Platitudes vs. Principles

Americans now reflexively expect the government to solve our problems, whatever they may be.  I am incredulous.

We have expected our government to guide our economy.  The result has been inequality and deteriorating infrastructure.  We have expected our government to ensure we all have adequate health insurance.  The result is a morass of inefficient bureaucracies and escalating cost.  We have expected our government to improve the prospects of our least fortunate citizens (remember the war on poverty?).  The result is that poverty has become entrenched in our inner cities and has extended to rural communities. 

How did we get here?

Politicians of both parties have abandoned principle in favor of an unstated philosophy that has been embraced by the public: “government should enforce what I think is right.” Whenever 50% of the population is imposing its beliefs on the other 50%, we have lost track of the basic American principles of freedom and rule of law.

Instead, we get platitudes.  What’s a platitude?  I recently saw a definition that cuts to the quick: a platitude is and idea that (a) is admitted to be true by everybody, and (b) isn’t true.

The recent bi-partisan budget deal is exhibit #1.  Rep. Mark Sanford (R-SC) called it a deal that “makes us weak as a civilization.”  Meanwhile, Sen. Charles Shumer (D-NY) called it a “win for the American people.”  So, which is it?

Well, you can be sure that whenever you see both Chuck Shumer and Mitch McConnell smiling, the taxpayers will be paying a bigger bill. (In this case, a mere $288B.) Such compromises always results in rewarding political friends, engaging in social engineering, and supporting businesses by socializing losses incurred by so-called capitalists.

Some media like to focus on examples of government waste from studying the sex lives of Japanese quails to printing reports that no one reads.  While that’s great fodder for social media LOL’s and angry faced emojis, it’s not the right place to focus our attention. 

The “free market” (not that it’s really free) is responsible for our prosperity but also is the cause of much pain. Society may benefit from higher average incomes but is harmed when businesses with near monopoly power eliminate the competition or when the side effect of our prosperity is damage to the environment.  To advocate policies in support of business while ignoring the negative side effects is irresponsible.

Our strategic competitors – primarily Russia and China – have been investing in military technology while we have shrunk our global presence and are burdened by a wasteful bureaucracy (the Navy has more Admirals than ships).  Yet, rather than debate the defense budget from the standpoint of strategy, we quibble about the size of the budget and what programs should be saved in defense of jobs in one Congressional district or another. 

We should be having healthy debates based upon principles.  What are public goods that should be supported by government? Does it include protecting natural areas?  How much should our budget commit to the Smithsonian Institution or national monuments?

What is government’s role in protecting the privacy of its citizens?  Should the government guarantee a minimum standard of living?  How should we restructure Social Security and Medicare to ensure benefits for an aging population without overwhelming the generation still at work?  How should our immigration policy be redrawn to ensure our economic growth while treating those who wish to come here humanely?

These are the debates we should be having.  Instead, conservatives focus on how to undermine the effectiveness of institutions that provide women’s health services, while liberals endeavor to restore the 20^th Century glory of a now obsolete trade union model. 

Both liberals and conservatives can agree in principle on the need to ensure our prosperity while providing an effective social safety net.  Both can agree that we need to maintain a leading edge in military technology in order to ensure our national security.  Both can agree that our environment must be protected by government regulation.  We should have a healthy debate on all these matters. 

Unfortunately, we can’t do so until we get past the perceived need to govern by platitude rather than principle.

WHO WILL LEAD?

A Wedding, a Birthday and American Exceptionalism

Monticello

It’s Thomas Jefferson’s birthday as I write this.  My wife and I just returned from a wonderful long weekend in Charlottesville, VA, the site of Jefferson’s home Monticello which we enjoyed visiting.  The occasion for the trip was not Jefferson’s birthday but rather my cousin’s wedding.

The weather was wonderful and the wedding celebration even more so.  As is often the case, I managed to find my way into an intellectual discussion in the midst of all this celebration.  I enjoy a debate that is respectful and where I have the opportunity to learn something new as was the case on this occasion. Standing a few feet from the Italian buffet, I was discussing American Exceptionalism with a well-traveled and obviously well read woman. 

She decries the use of the term.  Having lived overseas at various times in her life, she connects it to the boorish Ugly American who embarrasses us all.  She is undoubtedly correct in making that connection. Many conservative politicians have used the term to advance the idea that Americans are superior.  I agree with her in that I find Americans to be no more exceptional than citizens of other countries.

The term American Exceptionalism can be traced to the writings of Alexis de Tocqueville and refers to the notion that the United States was born of new ideas -- liberty, equal opportunity and laissez-faire economics.  In that sense, America was and remains exceptional.

Our economic progress has been the result of ideas embraced by both major political parties. Public investment in infrastructure, private investment in free enterprise and openness to immigration have created an economy that generates nearly a quarter of the world’s GDP despite having only 5% of its population. 

So, despite the xenophobia of established citizens and political efforts to slow the influx of immigrants, they keep coming.  The promise of an American way of life is as attractive today as it was in the 19^th and 20^th Centuries.

Our continued prosperity is derived from principles of Economic Freedom – free market capitalism, private property rights, the rule of law and predictable policy.  It’s no surprise that Jefferson’ study has a portrait of John Locke hanging on the wall to this day.  Locke was preeminent in the British Enlightenment of the 1690s.  He promoted then radical ideas that all citizens should be free to enjoy the fruits of their own labor, that innovators should enjoy the profits resulting from their inventions and that capitalism is the prime mover for prosperity. 

And so, even today, America can claim to be exceptional for its adherence to the founders’ principles and for its diversity of thought and culture. 

 

The blessing circle

My cousin and his bride are both Italian Americans raised as Roman Catholics.  Our celebration lasted for three days.  On the last evening, the couple asked for the blessings of their friends and family.  Standing in a loose circle, we were all given the opportunity to offer our words of love to the newlyweds.  The blessings were officiated by a couple that ministers to a Unity Church.  He was raised in a Jewish household and she as a Roman Catholic.  The offerings included special remembrances (some offered in Italian) as well as a Baha’i prayer recited by an Iranian American and a Jewish recitation that preceded the groom breaking a glass followed by a shout of “Mazeltov!” by the assembled congregation.

How’s that for exceptional?

Somewhere Thomas Jefferson was smiling.

WHO WILL LEAD?

Hey, Congress! You Are Asking the Wrong Question!

The brinksmanship in Washington has a lot of people upset (including me).  But the reasons differ depending upon where you sit and what relationships you have with the federal government.  Indeed, not everyone is upset.  A client told me he was in the middle of an IRS audit when the government shut down.  He wasn’t upset when the auditors vanished. 

A conservative friend of mine is upset with the direction of the Republican Party.  He quoted Napoleon over lunch.  In his view, Obamacare will collapse of its own weight and Republicans would be wise to let it.  “Never interrupt your enemy while he's making a mistake. That's bad manners,” quipped Napoleon.

However, Wall Street Journal economics editor David Wessel extols the virtues of Obamacare in an Op-Ed piece called “Obamacare – A Game Changer in the Making?” 

The Economist tries to elevate the debate a bit, pointing out “when you are brawling on the edge of a cliff the big question is not ‘Who is right?’ but ‘What the hell are you doing on the edge of a cliff?’ ” 

Meanwhile, Joshua Green asserts that “Republicans Are No Longer the Party of Business” in Bloomberg Businessweek.  Green starts with an anecdote about a Tennessee businessman whose company makes furniture.  He says, “It’s as if House Republicans are playing suicide bomber with the U.S. economy.”  People who make furniture are affected by a slow down in government-funded mortgages. 

None of them are asking the right question. 

Why is the government in the mortgage business?  For that matter, why are they in any business?

One could challenge a lot of things our government does.  The government is the largest landowner in the nation.  By some estimates it owns approximately $128 Trillion of real estate and mineral rights. 

Sell 10% of it and our debt problem vanishes.  Sell another 10% and no one pays taxes for the next three years.

The federal government also distributes between $10 Billion and $30 Billion in farm subsidies each year.  Originally intended to provide support to poor farmers who might again suffer the trials of the Great Depression and the Dustbowl, it now provides support to absentee landowners who are millionaires many times over.  The bottom 80% of recipients gets an average of $587 per year. 

Try to eliminate the subsidies and you’ll run into a buzz saw of mostly Republican congressmen who fight to protect the economic interests who send them back to Washington every two years.

Changing this paradigm doesn’t help to resolve the current budget and debt ceiling crisis.  However, it does go to the core of some foundational principles.

Americans take a lot for granted.  We expect the water from our faucets to be potable, the electric power grid to be reliable and the transportation systems to be safe.  We expect our military to be strong, our economy to be prosperous and our institutions to protect us from ourselves.

We have the luxury of those expectations because of the last 150 years of prosperity.  Yet, we have lost track of what got us here. 

The principles of economic freedom – predictable policy, rule of law, strong incentives, reliance on markets, limited role of government – are no longer on the minds of those who govern.  So, corporate interests have adapted.  In a world where lobbying for favorable tax and regulatory treatment can have a dramatic effect on your bottom line, big businesses benefit by focusing on Washington.  Interrupt that activity and the muddle that is the media somehow draws the conclusion that “Republicans Are No Longer the Party of Business”.

In the lingua franca of today’s political environment, the term economic freedom sounds conservative and Republican.  However, since WW II, the violators have come from both parties.  Starting in the 1960s, Presidents Kennedy, Johnson, Nixon, Ford and Carter approved a succession of laws, regulations and restrictions that violated the core values of the economic system that underpins our economic strength.  Perhaps no violation was more egregious than Nixon’s imposition of wage and price controls in 1971. 

An America that transforms itself from a free market juggernaut to a government that funds its favored interests will not maintain its economic leadership.  Instead, we will continue to be mired in the current slog of low economic growth rates and expansionist monetary policy. 

A reversal of that course will tread on the entrenched interests of big corporations who have benefited from the results of their influence on electoral outcomes.  Yet, that is what’s necessary to restore economic growth, the strength of the middle class and continued American hegemony.  The only question is…

WHO WILL LEAD?