What You Should Think About Unemployment

June 6, 2011

“Lost time is never found again.”

–Benjamin Franklin

The United States of America is a capitalist country.  Like the uncritical institutionalization of any other -ism, this is unfortunate.  Most of our citizens are neither informed nor passionate enough about economics to actually qualify as ideologues.  Among the rest, it could hardly be said that all of us are capitalists.  Nonetheless, it is the policy of this nation to treat free markets like magical sacrosanct entities.  To tamper with them, however vital and useful this tampering may be, is to commit a serious political transgression.  In spite of frequent invective characterizing him as a socialist, even the sitting President has given earnest voice to the first statement in this paragraph.

As a result, our policies reflect the priorities of capitalists.  Even the slightest of additional business regulation, like a hiatus on deepwater drilling in the immediate aftermath of a major ecological disaster, is often characterized as “the heavy hand of government preventing job growth.”  Never mind the important work to be done in fisheries and the loss of tourism dollars.  The balancing of interests, even legitimate economic interests, is not to be considered when it is possible to make the immediate leap from “mean ol’ guv’m’nt regulated an industry” to “we’re losing jobs!”  A more sensible approach would promote balancing economic interests in those situations where the advance of one impedes the growth of another.  Heck, a more sensible approach would even promote balancing non-economic interests like environmental quality and workplace safety with economic interests.

Alas, a more sensible approach means an approach in which there is less nonsense.  Since nonsense is essential to the exploitation of fears and hatreds that motivate irrational voting behavior, the party out of power will often see and act on opportunities to profit from the popularization of nonsense.  So it is with the nation’s mad and futile dash toward full employment.  Almost every modern American President has echoed the sentiment that ideal conditions would see to it that every adult who wants a job will have a job.  Precious few of them have been astute enough to expand on that sentiment with the observation that not every job is suited to every worker, or vice versa.

Yet this is a crucial observation to getting anywhere near and ideal economy.  Were every unemployed American to take the first position available to him or her, our collective output would be devastated by a combination of underemployment (overqualified people unhappily toiling away at less valuable work than they might otherwise perform) and overemployment (people unhappily enduring jobs so demanding that an inappropriate work-life balance can have serious long term medical consequences.)  One of the constructive functions of unemployment is to give growing employers and active job seekers time enough to get past the first possible employment situation and into a truly suitable working relationship.

Of course, there is much more to it than that.  Eager to achieve short term economic growth while facing increasingly absurd demands from Newt Gingrich’s majority in Congress, President Bill Clinton agreed to a host of draconian measures sheltered under the umbrella term “welfare reform.”  Though states have tailored some of these reforms in different ways, one common outcome of this mid-90s “reform” was a phenomenon known as “workfare.”  The idea is that the government subsidizes the pay of workers hired off welfare rosters so that businesses have more access to cheap labor and the chronically unemployed have more opportunities for “the dignity of work.”  Almost none of these jobs are actually dignified.

Worse yet, it is commonplace for these workfare positions to involve compulsory labor by single parents who are then compensated little more than the cost of obtaining child care for the span of time that they must be on the job.  His personal life is not the only way in which the former Speaker of the House utterly failed to live up to his many loud public commitments to family values.  However much he may have contempt for single parent households, surely taking those single parents out of the home and demanding the best of their energies be put into toil alongside minimum wage employees does no service to their innocent children.  Workfare as a policy may have stimulated a measure of short term growth, but it has also generated developmental and educational problems sure to be a long term negative force working against the cause of sustainable American prosperity.

It is bad enough that, since the start of Ronald Reagan’s Presidency, all real economic growth in the United States has been concentrated in the hands of the most wealthy 20% of our citizens.  Making matters worse is the fact that, during this same time, workers have been caught in the vice-like grip of our hypercompetitive economy.  Longer hours, fewer benefits, and increasingly inhumane conduct by management at businesses both large and small — all of it does much to increase the quotient of misery in this nation.  Economists look only to metrics like the unemployment rate and the consumer price index when attempting to gauge human misery.  They wear professional blinders that prevent them from a deeper understanding of just how much suffering would persist even if unemployment and inflation were to drop back to historic lows.

At this same time, we have conservative political voices calling for measures like a higher retirement age.  Few of them seem to recognize the antagonistic relationship between the quest for lower unemployment and the push for a higher retirement age.  A robust national pension plan or a shorter standard work week might offend some ideologues’ worship of almighty capitalism; but these measures would be relatively painless, even downright joyful, methods of decreasing unemployment.  Enhancements to retirement security policy would make it easier for elderly workers to retire in dignity, which in turn would make it easier for young people to launch their careers by landing suitable jobs right out of school.  Likewise, mandating that large enterprises support ample vacation time and/or a shorter work week would mean that business units would require slightly larger workforces to maintain the same levels of productivity.  This too would be an uplifting way to drive down unemployment figures.

For much of the life of this nation, the American people were influenced by capitalism without falling victim to fundamentalist thinking in the area of market economics.  To the extent that our productive lives actually are influenced by economic thought, that fundamentalist perspective — that worship of the -ism — has festered into a national sickness.  It leaves us unable to even consider a broad range of sensible responses to identified problems.  It leaves us unable to recognize serious problems born of our own extremism.  It is a weakness unworthy of a great people.  Are we, the people of the United States of America, greater than capitalism?  I believe that we are.   Yet I also fear we who embrace this belief are grossly and chronically underrepresented in the halls of power.


What You Should Think About Thomas Jefferson

May 31, 2011

“The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred. . .”

–Thomas Jefferson

Before our country was a sovereign nation, it was a series of ideas.  Some among the ancient Greeks wrote about and lived by the belief that specific populations were well-suited to self-government in the form of direct democracy.  Both the ancient Romans and the people of 18th century England had experience with rule by elected representatives.  Yet the Greek concept of popular governance was thought unsuitable for most people born outside specific city-states, and the British Parliament formed as an outgrowth of compromises designed to maintain order in a society where monarchs presided by a claim of divine right.

The notion of intrinsic and universal human rights was not widely accepted in the 1770s.  Even among the most progressive societies today, the struggle continues to recognize and address increasingly subtle ramifications of commitments to liberty and equality.  In the time America struggled for independence, many British loyalists remained skeptical of the idea that life without an official aristocracy would be an improvement over the status quo.  Before soldiers and arms could be rallied to the cause of freedom, voices and printing presses had to make the case that freedom was a cause worth fighting for.

Abusive policies and a fundamental lack of fairness in the dealings between England and its colonies created the unrest needed to drive rebellion.  Yet fear and anger never accomplish anything productive when they are given free reign to shape the course of human events.  It took rational men, acting with benefit of calm reflection, to reshape this unrest into a constructive force.  Most of the Founding Fathers were men of ideas, reasonable and thoughtful by nature.  When it came to declaring their intention to rebel, they turned to the foremost intellect in their midst — Thomas Jefferson.

Like so many other architects of the revolution, Jefferson was an educated lawyer.  However, no single discipline could monopolize his mind.  He took an active interest in farming, both as a landowner and a believer in agricultural productivity as the foundation of any prosperous economy.  He studied architecture, pouring much of his own time and money into neoclassical buildings like his beloved Monticello.  His personal library was among the largest in the New World.  When British troops burned the original Library of Congress, it would rise from the ashes through the acquisition of Jefferson’s personal book collection.  He was also a prolific inventor, perhaps second only to Benjamin Franklin in terms of his contributions to early American technology.

Yet Jefferson’s greatest invention was the argument that the fight for independence was both just and necessary.  He did not fall back on the worldly concerns of rising taxation, unfair trade, or coercive garrisons.  He claimed that rule by unelected authorities, even the most enlightened of despots, was an intolerable abridgement of “certain unalienable Rights.”  He gave voice to the will of the people in his time by insisting that the will of the people in all times and all places must determine under what laws and institutions those people would live.  He could have chosen the path of the incendiary bombast, ridiculing royalty while stoking the fires of hatred.  Instead he embraced the way of the philosopher, invoking reason and principle to shape the world’s grandest experiment in the history of civics.

Thomas Jefferson embodied so many of the best qualities of our nation.  He lived much of his life in debt not for lack of accomplishment, but because he thought his greatest inventions were too important to be constrained by the doctrine of intellectual property.  Enriching the nation and the world were much more important pursuits to him than personal enrichment.  He always hungered for knowledge, yet he was also not shy about thirsting for wine.  Though he lived much of his adult life as a debtor, he was the first U.S. President to push for an end to the federal debt.  His reluctance to tax made that pursuit one of his few great failures, but it was the start of a tradition that has produced balanced budgets as recently as the Clinton administration.

Keenly aware of the importance of land, it was Thomas Jefferson who made the Louisiana Purchase, nearly doubling the size of the United States and paving the way for the modern scope of our nation.  He also dispatched Lewis & Clark to explore the lands west of the Mississippi.  Were it not for his vision, the U.S.A. might still find France in control of the entire western bank of that river and lands beyond.  West Point and the Army Corps of Engineers were also achievements of his Presidency.  Though he did not favor costly standing armed forces, he understood the value of professional officers and other military specialists constantly prepared in ways only possible through a career of service.  His lofty ideals did not blind him to the need for actions of practical advantage to our young nation.

Such were the dividends of rational and brilliant leadership.  Like all nations, America never thrives and grows quite so well as when it embraces thoughtful guidance and elevates those persons most intent on advancing the general welfare.  This makes it all the more unfortunate that we have lost our taste for pursuit of the public good in modern times.  In military matters, the euphemisms of “defense” and “security” disguise belligerent posturing that builds at least once per generation into a misadventure of epic proportions (and epic losses.)  At the same time, “liberalism” and “socialism” have become epithets that malign one of the central purposes of all governments.

The Constitution expressly limits acts of war to those authorized by Congress. It also repeatedly articulates a national duty to provide for the general welfare of the citizenry.  Alas, legislative reflection is long lost as a prerequisite to war, and even the most reasonable efforts to improve the American way of life are attacked as a betrayal of the very traditions and documents that dictate such efforts should be undertaken!  The perversions of this modern “ownership society” make it seem downright un-American for a corporation to balance any other concerns against stockholder gains or for an individual to forfeit a fortune in the name of making new technology available more quickly and cheaply.  In this nation conceived so that people might peacefully enjoy the fruits of worthwhile labors free from the imposition of aristocrats, we instead concentrate rewards on a new aristocracy of do-nothing heirs and downright harmful wheeler-dealer types.

Thomas Jefferson lived in bizarre times fraught with suffering and injustice.  His boldest actions served to make this land a better place for inhabitants both present and future.  The suffering and injustice we see in America today is so much less severe than the hardships faced by colonists in the 18th century.  Yet to some degree it is also more intractable.  Because we are the architects of our own misfortunes, we must look inward for remedy.  Wisely, the Founding Fathers gave us a system capable of supporting perpetual revolution.  Through voting alone, it is possible to replace leaders and even amend our Constitution.

Yet to get those votes — to make those changes and build a better tomorrow — we need great ideas and wonderful language with which to popularize those ideas.  The voices of fear and anger are upraised in ever newer and more powerful ways.  A booming choir of willful ignorance constantly threatens to dominate the process by which we practice self-government.  There is no need for this to continue.  There is no reason for this to continue.

Progress requires turning the greatest minds of our times away from the crafting of ever more arcane financial instruments or ever more trivial enhancements to common medications.  Progress requires turning that brilliance toward the invention of new systems of economic organization and new technologies of real benefit to humanity.  This would improve the quality of life for rich and poor alike in ways we can scarcely begin to imagine.  Once this land was a haven for the greatest of ideas.  We can and should choose to make it so again.


What You Should Think About Poverty

October 15, 2008

“For the first time in our history it is possible to conquer poverty.”

–Lyndon B. Johnson

Almost forty-five years ago, the President of the United States declared a War on Poverty.  Like the War on Drugs or the Global War on Terror, that militant metaphor ultimately proved misleading and counterproductive.  Unlike the War on Drugs or the Global War on Terror, our nation showed a stunning lack of resolve in dealing with this issue.  As Red Scare propaganda crystallized into an ideology of free market fundamentalism, the War on Poverty was displaced by an agenda that might be characterized as a war on the impoverished.

At the heart of this is a form of political opportunism that demonizes large groups of people by focusing on exceptionally bad, exceptionally rare, conduct within that group.  Often it is children who pay the price.  The typical beneficiary of Aid to Families with Dependent Children was a single mother who started her family with every intention of paternal involvement.  The scope of this need would be much reduced if there were no deadbeat dads.  Yet the political dialogue that killed AFDC was dominated by the hateful distortion holding that the program was nothing more than a meal ticket for “welfare queens” who became pregnant repeatedly for no other reason than pursuit of a government check.

Because of irrational hostility toward the very idea of welfare, this nation has traded a program that enabled poor mothers to focus their energies on parenting for a program that compels poor mothers to labor in unskilled jobs.  In some of the worst cases, child care expenses required to enable this makework approach outweigh the value of the work itself.  Even in the best cases, the policy change compounds the disadvantage of being born into poverty with the disadvantage of decreased parental involvement in the upbringing those children.

The present debate about immigration is similarly distorted.  The typical illegal immigrant is eager for honest work and reluctant to engage in criminal activity.  It is the lack of a viable alternative, not a preference for lawbreaking, that drives the illegal component of their activities.  Worse still, many politically vocal Americans are obsessed with the relatively rare phenomenon of “anchor babies.”  Their hatred for people who exploit our laws see their children born as U.S. citizens becomes an excuse for counterproductive malice in the framing of policies meant to govern the inevitable (and thoroughly useful) flow of foreign workers into our economy.

The theory capitalist extremists espouse is that “nanny state” largess somehow weakens our people and our economy.  The facts would beg to differ.  At the close of World War II, the average height of the Dutch had stagnated.  Growth dating back to a 19th century prosperity surge gave way to the devastation of brutal military occupation.  Yet generation by generation since, they have risen to become the tallest nation on Earth.  A major factor in the change was a body of social policy that insured no citizen of the Netherlands went hungry but for the choice to do so.

Progressive social minima, including universal health care and robust poverty relief, are not economic liabilities.  To the contrary, they provide economic stimulus on many levels.  In the most immediate sense, an uplift in public morale created by alleviation of domestic hunger, homelessness, and ailments is good for business.  So too is the increased productivity generated by direct beneficiaries of sensible welfare spending.  Coupled with a long term commitment to minimizing domestic deprivation, the intergenerational result is a markedly healthier, happier, and more productive national workforce.

This is not simply some theory crafted to manipulate voter behavior.  The Dutch example is the clearest of many.  Global happiness surveys routinely turn up the best results in Scandanavia.  I have a hunch those results are not on account of the weather.  Right wing protestations about the certain failure of the welfare state are soundly repudiated by its many real world successes.  Besides which, recent events should make as clear as day that cutthroat capitalists are in no position whatsoever to criticize the democracies of Western Europe in the arena of fiscal responsibility.

It may well be the case that individualism has, even deserves, a special place in American culture.  Yet this raises the question — what is truly more useful to the purpose of enabling American individuals to pursue happiness in their own fashion?  Is the entire answer nothing more than big guns and small taxes?  Might instead there be a wide range of constructive actions that can be taken to promote broad-based economic growth while giving our least fortunate citizens options they otherwise would be unlikely to experience?

The ideology of supply-side economics was evidently corrupt at first blush.  Yet it has taken thirty years of disastrous public policy, punctuated by events taking place just this year, to provide overwhelming hard evidence to support that conclusion.  For decades, some citizens upheld the private sector as intrinsically superior to the public sector, without any regard for technical specifics.  Those same people also insisted free markets were sacrosanct ideals that ought be held inviolate.  These beliefs went beyond “regardless of the cost” and to the extreme of “the idea that there is any price to be paid for this form of extremism is unthinkable.”

Of course, the price is enormous beyond words.  To many Americans, every homeless schizophrenic, every undernourished child, every undermedicated senior citizen, and every serious medical condition left untreated constitute a great failure.  To turn Stalin on his head, behind each of those statistics is a staggering number of personal tragedies.  Each of them is heartwrenching.  Most of them are preventable.  That we as a nation should eschew efforts to engage in that prevention is abominable.

Obviously there are limits to our resources.  Yet those resources are part of a dynamic system that thrives under sound stewardship.  This same system withers when abused or neglected.  Trickle down economics endorsed a philosophy of deliberate neglect and fostered an environment of rampant abuse.  An ideal replacement would be a paradigm that transcends all ideology.  Yet if the ideal is unattainable, the least we can do is formulate a replacement ideology that fully recognizes the lessons to be learned by the realities of social spending around the world.

Just as Republicans never held any monopoly on patriotism, they also hold no monopoly on promoting economic growth.  Their leaders are quick to speak of growth as a justification for even deeper descent into the bowels of voodoo economics, but their ideas have been shown to create a false sense of prosperity amidst a backdrop of enormous fundamental problems.  Refusal to address those growing problems over such a long span of time is a big factor contributing to the crisis our economy faces today.  If we are ever to get serious about eliminating American poverty, we must first transcend the poverty of ideas afflicting this nation for the past few decades.


What You Should Think About Wealth

October 12, 2008

“Sell not virtue to purchase wealth, nor Liberty to purchase power.”

–Benjamin Franklin

A great challenge facing the crop of national leaders to be selected this November will be promoting national unity.  For any office of import, surely an uncontested election is worse than a hotly contested election.  Yet one side effect of heated political contests is a wide range of fried political nerves.  Unscrupulous panderers are sure to cater to outrage about “socialism” in America while continuing to leave millions of citizens worse than misinformed about political realities.

Ultimately, the debate comes down to a clash of opinions about the nature of wealth.  Speaking from the gut, concerned liberals may rightly point out that millions of American households face extreme economic distress, then forget about facts and simply conclude that it is time for “a change.”  Yet concerned conservatives rightly point out that major American businesses also face economic distress, only to forget about facts and simply conclude that more tax cuts will certainly remedy the situation.

Fortunately the same clash can also be framed in cerebral terms.  Few serious thinkers dispute that the economic environment could be much better for both American consumers and American businesses.  The real work to be done on these issues comes from sorting out just what policies and practices will improve those conditions.  National dialog is severely impeded to the extent that handwaving media commentators reinforce popular claptrap about economics being “too complicated” for popular debate.

To the degree that the complexity is not a phantom generated by self-justifying academics, it is largely a matter of delineating the boundary between fact and opinion.  Whether it is “better” to break your leg in Canada, Connecticut, or Cuba is a fuzzy argument.  Yet the populations, budgets, and outcomes in each territory are facts.  Available calculations may not achieve metaphysically perfect precision, but arguments that depend on impeaching basic non-partisan public health data are implausible on their face.

To see progress in related civic discourse, there must be more than answering false narratives with alternative narratives.  Even casual conversations often offer up some opportunity to address reality.  Media professionals should feel shame whenever appeals to fear or anger eclipse rational discussion of substance.  Like never before, it has become possible to subsist on a diet of lies.  This makes it all the more urgent that the veil be cast aside whenever reality has the opportunity to intrude.

Do not let “tax cuts create growth” simple sit unchallenged as if it were the alpha and omega of wisdom about economics.  After all, where has tax cutting been practiced with more consistency and commitment than the United States in the early 21st century?  What sort of growth followed those policy changes?  Can it all be chalked up to the grave threat posed by fanatics with boxcutters?  Can it all be swept under the rug of incompetence and corruption?  Even if we grant that this growth generation strategy requires competence and integrity to implement, how plausible is it that such traits should come to dominate the White House and Congress?

Such trains of reasoning yield only to unreasonable resistance.  No doubt regurgitated talking points and flat out denials of reality are common outcomes of political clash.  Yet each instance where a sane adult falls back on irrational behavior to defend a political belief is one more instance in which the belief itself becomes distasteful.   Often these beliefs are incorporated into self-identity.  Changing them is not like learning the location of a new supermarket or the time change of a favored television program.  Yet the slower and deeper nature of these changes is no reason to deny that they occur . . . or that it is worthwhile to encourage them.

As the American people belatedly turn their backs on the absurd notion that every citizen ought aspire to be some sort of tycoon, we will collectively turn toward something else.  Even the most extreme of conservatives should be much more interested in tying these new ideals to reality than in jabbering on about doom and gloom born purely of political fearmongering.  Even the argument to desist with the mythology and get down to brass tacks is itself rooted in facts, from ongoing capital losses to polls projecting consolidation of legislative power.

One potential, perhaps ideal, casualty of contemporary politics would be this notion of “job creation.”  Short of making actual federal hires, there is nothing a President or Congress can do to create a job.  Still the term is a staple of hollow campaign promises.  Likewise, corporations often argue for a particular policy or subsidy based on theoretical “job creation” that is in no way linked to concrete workforce expansion plans.  Furthermore, new hires that do not actually accomplish some productive purpose create a false prosperity that simply cannot be sustained over time.

Between a natural tendency for leaders to take undue credit for good news and a body of policies oriented toward promoting quantity (and largely ignoring quality) in employment, it was entirely foreseeable that hearty growth achieved in recent years would eventually come undone.  Promoting this sort of unsustainable growth may delay the next downturn in the business cycle, but at the cost of its amplification.

Arguments from the political right are rarely short on hostility toward usefulness of promoting economic equality.  Yet they are rarely answered by questions about the usefulness of perpetuating (or amplifying) economic inequality.  Through a process that begins with facts, it is possible to provide compelling support for a conclusion that condemns some extreme scenario that not even Stalinists would actually have attempted.  Rather than wasting energy on the straw man of hypercommunism, there are two approaches informed commentators can take to provide a positive contribution to the shape of things to come.

The first is simply to point out that the United States could make tremendous moves away from cutthroat competition without getting anywhere near communism, real or imagined.  It is one thing to have difficulty grasping nuance — quite another to simply refuse all discussions that are not confined to absolute extremes.  Moments like that call for the subtlety of pointing out truly childish behavior while stopping well short of a counterproductive level of invective.

Perhaps more importantly, it is worthwhile to take a look at the nature of wealth itself.  What are the existent inequalities?  What is their usefulness, and how would that be diminished if those inequalities were diminished?   Mountains of data from dozens upon dozens of stable national economies demonstrate that prosperous corporations, complete with growing workforces, thrive well enough in a wide range of economic and social environments.  If there were a correlation between concentration of wealth and creation of wealth, then why is the current American economy as (or more) prone to difficulties than any other large modern economy?

As Pollyanna attitudes are put down by harsh realities, we must look inward as well as abroad.  Even allowing for some negative emotional bias at work on capital markets today, it is clear that slashing taxes on investment income and high levels of personal income is no way to build a more prosperous future.  A moment of national lucidity, prompted by crisis and under constant assault from bombastic pundits, provides a rare opporunity to strike a new balance.

Our future, be it more or less prosperous than today, will originate with this moment.  For those of us who care about the wealth of the nation, it is imperative that this new balance facilitate broad, real, and sustainable expansion of human achievement.  It may indeed be difficult and complicated to craft a detailed and comprehensive solution, but by now hopefully all earnest patriots can agree that it should be well within our means to do much better than Reaganomics.


What You Should Think About Progress

July 21, 2008

“The greatest thing in the world is not so much where we are, but in what direction we are moving.”

–Oliver Wendell Holmes

In dialogue about the war in Iraq, so many terms have been robbed of consensus meaning.  Never mind “mission accomplished.” “Victory,” “success,” “defeat,” and even “war” are officially applied in completely inappropriate contexts.  The pathological abuse of language even extends to the point where demilitarization plans are shaped by “time horizons” and a major diplomatic meeting cannot be labelled as a “negotiation.”

This Orwellian approach to misleading the public can never serve any worthwhile purpose . . . at least, not as well as clear honest communications would.  However, it can prove effective to the degree that confusing the general public is its intent.  “Progress” provides a platform from which to observe this phenomenon.  After years and years, slaughter upon slaughter, there has been a meaningful reduction in the level of violence inside Iraq.  No doubt in some sense this is progress.  Yet it is fair to ask if this is the progression of strategy adapting to achieve improved results or the progression of a fire that is running low on fuel.

Had powerful outsiders equipped with invincible military power occupied the United States of America, a radical and violent insurgency seems like one inevitable consequence.  To some degree there is an rational case to be made for freedom fighters.  The idea that many of us would not simply capitulate and take orders from an invading force may even be a legitimate source of pride.  Yet for how many years would we struggle against the occupying power before the highest levels of violent resistance could no longer be sustained?

Unlike religious fanaticism, the principle of self-government provides an ethical basis for resisting outside invaders.  With that in mind, is it likely that an insurgency containing elements of Al Qaeda would run out of proverbial steam even sooner?  The reduction in violence, like the reduction of polar ice, is a fact established by credible evidence put through extensive scrutiny.  Yet the case for a kinder gentler Iraq caused by the “troop surge” rests on hot air of the figurative variety, whereas a trend of atmospheric warming is subject to measurement and verification.

There is some underlying reality to consider.  For one, the actual escalation in troop numbers went a little beyond a token gesture.  From even before the invasion began, informed experts openly criticized Secretary Rumsfeld’s “lighter, faster, cheaper*” paradigm that saw U.S. forces putting roughly one third as many boots on the ground as would be required for effective control.  The surge of this year was an order of magnitude below what would be required to pursue pacification over such a large and diverse area.  However, something is better than nothing, and it was only one order of magnitude shy of a full-fledged military solution.

Then again, just what about this continued to be a military problem after Saddam Hussein was apprehended?  Even accepting the proposition that regime change in Iraq was a sensible goal to pursue at the time of the invasion, there is no excuse for a total failure to push for demilitarization of U.S.-Iraqi relations after the old Baghdad regime was effectively neutralized and a fledgling state established in its place.  Instead of preparing Iraq to stand on its own, the Coalition Provisional Authority fired everyone in the army and most security services.  If there were ever a case of criminal stupidity, surely adding legions of desperately poor young men with guns to an already unstable and violent mix would be that case.

To what degree this dip in Iraqi violence was inevitable and to what degree it was a result of American policy is not at all clear.  Thus it becomes clear when someone proclaims “the surge is working” that the vocal individual is eager to pass off opinions as facts.  It is hard to imagine the level of gullibility required to take those individuals seriously.  They laud the cleverness of the current Presidency based on this argument after countless evasions of responsibility for nearly everything that went wrong in foreign affairs, counterterrorism policy, and military operations since the first moments “shock and awe” was unleashed on Baghdad.

Even a broken clock is right twice per day.  Pundits who constantly predict economic boom times get it right when there is a boom.  Something parallel is true of more bearish prognosticators.  Official statements regarding the war have taken the concept of rose colored glasses to a much more extreme and much more disturbing place than ever before.  At any point in the years and years this bloodbath has been perpetuated, President Bush and his administration remained poised to take credit for any dip in violence.  As determined as insurgents and terrorists were to drive off the invaders, it appears that even their desire to kill was no match for that of our political right-wing.

Now as the debate about Iraq looks to the future, one candidate will argue that the other “wanted America to lose” and “was wrong about Iraq” regarding the effectiveness of the escalation and new tactics.  Yet this all goes back to the Orwellian trick.  Insofar as winning and losing are applicable concepts, a “win” was extremely unlikely based on the initial plan and not at all possible after Paul Bremmer demonstrated beyond any shadow of doubt that the 21st century is no place for viceroys.  Is it really a “win” to partially rebuild a nation devastated by an invasion and occupation that were predicated on abominable intelligence analysis and perpetuated by even worse executive leadership?

Manipulating language to confuse asymmetrical warfare with conventional warfare may rally support for violence, but only to the extent that violence is misguided.  A straightforward explanation of terrorism and the means of neutralizing terrorist threats can promote support for wise policies and create a kind of genuine strength propaganda never can.  Likewise, those who would trivialize and spin this incredibly complex situation in Iraq by phrasing things in terms of “winning” or “losing” promote a false strength that is really a weakness.  This national weakness has left our nation politically and intellectually hobbled for at least as long as this war has been underway.

Demilitarization of Iraq policy is a measure that is long overdue.  The blood and treasure squandered during years of unjustifiable delay is staggering.  Yet those losses only continue to grow until the time comes that real power is used to rally the kind of real strength that can only come from real progress toward concluding this obscenely long military occupation.

If we are to be constructive in all of this, perhaps the term “progress” can be reclaimed from those who insist American policy in Iraq is the cause of said phenomenon.  Whatever the true cause(s), less violence in Iraq is some form of progress.  More and more people conceiving of a day when that land is not subject to U.S. military occupation is progress as well.  If we as a nation can find common ground about realizing a vision like that, then we can continue to make progress.  Call them “time tables” or “time horizons,” but by all means keep such talk alive.

*Of all the ironies, the notion that a joint Pentagon-Haliburton venture would be part of a “cheaper” approach to war may be the most extreme.  Of all the tragedies, the earnest belief that privatization of the commisary did in fact generate savings for taxpayers is nowhere near the most extreme . . . but it is nonetheless a tragic failure of basic competence.

What You Should Think About Economic Churn

December 11, 2007

“So now, as an infallible way of making little ease great ease, I began to contract a quantity of debt.”

–from Great Expectations by Charles Dickens

Wall Street’s elite and television news anchors seem largely of one mind when it comes to the recent decision to cut interest rates again. None of them seem to have a problem with the ongoing trend. To the contrary, their complaint is that the latest cut was relatively modest when continuing turmoil in the world of high finance is thought to constitute a demand for bold cuts to continue. Chronically drunk on loose credit, they find mere moderation of the trend cause to for vocal complaint.

The underlying thinking is simple enough. Lower interest rates mean that consumers and businesses may borrow more easily. All else being equal, this also means that consumers will make more large purchases and businesses will undertake more aggressive expansion. It also lowers the hurdles aspirant entrepreneurs must overcome to launch a new venture. So far, so good, right?

The problem with this nice neat simple thinking of this sort is that we do not actually live in a nice neat simple world. After all, if great economic success was automatically the result of lowering interest rates, why not slash them to the practical minimum with all possible haste? The answer lies in the fact that not all economic activity is actually a good thing. Sometimes new ventures actually are a bad idea, destined to waste resources then fold for lack of revenue. Sometimes existing businesses are not actually better off at a larger size. Sometimes consumers are not best served by another big ticket purchase.

One major influence on present economic conditions is proof enough that this is true. The ongoing problems with mortgage-related financial instruments in the United States have much to do with a mismatch between real estate acquisitions and suitable lifestyle choices. This goes beyond low interest rates and a shamelessly underegulated mortgage industry enticing homeowners to bite off more than they could possibly chew. The rise of media promoting lavish home improvement aspirations, even idealizing fairy tale rarities in which amateurs “flip” properties they have no intention of inhabiting, fueled a wave of cultural pressure to go big with real estate.

No doubt there are many Americans with the resources to live in large houses or even own multiple homes. However, there are also many Americans who attempt to do this in spite of lacking the resources to make it a sound decision. There was a definite sense of schadenfreude in the early 1990s when Japanese investors, coming from a crowded island nation, took tremendous losses on commercial real estate in the U.S. The idea that an office tower in a major city might actually be less valuable from one year to the next simply did not compute among analysts willing to be literally crammed inside trains for their morning commute.

When excessive capacity ran up against sagging U.S. demand for that urban office space, even world famous landmarks had difficulty holding their value. Somehow that experience, well-covered in financial media of the time, seems to have been forgotten by figures framing American real estate policies and practices this century. Year after year of steady growth in the sector was thought to be part of a perpetual boom. It seems to me anyone claiming to be an expert in economics and/or personal finance ought know better than to ever endorse the notion of a perpetual boom.

Yet what has happened to American housing lately is not all that divergent from what has been happening to American business lately. For years and years “more more more” has been the battle cry of pundits and policymakers alike. Yet more activity does not necessarily generate more real value. One healthy aspect of the business cycle is that downturns weed out marginal operations that are not thriving on their own merits.

An ideal economy has very little churn — makework activity or meaningless transactions that serve no useful purpose. The more churn involved in an economy, the more demands will be placed on working citizens without any compensatory increases in quality of life. To a simpleton spellbound by Gross Domestic Product and unemployment figures, there is no difference between churn and meaningful productive endeavors. Yet to the people actually doing the work, there are huge consequences for morale. Perhaps more importantly, to everyone participating in the economy, there are huge consequences for the quality of goods and services obtained by a given unit of purchasing power.

Replacing a lifelong pharmaceutical therapy or an expensive surgery with a simple remedy for a common medical condition is seen as bad for the economy by prevailing metrics. Yet who among us would prefer to live in a world where a $500/month treatment is widely promoted in spite of being no better than a $150 treatment that provides at least as much health benefit? A pro-churn paradigm has our nation favoring the perpetual prescription or the sophisticated surgery over simpler approaches. While the market ultimately promotes smart choices when they become available, it also discourages the development and popularization of smart choices when there are huge profits to be made from continued dependence on costlier alternatives.

The most recent announced decline in interest rates, as with all others, is thought by its proponents to spur new ideas and new investments that will advance the cause of American prosperity. Yet this method of growing the economy is more like blowing up a balloon than building up a structure. Absolute emphasis on quantity, with no regard at all for quality, drives greater levels of economic activity without driving any greater satisfaction of human needs or desires (save the desire to prop up specific economic indicators.) In the long term, it actually undermines prosperity by amplifying the extent of future losses when an inevitable reckoning comes to pass.

This is not to say that there is no place for manipulation of interest rates as a means to stimulate or fortify a national economy. In fact, the prospect of surging foreclosure rates in response to rising interest rates is precisely the sort of scenario in which a bold cut could accomplish some useful purpose. Unfortunately, this purpose — encouraging stability in the face of troubling fundamental conditions — is best accomplished when the bold cut stands out as a sharp contrast to historical changes. When national policy has long been “cut, cut, and then cut some more,” no practical cut will be bold enough to send the right signals, and anything less than continued sharp cuts only compounds the influence of troubling fundamentals.

If managing a national economy were like running a horse race, we would find America’s productive elements so heavily whipped that no further action is likely to bring about a more energetic effort. Had the implement been used more sparingly, then it would have much more potential to motivate a surge at this point in time, when there is a clear imperative for stimulating intervention. In this way it becomes possible to provide effective support as it is needed. Realism, sensitivity, and selectivity all have crucial roles to play in these decisions.

Alas, along with just about every other issue that has some political dimension, most discussions of interest rate policy have been dumbed down beneath the point of usefulness. “When rates go down it is good, when rates go up it is bad,” is just a slightly more nuanced perspective than Frankenstein’s monster’s thoughts on fire. Yet widely respected financial analysts seem unable to do better in their assessments of Federal Reserve actions. This mindset is a wonderful thing for promoting even more economic churn, but when it comes to promoting real productivity and building real value in the American economy, it is anything but wonderful.


What You Should Think About Recession

November 28, 2007

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

–William Arthur Ward

My first experience analyzing the cultural resonance of the word “recession” comes from the media treatment of conditions leading up to the 1992 Presidential election. It is clear that the first President Bush presided over a weakening American economy as the end of his term approached. Yet it is also clear (all the more with hindsight) that a some of this was the inevitable adjustment of indicators and indices tugged away from realities by the fervor of Reaganomics jingoism.

Today, jingoism is almost too soft a term for an institutional predisposition to spin economic news. Anchors with almost every major network tiptoe around the fundamentals and treat “the R word” as if it were a vulgarity that should never be uttered in polite company. In fact, recession is a technical term that should be fluently employed in any applicable discussion of economics. Alas, it is also something of an ambiguous term, made all the more fuzzy by the abuses of journalists, pundits, and politicians themselves.

Perhaps the most sensible definition of “recession” holds that it is a period of time when economic growth across two consecutive quarters does not keep pace with population growth. Yet economic growth is itself a much fuzzier concept than tends to be widely believed. If an expensive and fragile device is replaced by a cheap durable device that fulfills the same need, adopting the innovation registers as a negative on the scorecard of economic growth. Acting promptly to minimize the damage caused by a natural disaster may also compare unfavorably with the activity involved in rebuilding efforts.

Then there is the matter of war. While much of education, child care, resource conservation, domestic toil, etc. is not included in the calculations that shape growth assessments, even the most destructive of military activities registers as economic accomplishment. For years the present Bush Administration has turned out mediocre economic performance — a feat that might be considered more than mediocre in light of the damage the attacks of 9/11 inflicted on key institutions as well as public morale.

Yet it is legitimate, even important, to have some sense of context in these matters. Attributing the economic components of declining public morale to terrorist attacks seems a serious error in judgement. If anything, the United States was energized and mobilized, more than at any other time in recent decades, as a response to the 9/11 attacks. A strong national leader with real vision about how to solve real problems could have accomplished amazing things while marginalizing apathy for the foreseeable future. As our sitting leader chose a different approach to directing the resources of the nation, we have experienced a different outcome.

Insofar as there are problems with public morale today, they have little to do with fears Al Qaeda is about to take the roof off the local Pamida store and more to do with weariness. People have grown weary of the persistent disconnect between the stated purposes and the predictable outcomes of White House initiatives. People have grown weary of the persistent deference to market forces in almost all matters, as if trickle-down thinking was still considered to be a perfect panacea to all social ills. Perhaps most of all, people have grown weary of a horrendously bloody and costly counterterrorism strategy that does at least as much to produce new terrorist recruits as it does to neutralize existing terrorist operatives.

The war in Iraq continues to bleed this nation, both literally and economically, to a significant degree. Yet that significance also registers as a net positive in the Gross Domestic Product. An end to the wartime spending binge would mean less spending to stimulate economic activity (unless policy also called for expensive peaceful initiatives like universal health care, universal access to higher education, and whatever else could be funded with the mountains of money funding the occupation of Iraq.) A short term thinker cannot help but see perpetuating the war as vital from the perspective that it also perpetuates wartime spending.

Yet focusing exclusively on short term thinking is almost never a sound approach to economics. So much spending creates more government debt. More government debt means more difficulty in securing creditors for the Treasury. Other than raising interest rates, there is little legitimate action a government can take to expand support from investors. Yet this all happens against a backdrop of interest rate cuts. Even now, Wall Street svengalis continue to promote loose credit as a way of encouraging business growth.

Somewhat like a balloon, applying hard restraints to the economy in one area at best merely transfers pressure to a different area. If our nation spends more and more while issuing bonds that are less and less rewarding, ultimately the medium of exchange itself takes a hit in value. While this eases debt pressure by reducing the real value of that debt, another inevitable consequence is increased pressure on working class citizens (or really all citizens with ordinary levels of personal income.) Less value in the dollar means more dollars are required to obtain goods or services of value — but the process does not provide more dollars to income recipients until terms of employment change.

On top of this great tangle of fundamental problems, oil speculators have driven energy prices up, and thus by extension made inflation that much more severe. If there is any bright spot in the big picture here, it is that the speculation cannot persist indefinitely. Unless the Bush-Cheney team starts a shooting war with Iran, the climb of oil should be arrested in spite of the continued decline of the American dollar. In fact, a general sense that U.S. belligerence is a declining phenomenon could drive a long-needed correction in the price of that particular commodity.

Still, when President Bush’s chief economic advisor Allan Hubbard declared that the prospect of a recession was more likely now than it seemed one year ago, he was doing so with some awareness of these hard facts. As this moment of frankness was almost immediately followed by a resignation, it is hard to say if many others inside the administration have even tried to wrap their minds around the particularly complex and particularly messy state of the national economy today.

Will the unraveling of Dubyanomics have such a severe impact as to bring about a national recession? This is a difficult question to answer, even if one accepts a concrete technical definition for the term “recession.” It may well be the case that American industriousness will sustain some measure of real growth even as the ongoing series of small shocks continue to reduce the median purchasing power of the American consumer. It may even be the case that a sense of hope brought on by a pending change in national direction could inspire major changes for the better.

Yet there should be no doubt — military aggression and widespread corruption fostered by this President have done no favors to the American economy. If we fail to get out economic house in order relatively quickly, the price we have already paid for his follies will be multiplied as it rests on the shoulders of future Presidents and even future generations of American taxpayers.