taxes, cut taxes"), nurse tribal resentments, ostracize independent thinkers. Above all, they feel positively proud of their doggedness. You can’t talk them out of it. Think of the Republicans in the FDR years, the Democrats in the Reagan years, the British Labour Party in the Thatcher period, and the British Conservative Party in the Blair period. Think of Japan’s Liberal Democratic Party for most of the past half-century, or France’s Socialists today. To get a new brain, zombie parties usually need to spend years out of power or wait until a new generation rises to leadership.

The current Republican Party--and, I dare say, the Libertarians (the Party, not philosophy)--could get a shamble-on part in the next George Romero movie.

"The refusal of so many of my fellow conservatives in the United States to adapt their thinking to facts and realities does not demonstrate their adherence to principle," David Frum recently wrote in Canada’s National Post. "It demonstrates a frivolous indifference to the responsibilities of political leadership." But Frum will tell you that his admonitions fall on deaf ears. "These days," he writes, "the question I hear most from political comrades is: ‘What the hell happened to you?’ " There are smart, modern people in the Republican Party and the conservative movement. But the movement is in no mood to listen to them.

History looks a little different from this perspective. For example, the Civil War is " 'a conflict between two types of conservatism.' Southern conservatives fought to conserve the South’s distinctive society, its time-honored traditions; northern ones, to conserve an indivisible, democratic nation-state." In our era "conservatives," in all their variety, were only able to keep it together as long as they did because of the fear of communism and the papering over of real ideological rifts.

The paper's gotten too thin. Tax cuts aren't always the solution. The growth of government probably can't be reversed, because for the most part people want a big government--so long as it is doing the right things.

Some conservatives do have ideas: Bruce Bartlett champions the idea of a Value-Added Tax (VAT) because, as well as raising funds, it can get government out of the micromanagement-by-taxation system (with all its inequities, inefficiencies, lobbyists, and corruption). Charles Murray builds on Milton's Friedman's call for a negative income tax, suggesting that all federal government transfer programs be cashed out and replaced by direct checks for $10,000 to every non-incarcerated American over the age of 21. Call it socialism, as I'm sure some conservatives will. Call it a Guaranteed Annual Income. Call it a Social Dividend (as Robert Heinlein alluded to in several of his novels). Labels don't matter. Getting a foundation of support to everyone, as a benefit of citizenship, equally, gets government out of the business of managing lives and playing political games with people's survival. Would it be perfect? Hell, no. This is politics. But it's certainly worth a look. And maybe, when the Republicans (or the Libertarians) have been wandering in the desert long enough, they'll find the courage to consider it.

Conservatism: Attack of the Zombie Party

Cycles and reforms

There's a very good discussion at The Baseline Scenerio (an all-around source for thought on the financial crisis). The short form: the US has done as well as it has because of the rule of law, but this has been undermined on more than one occasion by corruption and the concentration of power. Although there can still be "banana booms" (I love that term--comparing the current structure to banana republics), they aren't sustainable. These problems have led to course corrections in the past (under Johnson, TR, and FDR), but it isn't easy, and the reform period has averaged five to ten years. If it can't be fixed, we are doomed to a cycle of "oligarchy-boom-bust-oligarchy".

Global Crisis And Reform: Starting A Long Journey « The Baseline Scenario

Where the new package is going (so far)

Taking Apart the $819 billion Stimulus Package - washingtonpost.com

Ayn Rand Shrugged

There’s a lot to criticize in the work of Ayn Rand—she’s always seemed to me to be a better novelist than political theorist, largely because of her tendency to think in absolutes when absolutes are inappropriate. Perhaps that’s why I’ve preferred The Fountainhead to Atlas Shrugged.

But I must admit that Atlas Shrugged is, in many ways, a lot more true to life today than it was in 1957, and it’s because Rand recognized some fundamental tendencies in American (and global) politics and economics. Industrialists are not all heros; politicians are not all corrupt or idiots. Nevertheless, there are some ways in which the profession of politics selects for the corrupt or the idiot.

An op-ed in today’s Wall Street Journal makes the point:

Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.

Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally, hated her. But as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated "Atlas" as the second-most influential book in their lives, behind only the Bible.

For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.

'Atlas Shrugged': From Fiction to Fact in 52 Years - WSJ.com

A pork-encrusted scam

The "revised" Bailout is the most horrible piece of legislation I have ever read: wrongly conceived, poorly organized, badly written, a collection of executive aggrandizement and legislative pork that makes the PATRIOT Act look well-considered.

Even if something needs to be done, this is not it.