Why I LIke Ike

“Moderation shall rule in all things except exact sciences and morality”                         

 Dwight David Eisenhower

A friend recently asked me which President during my life was my favorite. Easy, I said, I like Ike. I usually get a blank stare when I say this and this time was no exception. Many of my contemporaries, Baby Boomers, have little memory of Eisenhower’s administration other than nostalgia – egg crèmes, tail fins, pastel colors, hoop skirts and the like. Those are my memories too. However, I love history and the 50’s provide some interesting perspectives.

Many people think of Ike as a “do nothing” President. By the end of his second term, he was old and ill having survived a heart attack while in office. Energetic and thriving, the WW II generation (“… born in this century…” as JFK put it) were anxious to move on. JFK’s “vigor” (or, “vigah” as he famously said it with his Boston accent) seemed like just the ticket. Ike’s image wasn’t helped by the televised White House tour hosted by Jackie Kennedy in 1962 in which she pointed out the damage to the Oval Office floor from Ike’s golf cleats. He apparently liked to practice his putting from time to time.

Do-nothing? Well, one thing he didn’t do is get us into Vietnam after the French were defeated by the Viet Cong in 1954. Also, he didn’t send troops to Hungary in 1956 to fight the Soviets as many conservatives wanted him to do.

Eisenhower was motivated to run for President because he wanted to ensure that international institutions created after WW II were preserved – NATO, the United Nations. The conservative wing of his party, led by Robert Taft, was "non-interventionist". I don’t know if there were rumors of black helicopters but the sentiment springs from the same well.

Here are some things that do-nothing Ike did. He ended the armed conflict in Korea. He initiated the development of the interstate highway system, joined the space race through the establishment of NASA, paid down the extensive debt from WW II and ran a balanced budget. He eschewed party politics, leaving that burden to his Vice President. Absent politics, how did he decide the best course? In his own words:

“I have one yardstick by which I test every major problem - and that yardstick is: Is it good for America?”

I had the extraordinary privilege of attending a dinner last week at which the guest speaker was US Supreme Court Justice Stephen Breyer. The event, arranged by good friend and colleague, Phil Bakes, and sponsored by The Strategic Forum was awe inspiring. Moreover, Justice Breyer gave us another reason to like Ike.

The Justice, who carries a copy of the US Constitution in his coat pocket, cited the Federalist Papers to provide context for the establishment of the Supreme Court. The framers were concerned about the court having too much power, it seems. They were finally persuaded that the Court represented no threat. After all, they had no power of the purse or to order military action.

The power of the Court was put to the test in 1830 when it found that the Cherokee Nation had rights to the land it occupied in Georgia. What did President Andrew Jackson do? He ignored the Court’s ruling and evicted the Cherokees anyway. Their journey west to Oklahoma along with other tribes, Creeks, Choctaw and Seminole, was called the Trail of Tears as roughly half the Native Americans didn’t survive the trip.

Now, I knew all that. What I didn’t know was that this was the first of many Court rulings that Presidents over the succeeding 125 years chose not to enforce. The Court having no military or financial authority was powerless. Until the 1954 Brown v. the Board of Education, that is.

The Court’s ruling led to the order to integrate the public schools in Little Rock. Governor Orval Faubus defied the Federal government. Southern congressman warned the President that if he sent in troops, he would have to “occupy” the entire South. Ike’s response? He sent in the 101st Airborne Division. Not only did he force the integration of schools, but he also firmly established the authority of the US Supreme Court by, finally, giving their rulings the force of law.

The Supreme Court is a lightning rod that attracts most of the electricity around emotional issues the Congress hasn’t the courage to address. Yet, that is the role envisioned by the framers. Someone needs to look at laws objectively with the objective of deciding if those laws comply with the intent of the Constitution. Eisenhower’s LEADERSHIP defied the politically expedient course.

Justice Breyer held the audience in the palm of his hand for about an hour. I think everyone took something different away from the evening. The history lesson for me was that it was Ike’s LEADERSHIP that gave the US Supreme Court the force of law.

Eisenhower was a conservative at heart. A reading of history informs us that he saw government’s role as limited to national security, assuring equal justice under the law and responsibility for the basic prosperity of our country. That said, he refused to follow the reactionary course encouraged by some members of his party. He, also, worked against fellow Republican, Joseph McCarthy.

And, that’s why I LIKE IKE.

Which modern President is your favorite? I would love to hear from you. Please scroll down to leave your comments.

Time to Call the Plumber?

Loose lips sink ships.


 Advice given to service men and women during WW II



It’s kind of amazing to think about it but prior to World War II, there were no rules provided to members of our military on what they could and couldn’t communicate to people outside their unit.  I assume it was a little easier to be a spy before that time.

Espionage has been around for centuries, of course. There is evidence that the ancient Egyptians used agents to assess enemy forces. And, the very quotable Sun Tzu said, “It is essential to seek out enemy agents who have come to conduct espionage against you and to bribe them to serve you…. Thus doubled agents are recruited and used”.

Leaking is different than spying. Pamphleteer, Thomas Paine, famously published (leaked?) information about a secret alliance between the Americans and the French, which was news to the British at the time. He was forced to resign as secretary to a committee of Congress.

French revolutionary, Joseph Fouche, is often credited with establishing the first government institutions dedicated to espionage. He was a popular guy by the time Napoleon began his campaign.

During the Civil War, the Confederacy developed an extensive network of spies who were managed from an office in Richmond down the hall from Jefferson Davis. One agent brought a copy of the Philadelphia Enquirer to General Robert E. Lee outlining troop movements by Union General McClellan. Lee cancelled his battle plans and moved his own forces to counter the moves.

The CIA is perhaps more famous for its failures than its successes. (How would we know about their successes?) There was the Bay of Pigs, of course. And, the CIA missed important developments leading to India getting the bomb in 1974, the collapse of the USSR and the presence of Weapons of Mass Destruction in Iraq.

While the Iraq war continues to have daily impact on the United States, those other events of the last 50 years are now part of history. It is unlikely that a Wikileaks event would have changed the outcome. There are inexorable forces at work that will affect our security long after this controversy becomes part of the history books. So, it strikes me that we need to take a long term view of Wikileaks.

It is important that we pay careful attention to the interests of Russia in Eastern Europe. During the Cold War, the Iron Curtain represented the western most boundary of the Russian sphere of influence in their entire history. Conversely, the current western border of Russia is set more to the east than it has ever been. Noting that Vladimir Putin is an “alpha dog” should surprise no one, least of all Vlad. What he might do next could surprise us all.

China’s economic growth rate is unsustainable in the long term. The cracks are already starting to show. Yet, they continue to be the single most important influencer in Asia. Are we prepared to deal with both the short term and long term developments?

The Arab world has been unstable for decades. Their only economic asset is oil. They have no middle class to speak of and the ongoing Jihad makes even our best allies suspect over the long term.

And, then there’s Korea……

Nothing that Wiki leaked will have a serious impact on these inexorable trends.

At the end of the day, it reminds me of when your high school teacher intercepted a note being passed around the class and read it out loud. A little bit of name calling and characterizations that are embarrassing to hear out in the open but no real harm done in the long term. (I suppose kids send text messages now. What’s a school teacher to do?)

There were two things that really struck me during the airing of all this gossip. When I was a young military officer, I had a Top Secret clearance. It was granted to me because I had access to encrypted messages. However, during my brief career in uniform, I never once saw any Top Secret information. Why? Because I didn’t have a “need to know”.

So, how is it that a private first class in the US Army had access to all this information? Did he really need to know what was being said between the Ambassador to Pakistan and the Secretary of State? What possible purpose could that serve?

My second observation has to do with LEADERSHIP. Despite our hyper partisan political environment, the opposition Republicans refrained from attacking the administration’s policies. It was a rare display of LEADERSHIP on their part.

“You don't lead by hitting people over the head - that's assault, not leadership.”
                                          ----  Dwight D. Eisenhower

Little Brother is Running Things Now

The atom bombs are piling up in the factories, the police are prowling through the cities, the lies are streaming from the loudspeakers, but the earth is still going round the sun.

-- George Orwell, British author

Boy, did this guy get it wrong! (Other than the part about the earth and the sun) Those of us who grew up in the 50's, 60's or 70's read Orwell's famous novel, Nineteen Eighty-Four, with fascination. It was intended as an attack on totalitarian regimes and was a cautionary tale. However, its depiction of post-WW III life was often taken as commentary on modern society.

And, we can find ample evidence of its ironies everywhere. We need go further than Jon Stewart's or Steven Colbert's nightly TV shows for a catalogue of the day’s "Doublethink" and "Newspeak". Many of the invented terms from the novel were adopted in popular speech. Indeed, the term Orwellian is often used to describe subjugation by the "Thought Police". Moreover, Orwell's home city of London is intensely surveilled by cameras in every public place. Big Brother is, indeed, watching us.

However, Orwell's core theme -- that technology would permit the state to control the actions of its citizens -- has proven to be the opposite of our current condition.

Technology -- specifically, the Internet -- has enabled the masses to effect leadership from the grassroots level. Examples abound.

CEO's for Cities is a web-based community of people driving change in urban environments. Their bottoms up approach has achieved results in Portland, OR, Chicago, IL and New York. So far.

Maryland based Kapston Corporation, a marketing company, has started a non-profit Internet initiative to support green business.

Cancer.im has as its mission "to empower every cancer patient regardless of their ability to pay, with the ability to research their disease and assist in finding, organizing and managing their own cancer support network".

Last June, Think Social, a NY based non-profit, hosted a one day conference the goal of which was to “explore how social & mobile media are empowering corporate citizenship to create social & environmental change.

None of these efforts rely upon support from taxpayer dollars. There is no hierarchy imposing control of the process. The success of each is based upon the initiative of its participants. The technology enables their success rather than hindering it.

Can you think of any examples of LEADERSHIP emanating from the Internet? If so, I would like to hear from you. Please scroll down to post your comments.

Who's Steering the Boat?

Help one another for we are all in the same boat.


Chinese Proverb



In 1405, Chinese Admiral Zheng began the first of seven voyages of exploration and conquest in the western Pacific and South Seas. Eighty-seven years later, Columbus sailed the ocean blue. He had to “pitch” his idea to Queen Isabella who granted him enough money to build four ships to cross the ocean on a westerly route to India. Admiral Zheng had a fleet of over 300 ships and a crew totaling 28,000. Columbus had a crew of about 150 on all four ships.

The largest of Columbus’ ships was about 100 feet long. Zheng’s longest ship was over 400 feet, slightly smaller than a modern US Navy frigate. It functioned like a small city, carried an Army, horses and provided relative luxury. Columbus Spartan ships provided an atmosphere that led to near mutiny.

Never heard of Admiral Zheng? Well, maybe that’s because the new emperor decided the venture was too expensive to continue in 1433. He decreed that anyone who built a ship with more than two masts would be executed. Just as Europe was beginning to expand its influence through colonization of North and South America, Africa and Australia; the Chinese shut out the rest of the world.

British economist, Angus Maddison, estimated that in the mid-14th Century, GDP per capita in Europe and China were about the same – around $600 in today’s dollars. Over the next six centuries (to about 1950), China’s GDP per capita remained about the same. During the same period, Western Europe increased by 600 percent. Such is the impact of free trade, liberal institutions and openness to innovation. China, by remaining closed to the rest of the world, missed the industrial revolution and failed to grow. Even today, the majority of Chinese live in poverty.

The U.S. has engaged the nations of the world in international trade to our benefit and theirs. While we continue to lead the world in pharmaceuticals, technology, food production and financial services, Europe and the developing world have benefited from U.S. consumers purchasing everything from Japanese electronics to French wine to Italian shoes.

President Obama’s trip to Asia has been widely covered by the press. There was lots of discussion about the weaker dollar, Chinese currency manipulation, quantitative easing, etc. I suggest you do not let all the noise detract from the President’s core message: The world’s exporting nations cannot continue to rely upon US consumer spending to support their economies.

This is not a blog about economics. However, I would like to offer an arithmetic lesson. GDP is the sum of government and consumer spending plus private investment plus net exports. So, if you live in a net exporting country (Australia, Canada, China, Germany, Korea), your GDP can grow with less government and consumer spending than a net importing country (the US and the rest of Europe). Got that? Exports good!  Imports bad!

So, when the President mentions “global imbalances” that’s what he is talking about. We have been “imbalanced” on this score for about 30 years.

Our trading partners complain that the Fed’s policy will weaken the U.S. dollar making their exports less competitive. While the weaker dollar will, over the long term, increase our total exports, it will also be painful for U.S. consumers. Commodities – primarily food and fuel – will increase in price. Other impacts are less well understood. The Fed’s program has never been tried before; so, there are bound to be some unintended consequences.

Meanwhile back at the ranch, we are going through our own balancing act. Households have become net savers again. Burned by the recession and scared to death of losing our homes and livelihoods, we are paying off credit card debt and saving for retirement. That reversal has benefits for individuals, families and the financial stability of our economy. But, it does little to pull us out of the doldrums.

The final – and biggest – balancing act is the responsibility of government. Will the new Congress get our house in order? Will the President tack to the middle? Who knows? The President’s commission chartered to balance the budget has some ideas. Some very painful ideas. The pundits pronounced their plan dead on arrival. But no serious economist or budget expert thinks we can get on track without lots of pain. The politicians all promise to balance the budget, reduce taxes and leave entitlements alone all while we are fighting two wars overseas. But, it simply can’t be done.

So, the long and short of it is that we are in for a lot of pain. Higher taxes, reduced entitlements, reduction or elimination of popular government programs, lower defense spending and on and on.

But, you knew all that, right? Why am I telling you this? Well, it’s because there’s something missing.

Politicians warn that our profligate spending will result in a massive debt burden for our children and grandchildren. But, no one has laid out a vision of the future for the generations that succeed us. Why go through all the pain if we can’t see a better world on the other side of this crisis? Someone (gee, maybe a President) needs to provide us a believable picture of what life in the United States of America will be like in 2030 or 2040.

Moreover, we need more than a vision, we need a plan. To be competitive in the global economy, we need better educated children, less reliance on foreign energy, investment in R&D and a business environment that encourages innovation.

How do we get there? What are the key elements? What’s the plan? How much will it cost? Where will we get the money?

Or, to put it another way, WHO WILL LEAD?

The Rise of the Comedians

        “Should Jon Stewart Have Called the President ‘Dude’?”

                       
                    Question posed by WSJ.com, the website of the Wall Street Journal

It was extraordinary. With only six days left till the mid-term elections, the President of the United States, POTUS to his friends, appeared live on Jon Stewart’s Daily Show. The “Fake News” program has risen in the ranks of media to this lofty position. And, Stewart did, indeed, call the President “dude”. Personally, I think “His Dudeness” would have been more appropriate. But, that title was taken by the Big Lebowski and I would hate to have the image of Jeff Bridges in his boxers and robe in my head when thinking of the President.

But, the grand finale of his week of live TV in DC was not his chat with the President; it was the “Rally to Restore Sanity and/or Fear” held on the Washington Mall on Saturday. The event was also broadcast live on the Comedy Channel. It was mostly music and typical Comedy Channel stuff – a few laugh out loud jokes interspersed with a few hundred not funny jokes. But, Stewart had a serious intent as well. Not wanting to take sides in the culture war, he went after the press.

“The press can hold its magnifying glass up to our problems bringing them into focus, illuminating issues heretofore unseen or they can use that magnifying glass to light ants on fire and then perhaps host a week of shows on the sudden, unexpected dangerous flaming ant epidemic.”

That was one of the LOL moments. It’s funnier when you hear it than when you read it.

That 200,000 people showed up is not just a measure of Stewart’s impact as a comedian but rather a measure of how he has become an arbiter of, well, sanity.

It wasn’t always this way. Mark Twain is often given credit for being America’s first “humorist”. He had a way with a one liner. But, his comments were not personal in nature. In a sense, his lines were simply proverbs with a barb. Proverbs have been around for centuries. “A fool and his money are soon parted” was written by Thomas Tusser in the 16th Century.

In the century before Twain, Ben Franklin was prolific in the same form:

“Well done is better than well said.”

So, while Twain added politics to the form, he didn’t change the form itself:

“Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself.”

Even Will Rogers, who sounds funnier to our more modern ears, didn’t really get personal:

“A fool and his money are soon elected.”

It wasn’t until after WW II that things started to turn personal. Here’s Bob Hope:

“I don’t know what people have against Jimmy Carter. He’s done nothing.”

More contemporary is Jay Leno:

“According to New York publishers, Bill Clinton will get more money for his book than Hillary Clinton got for hers. Well, duh. At least his book has some sex in it.”

But, Stewart has taken the form to a whole new level. His event, in some part, might have been called a “Rally from the Back of the Classroom”. All that was missing was the spitballs. However, the underlying thrust was quite serious. The country has serious problems and the numbskulls in government enabled by the media are not addressing those problems.

“Not being able to distinguish between real racists and Tea Partiers or real bigots and Juan Williams… is an insult, not only to those people but to the racists themselves who have put in the exhausting effort it takes to hate…”

Post event, Stewart and his partner in crime, Steven Colbert, denied any intent besides pure entertainment. Smart move! If they had expressed a grander goal, they would no doubt be excoriated for their ambition. The better tactic is to sit back and let the message sink in. We’re mad as hell and we’re not going to take it anymore. But, to maintain our own sanity, we know you have to laugh or you’d cry.

In a sense, Stewart has become a LEADER. By filling an obvious void, he has demonstrated that there is an appetite for something other than the insanity that our political parties – or the Tea Party – offer us. He has shown us an opportunity. Who will step into the breach? Or to put it another way, WHO WILL LEAD?

An Election Weekend Special Edition

“It’s time for a center right party that is truly fiscally conservative, truly believes in limited government and is truly socially liberal. A party that is interested in reaching the Center as much as it is in reaching the Right.”

• Dennis Sanders, blogger at www.bigtentrevue.org

Anyone who reads this blog from time to time knows that I don’t lack for opinions. Or as my third grade teacher put it to me, “you have an answer for everything”. I thought that was the idea.

However, this weekend I am stumped on one big issue. So, I am posting this a bit off schedule. Why? Because I need your answers to a question to inform me before I go to the polls.

By way of background, I should tell you that most of my friends and colleagues are Republicans. I am a businessman and that’s who I hang around with. So, over these last few weeks, I have asked many of them this question:

The pollsters have been telling us that the nation’s voters are center-right. Specifically, they are fiscally conservative and socially liberal. So, why is it that Tea Party, right wing conservative Republican candidate, Marco Rubio, is leading independent, fiscally conservative, socially liberal, Charlie Crist, in the polls in one of the biggest swing states in the country?

Most of the answers I get are incomprehensible. Not that I don’t understand what the responder is saying. Just that the responses make no sense.

Got a clue? If so, I want to hear from you. Please scan down to Comments to leave your reply.

And, no matter what you think, please vote on Tuesday, November 2.

It Doesn't Sound So Loonie to Me.....

"Both Parties seem to be infected with, among other maladies, an acute case of Not Invented Here-itis…."

 David Hay, Chief Investment Officer of Evergreen Capital Management

I have endeavored to bring a new twist to each topic as I write this almost weekly blog. However, this week I feel compelled to bring you the writings of other bloggers more famous than I (which is almost everyone).

Among my readings is a weekly newsletter published by John Mauldin. He is a conservative economist with a compelling writing style, making complex concepts digestible for the lay reader. Last week’s letter from Mr. Mauldin incorporated a letter from his colleague, the Chief Investment Officer of Evergreen Capital Management, David Hay. My blog today will provide you with a link to Mauldin’s letter. So, technically we have a blog within a blog within a blog. To read it, click HERE.

Here are a few teasers. Did you know that our northern neighbor, Canada, was in worse fiscal shape than we are in the mid-1990’s? Did you know that they have now produced 11 years of balanced budgets? Neither did I. What was I doing in 1995 when the Wall Street Journal declared that Canada had become “an honorary member of the Third World in the unmanageability of its debt problem”? Who knows? I only know I wasn’t watching when they began a remarkable turnaround. How bad was it?

 The Canadian dollar was known as either the “Loonie” after the bird on its dollar coin or the “Northern Peso”.
 The government accounted for 53% of the country’s GDP.
 Government debt was 120% of GDP or about twice the level of the US today.

The Canadian turnaround is perhaps the most remarkable economic achievement of any industrial economy since WWII. The new Canadian budget reduced spending by 8.8% over two years while reducing federal employment by 14%. Corporate tax rates were reduced by roughly 30%. Personal income and capital gains taxes were cut and a Value Added Tax (VAT) was implemented to cover the revenue lost by other tax reductions.

What were the results? Drum roll please…. The federal budget was balanced within three years and federal debt dropped to 45% of GDP.

Admittedly, there a few salient points missing from Hay’s summary. Canada fixed its problems during a booming decade for the global economy. And, they were aided by the passage of NAFTA which resulted in US car companies moving much of their production to Canada. They did so because the Canadian taxpayer picked up the tab for healthcare. They are still the country from whom we import the most goods and services (not China). Exporting economies have much less to worry about than importers like the US.

Still, when you look at what they have accomplished compared to our own domestic quagmire, you have to ask, WHO WILL LEAD?