WHY THE LEADERSHIP DEFICIT

INTELLIGENT CONSERVATIVES AND OLD-FASHIONED LIBERALS UNITE:

ALL YOU HAVE TO GAIN IS YOUR COUNTRY’S SURVIVAL…

INTRODUCTION

THE IMPASSE IS TEMPORARY,

THE PROBLEM IS CHRONIC

To no one’s surprise the deficit-fix supercommittee has failed to fix the deficit, even in principle.  They are so sorry.

David Brooks almost always makes sense, but when he doesn’t, it’s always a “diagnostic moment.”  In today’s New York Times, he concludes a Rodney King, ‘Why can’t we get along?’ lament [The Two Moons*] with this gem:

“…it’s hard to see how we get out of this, unless some third force emerges, which wedges itself into one of the two parties, or unless we have a devastating fiscal crisis — a brutal cleansing flood, after which the sun will shine again.”

Mark this down: After the last “brutal cleansing flood”, Russia got Lenin, Germany got Hitler and the world got to live in hell for the better part of a generation.

Mr. Brooks has sound instincts that are occasionally overcome by the attempt to keep all well-meaning liberals in the conversation even when they have wandered into deep brackish waters (especially the subset that runs and reads the New York Times).  This has prevented him from making any sharp ideological critique of the hard-left elements that, sadly, seem to have a death grip on the current administration.

This problem is so severe that two prominent democratic pollsters are calling for POTUS to abdicate his second term ambitions for the good of the country, and inter alia, the good of the party.

On Monday Patrick Caddell and Douglas Schoen, called for President Obama to follow the example of Lyndon Johnson and decline to run again, arguing that-

“…the president could eke out a victory in November. But the kind of campaign required for the president’s political survival would make it almost impossible for him to govern—not only during the campaign, but throughout a second term.

“Put simply, it seems that the White House has concluded that if the president cannot run on his record, he will need to wage the most negative campaign in history to stand any chance. With his job approval ratings below 45% overall and below 40% on the economy, the president cannot affirmatively make the case that voters are better off now than they were four years ago. He—like everyone else—knows that they are worse off.”

Caddell and Schoen are traditional democrats associated with the Clintons.

http://online.wsj.com/article_email/SB10001424052970203611404577041950781477944-lMyQjAxMTAxMDIwMDEyNDAyWj.html?mod=wsj_share_email

The failure of leadership by this president is irrevocable in my opinion.  His replacement by another, reverse-image ideologue committed to another scorched earth program, opposition and dialogue be damned, will suffer the same fate.  What the country needs is a new coalition that, of necessity, will be led by a conservative who is willing to adapt and compromise sufficiently to form a new coalition.  Secretary Clinton has been sufficiently tainted by association with the incumbent and by her earlier “right wing conspiracy rhetoric” that she is only marginally more likely to assemble a governing coalition than her current boss.

This is why the current fiscal crisis requires liberals to jettison their Marxist/progressive baggage, and the conservatives to get real.  Why only a coalition of intelligent, realistic conservatives and old fashioned, constitution-supporting liberals can save the USA from ruin. Why the next move belongs to the conservatives.

The Conservative Challenge

Commentary & Analysis

By

Jay B Gaskill

► In the best, traditional sense of the word, almost all of us are all liberals, but….

Liberalism, in its present form, is hostage to a Marxist Lite ideology that exerts a stubborn grip on the hard “progressive” American left.  The core notion is that wealth inequalities are an affront to social justice. The term “justice” is code for the attempt to achieve social and economic equality through stealth rather than via up-front socialist confiscation.  To hard-core progressives, wealth disparity as such – not unjust wealth disparity, but any wealth disparity – is a social evil because all such disparities are inherently illegitimate. In their moral universe, wealth inequalities, by their very existence, are wealth inequities, carrying the stench of “selfish capitalism”.

No society in the last 1,500 years, if ever, has actually eliminated significant differences in wealth. Wars revolutions and coups have succeeded in replacing elites, destroying assets and producing different concentrations of wealth and power, but not in “leveling” – except in the extreme cases in which the survivors are more or less equally destitute.  This sort of realism was called “mean spirited” by some on the left, for whom the actual accomplishment of leveling through genocide in Stalin’s Soviet Union was once justified as “a necessary revolutionary step”.  Marxist progressives are uncomfortable with this legacy and prefer to blend in with the old fashioned liberals. But the problems with top-down wealth leveling programs won’t go away.

Wealth disparity is the cumulative result of income disparity which is the cumulative result of different earnings and takings over time.  In traditional, non-Marxist, moral theory, only the takings qualify as illegitimate. In the surreal world inhabited by political progressives many takings are invisible because they are the result of political favors, i.e., the coercive power of the political class to punish and reward. To a traditionalist, either form of taking (by a government official or agency or by the trickery of a criminal schemer) amounts thievery, whether the takings are from individuals in a classic Madoff style or from taxpayers as favors to political supporters and allies.  Marxist and Marxist Lite reasoning converge on one morally untenable assertion: The act of taking excess wealth for any public purpose, including its redistribution via the political process, can never be theft because its larger moral public purpose cancels out ordinary morality.

For the last five decades, old fashioned liberals and the hard left kind have suffered through a bad marriage because all the takings were disguised as government-enacted underfunded wealth transfers and unfunded mandates.  The stealth strategy to hide these takings was a state-sponsored Ponzi scheme in which the government financed wealth transfers (the takings) by borrowing while pretending that the indebtedness would be repaid by “growth.”  This was rather like a 20th century Robin Hood bleeding out the bank accounts of productive earners, leaving worthless IOU’s behind – “Redeem if I get rich.” We are witnessing the large scale collapse of this form of liberalism.

This is a dangerous period because, for some progressives, the crisis represents an opportunity to install hard core bureaucratic socialism using the excuse that we are witnessing the failure of “capitalism”. The time has arrived for conservatives to put aside their minor differences, to hone their core message and get on board, even inviting traditional constitution-respecting liberals to break with the Marxist-progressives and join the in saving the USA as a free and prosperous country. The crisis requires the subset of patriotic, sane traditional liberals and all conservatives to focus on just three essentials: (1) Preserve our military against the attack within. (2) Preserve and restore economic freedom against the last-gasp socialist surge. (3) Head off the coming depression.

Four moral principles define and unite authentic conservatism:  (a) Support and defend the American constitutional system. (b) Protect earnings and the accumulation of earnings. (c) Limit taxation and regulation to well-established general purposes, not political favors and special interests. (d) Uphold economic policies that promote profit-making enterprises without political manipulation and interference, refusing to pick winners and losers.

They unpack as follows:

Government exists to protect the mutual respect of individual freedoms of its citizens, to adjudicate individuated justice among them, including enforcement their contracts, the redress frauds, trespasses and assaults against them, and to secure the benefits of liberty through an impartial system of law and justice that respects no status of royalty or privilege above that of common citizen. Because work and earning are fundamental values, owning and keeping the fruits of one’s earnings is a basic right. Because taxation is a government-taking of the people’s earnings, the care and spending of tax revenues are a public trust, to be used prudently and honestly only for general purposes that clearly benefit everyone and not for special favors to special groups.  Because regulation is a disguised form of taxation, one that can and does take away the fruits of one’s earnings, the issuance and enforcement of regulations is also a public trust, to be done, if at all, prudently and honestly for general purposes that clearly benefit everyone only, and not to create special favors to special groups. Because innovation and competition, risk and reward, are among the fit and proper uses of one’s accumulated earnings, the government may not pick winners and losers.

The 2012 Conservative Message in a Nutshell

The impending economic train wreck is the result of excessive liberalism. Therefore we need a conservative-led prosperity surge. Only a surge of healthy, profit-generating commercial enterprises can save us from fiscal collapse, avert a depression and bring us out of the economic swamp.  And only a tough, focused, well-funded military, backed by a strong, guilt-free American foreign policy, can protect us from our enemies.

Both goals are achievable, provided that a business-savvy, common-sense leadership emerges that is fully committed to four bedrock principles: [1] Failure is a lesson, not a problem to be shared, therefore: Contain failure, don’t reward it. [2] Success is a model to be promoted, not a shameful example to be burdened. Honor success, don’t burden it. [3] America is the beacon of hope to an un-free world because its core principles are protected by a unique constitutional system. Guard our firewall against tyranny.  [4] Political interference ruins economies. Four decades of liberal mal-governance has brought us to the brink. Peel back the political load on commerce.                                                                                                                     

Repairing the consequences of neglect

A crash will be the final, damaging legacy of cowardly procrastination.  It will threaten the very constitution, the fragile fabric on which all of our hard-won freedoms depend.

Fiscal neglect has characterized the decades of political and economic malpractice leading up to the present crisis.  The consequences of a full-on crash would be unthinkably dire as will the malign results of the unwise effort of institutional liberalism to prevent it.  For example, further attempts to attack the US sovereign debt problem by attempting to flood the system with more fiat money will backfire: Intractable, systemic hyperinflation would erupt along with further investment paralysis, leading to a prolonged depression.

Therefore a coalition of enlightened conservatives and realistic, constitutional liberals will need to implement certain seemingly brutal, but practical and survivable steps that are urgently necessary to contain the hemorrhage.  These should be softened by parallel bold and quickly effective steps to raise revenue (see Setting Off  the Economic Surge outlined in the next section) by dramatically “lifting the lid” on private, profit-making commercial activity.

The scale is daunting because the out-of-control federal spending machine is running on empty 44% of the year.  This is a patient that is bleeding out while replacement blood is poised to become unavailable within the first term of a new president or the second term of the current one.  If anyone is still wondering why so few well qualified candidates are running for POTUS, the answer is bright line clear.  The ones not running for POTUS knew there were not up to the job and/or that anyone who actually does what is needed will not be reelected.  I disagree with that assessment, but I do sympathize with the thinking.

In order to staunch the federal fiscal bleeding before a ruinous crash takes place, six major federal expenditure areas must be addressed such that a net overall 44% savings is achieved.  Recall that even a balanced budget will not make the existing debt load go away, just prevent it from getting worse. Having shored up the national credit rating, we’ll still need to pay off the mortgage.

But to achieve balance on an emergency basis, across the board cuts must be made over a set period of time, incrementally raising the cut percentages if and as needed, until all federal borrowing is stopped.

How long do we have? The longer it takes, the more we continue to borrow, the closer the crash tipping point becomes.  Europe or China could fall into a forcing moment in any given week, giving our paralyzed political class almost no warning.  I estimate that we have fewer than three years. That we need to start immediately is evident to everyone except our elected officials.

Why the hesitation? As the recent supercommittee impasse demonstrates no one wants to bell this cat.  I’ve appended an exercise in the Appendix, inviting the reader to work out the needed percentage reductions federal sector by federal sector.  Recall that 44% of expenditures need to be covered either by increased taxes during a dangerous recession, by expenditure reductions or both. Also recall, that any significant increase in the cost or duration of current federal borrowing will trigger a fiscal crisis.  Debt service costs alone already far exceed the Homeland Security Budget. Think of achieving “savings” between 40 and 50 percent across the board in Salaries, Entitlements, Contracts, Personnel and Programs.

Drastic cuts in the military budget would be suicidal. Protecting the military means that every other federal agency and department will need to undergo a proportionately greater reduction in paid personnel – mere salary adjustments won’t be enough.  Truth be told, some activities and functions of the federal government are more important than others.  Subject only to those federal government activities that are clearly necessary to protect public health and safety, entire government functions will need to be retired, partially or in toto.  For reasons I develop elsewhere (see my article “Nukistan and Islamageddon”  – http://jaygaskill.com/dot2dot/2011/10/24/averting-nukistan-avoiding-islamageddon/), significant cuts in our exposed military forces would trigger disaster.

So…what about raising taxes?  The Beltway compromises over the last five decades have been brokered by a pattern of mutual hostage taking, liberal sponsored programs have been pitted against national defense expenditures, each held hostage, and increased borrowing resulted.  Given the impasse, some “revenue increases” are inevitable.  And given that reality, a plurality of conservatives can be persuaded to create a protective revenue stream in order to prevent national security and military preparedness from being taken hostage again. This dismal discussion brings us to the central problem: We need to decisively end the recession in a way that will reliably generate higher incomes across the board for a number of years going forward.

Starting the next economic surge

Growth alone may not close the fiscal chasm, but it can at least buy time by boosting employment and public support for short term sacrifices to get the country back on track.

But this cannot to be another bubble.  It’s too late for a manipulative, faux recovery.  The good news is the there are five, real-world elements of any American economic surge, and they play to uniquely American assets: Energy, Agriculture, Transportation, Communication and Water.

Enter the Elementals:

The resemblance to the ancient elements –earth, air, fire and water – is probably not accidental.

Water – clean, abundant, affordable and available in real time, and Energy – abundant, affordable and available in real time are deeply interconnected.  Transportation – secure, fast, affordable and available in real time, and Communication –also secure, fast, affordable and available in real time are also deeply interconnected.  Food production on a world scale is falling behind demand.

As it happens, the USA is still a world leader in communication and transportation technologies, has immense, world-scale agricultural capabilities and is sitting on immense energy resources.  For example the sheer scale and volume USA’s interstate trucking corridors trump every other comparable system in the world.  No country of comparable scale is so tightly knit by redundant communications systems.

But agriculture and human life critically depends on a reliable source of abundant clean water.  In spite of measurable urban water quality deteriorations in the last 25 years, Americans still enjoy the safest, most abundant tap water of any large country in the world. The massive settlement and development of arid regions in the USA has taken place on a scale unduplicated anywhere else in the world.

The energy production surge has an easy first step: Allow energy production and sales to go forward in the USA, using the best available, existing off-the-shelf technology to manage (not eliminate) the inevitable collateral costs.  For at least eight years the USA can afford to dramatically enhance its own prosperity while marginally contributing to so-called greenhouse gas emissions.  This country has more than enough economically recoverable conventional energy resources (coal, oil shale, oil and natural gas) to meet its own needs and make a difference in the world market for the rest of the century.  The additional government tax revenue should be used to retire our indebtedness and to prevent further borrowing.

The second, related step is to allow, via cost-free licensing, next generation nuclear reactors to be built and deployed under close military supervision (for safety and security) using military grade fissile material. These installations should initially be licensed to power military facilities, homeland security facilities and other strategic assets, including key transportation hubs, to demonstrate operational reliability before they are generally licensed for private civilian use.

All regulation and licensing obstacles to other alternate energy systems will be relaxed.  But other than the partial subsidy of nuclear by supplying fissile material and security, the energy market will govern supply and demand allocations.

The key to an agricultural surge is land use policy, water availability and the access to large markets.  Productive agricultural land use gets priority.  Water for agricultural use gets priority.  Trade, anti-trust, commercial regulation and tax policies are reconfigured with a view to allowing the maximum efficiencies and profits for all forms of American food production and sales (local and international), including the clearing away of the government measures that affect transportation to market.

Again, the government does not pick winners and losers; does not bail out losers or differentially tax winners.  Market forces need to be allowed to work.  Investors need a clear, stable regulatory path to profitability.  Political interference with commerce – even with the best of intentions – is toxic.

LIFTING THE POLITICAL BURDEN ON COMMERCE

US commerce is smothered in a vast spider web of federal and state regulations, tariffs, fees, permits, licenses, mandatory studies, reports, reviews, obstacles – often overlapping – from councils, committees, commissions and bureaus and other political entities, the net effect of which often exceeds the corrupt kleptocracies in the Third World.

This is actually good news because the suffocating spider web can be lifted, releasing an economic surge.

Much has been made of the claim by the left that vast sums of wealth are being held by a small number of elite capitalists.  This is a puerile statistical game.  No small group is capable of consuming such vast sums.  [The estimates vary but the available number is measured in the low trillions, at least enough to ignite an economic recovery.]

The real question is – Why is not this money being invested in new economic ventures in the USA? And the answer is clear: This is the last readily available money, and its owners are reluctant to pour it down a rat hole.

Tax policy needs to be non-punitive – fair to entrepreneurs, employers and ongoing businesses.  The tax system needs to be tweaked, but the regulatory system must be uprooted.  There is a straightforward way to accomplish this.

The real recovery is entirely located in the private sector, powered by new, profit-driven business activity.  Individual, well managed enterprises that make/sell/move the “real stuff” on which day-to-day commerce depends will link up with the “better mousetrap’ ideas and the surviving sound financial sources.  This is where the real recovery will begin.  That is where it has always been.

But this is exactly where a whole set of government impediments, tolerable in a boom, are fully capable, during a fragile recovery, of aborting the new stirrings of economic life in utero.

What impediments, you ask?  Think of tariffs, business licenses, building permits, mindless approval loops, excise taxes, sales taxes, capital gains and income taxes, land use barriers, fees, more fees, hearings, slow-moving bureaucrats, all standing in line, blocking the path to economic growth….  You get the idea.  This is why successful businesses in the Third World have line-item budgets for bribes.

This is the “Political Commerce Load Factor” (or PCL).

The existing PCL has been augmented by an environmental set.  The PCL factors (extant and contemplated) are dangerous enough by themselves.  But when combined with price/cost instabilities induced by haphazard political market manipulation (the unintended consequences of non-productive subsidies, leading to artificial supply scarcities and-spot inflation), the effect is the same as putting a heavy foot on the national carotid.  Unchecked, political good intentions will consign us something worse than Japan’s fate, far worse.

Therefore, our secret weapon, our only means available for a self-bailout, is to seriously attack the accumulated political load on commerce.  This will generate opposition, but some perspective here is needed.  Nothing generates bigger riots than sudden, involuntary poverty.

As we approach the prospect of reducing the political, regulatory and bureaucratic impediments in the US to profitable economic activity (i.e., recovery), we need to focus with laser efficiency on the legitimate core concerns that animated the regulation in the first place. They fall into three categories: Environmental toxins; Heath risks; Public safety risks. Everything else is expendible.

In each of these areas, China’s blowtorch economy is a cautionary tale as well as a working model of a rapid capitalist expansion.  China’s post-communist leaders have ignited a Wild West economy, the rough edges of which are insulated from protest by the selective use of the legacy tyranny-instruments from the Maoist days.  We’ve witnessed more of this than the Chinese people have.  The burning skyscraper in Beijing captured on US television during Diane Sawyer’s recent visit, the lead-painted toys of Christmas’s past, and the adulterated pet food are just the visible hints of the not-so-hidden costs of economic speed.

By contrast, the USA economy is like a sclerotic elder, using a walker, hesitating for endless discussion about the next step.  But the decrepitude of our own design, much of which was implemented over the last six decades by semi-autonomous bureaucracies tasked to make life better for some of us, no matter the general cost.

The moment is overripe for an intelligent, focused attack on the political load burdening US commerce.  We are ready for a discussion of how regulatory easing would be managed and implemented.

Not all of the burdens holding us back stem from health and safety concerns.

Much of the burden represents the bureaucratic processes themselves, the “hearings” and “inputs’ and “reports” that are designed to substitute endless, unproductive discussions for decisive progress.  The post-earthquake San Francisco Bay Bridge replacement project (the quake was in 1989 and the work is just now approaching a visible terminus) was delayed at least a full decade while a highly politicized process invited “input”.  Most of the discussion was nominally about esthetics, but really about credit-sharing and the courting of embedded interests.  All this talk trumped public safety concerns and drove up costs. Delay is a form of regulatory abuse, the direct byproduct of politics as participatory obstructionism.

We have the power to break out of economic paralysis, only if we have the wisdom and courage to use our best tools now. This dangerous economic malaise requires us to break through the Political Load Factor in the service of robust economic recovery. It is both legally and practically feasible for a specific, as yet unnamed federal agency to be created, empowered and charged with the mission to break clear paths through the red tape and punitive taxation so that nascent, privately funded commercial enterprises can flourish more quickly and robustly than anyone thought possible, especially in the pre-recovery economic environment. 

In the same way that an Arctic ice breaker can break open a clear path for a fleet of fishing trawlers, a federal regulation and taxation ice breaker can do the same for a strong business recovery.  This would be proactive, creative conservative-liberal policy at its very best.  It would serve the same, practical function in the tangled web of business-killing regulations, licenses, permits, delays and kleptocratic taxes that bribes to in corrupt Third world economies.  Except that its operations, in partnership with cooperating state governments would be above board, transparent, subsidy-free and legal.

The solution – or a major part of it – is to implement comprehensive commercial liberation, utilizing the commercial regulation powers conferred by the Commerce Clause, operating in reverse.  Business people are not fools.  The protections afforded a start-up would need to provide a clear path that could relied upon to remain clear for a reasonable time, say, a full fifteen years. The basic template would be as follows:

A new Agency, let’s call it the Interstate Commercial Enterprise Deregulation Agency (ICEDA) would be given a fifteen year charter to liberate private businesses from burdensome, growth-impeding government rules, regulations, fees, mandatory reviews and other bureaucratic impediments to economic health.

(1) Does the challenged government rule, regulation, fee, mandatory review or other bureaucratic impediment constitute a significant negative impact on new business activity, development or employment, whether directly or indirectly, potential or immediate? (2) Would its elimination or proposed modification pose a significant risk to public health or safety over and above that which normally could be expected to occur from increased economic activity?  (3) When (1) is YES and (2) is NO, the ICEDA is empowered and directed to remove the impediment.

The path clearing protection should be reserved for privately funded ventures only, the kind where the cost of failure is born by those who took the risks in the first place, the same investors who can reasonably expect to be allowed to retain the rewards of their success.

History tells us that this model or something very much like it will work.  History also tells us that when we Americans are challenged, we rally.

There every reason to be optimistic about the prospects of a real American recovery prompted by the liberation of profit-making commercial activities along these lines.

As Hoover scholar Victor Davis Hanson put it his must-read essay, What America Does Best….

“The Obama experiment of the last three years did not bring prosperity, and is likely soon to prompt a sharp reaction and a return to the American devotion to individualism and choice that made us the wealthiest nation in history. The American model is the antithesis of the socialism, Communism, theocracy, and statism that have impoverished so much of the world — and the 21st century has brought that fact home in a way few imagined.

“Why does the United States continue to reinvent itself, generation after generation, to adapt to a radically changing world? Our ancestral Constitution checks the abuse of power and guarantees the freedom of the individual — all in transparent fashion. And our habits and customs that have evolved over two centuries are grounded in the human desire to be judged by what we do rather than what we look like, or under what circumstances we were born — a fact that explains our vibrant and sometime crass popular culture. The essence of our culture is constant self-critique and reexamination — a messy self-audit that so often fools both ourselves and our critics into thinking that our loud paranoia about decline, rather than our far quieter effort to arrest it, is the real story of America

“In short, the 21st century will remain American.”

(http://www.victorhanson.com/articles/hanson111711.html)


APPENDIX

Here is your cut-the bleeding exercise.  The percentage numbers are plug-ins designed to give the reader a realistic sense of how difficult it is going to be to make the transition from 44% borrowing to no borrowing before the Big Ax falls.  In round numbers, you need to save about 1 trillion dollars.

[1] Salaries: All federal salaries and benefits, starting with salaries of the president, the entire executive branch, the congress and all other federal employees, except the uniformed, active-duty military, are initially reduced XX%. This is necessary on two levels.  (1) Shock treatment: Until the executive and legislative branch do something this forward and significant, little credible sacrifice can be expected of the rest.  (2) Federal salaries are too generous in relation to recession paychecks in state, municipal and private employment.

[2] Entitlements: Obama care is repealed and defunded.  All other health benefits, going forward, are frozen at 2010 levels and some form of Congressman Paul Ryan’s block grant to the states solution is phased in for Medicare and Medicaid.  All other federal entitlement payments, excepting current social security beneficiaries, are initially reduced XX%. All payments to current social security beneficiaries are frozen at the current levels. [Further Social Security reform is deferred on the pragmatic grounds that the cost crunch is further downstream than the imminent crash and that the political system can’t be distracted by that argument right now.]

[3] Contracts: All procurement contracts, other federally funded “contracted-out” services and purchases, and block grants and transfers to state and local governments and private entities are frozen until they can be renegotiated or unilaterally reduced to XX% of their prior cost or less.

[4] Personnel: Every federal agency and department, except possibly law and justice, homeland security, the defense department and the armed forces are thinned out sufficiently to yield an additional XX% in payroll costs (after the salary and benefit cost reductions in 1). The executive branch is given plenary authority to bypass seniority and other restrictions with the goal of achieving as much “merit and productivity” retention as possible.

[5] Programs: A rapid and comprehensive functional review of all federal agencies, departments and bureaus is conducted by the executive branch, given plenary authority to make reduction and elimination decisions as appropriate.

Now you know why your favorite candidate did not decide to run for president.

Copyright © 2011 by Jay B Gaskill, Attorney at Law

Forwards and links are welcome and encouraged.  For all other permissions, contact the author at law@jaygaskill.com .

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NO HYSTERIA – CALMLY ADDRESSING THE COMING SYSTEMIC FAILURE

Friday, November 18, 2011

Analysis by Jay B Gaskill

CALMLY ADDRESSING THE COMING SYSTEMIC FAILURE

Why the Way Out Requires Re-Thinking Fundamental Assumptions

Overcoming Hysteria in the Face of Fundamental Change

The Western democracies in general and the United States in particular are facing a systemic failure in finance and governance.  The problem is critical and potentially catastrophic because policy makers are unable to grasp that the very organizational architecture that has been taken for granted is the main problem.  Complex systems characterized by emergent order are being politically mismanaged by a hierarchical, top-down process that is doomed to crash.  The political class is responding to the challenge by attempting to achieve even more centralization and top-down control.  This will have the perverse effect of increasing the scope and depth of the damage when the inevitable failure cascade takes place.

Among the early signs of runaway hysterical thinking are four related loops: (1) Category mistakes, as in confusing practical necessity with immorality; (2) Priority paralysis, as in letting arguments over the desired long term outcomes get in the way of obvious necessity; (3) denial, as in pretending that we have more time than we really do; (4) the tendency to grandiose gestures, like an infant’s tantrum about being denied sugar. Illustrations:

[1] Economist Paul Krugman stubbornly continues to mischaracterize the debate between conservative and liberal economic analysis as primarily a conflict between bad and good versions of “social justice” [1]

[2] Conservative and liberal advocates who are currently tied up in a paralyzing debate about the tax and welfare system should wait for some later time when the country is durably prosperous.  Liberals are rejecting necessary reductions in entitlement programs that cannot be paid for in real time, holding national defense expenditures hostage (contrary to the recommendations of even the liberal Secretary of Defense) and rejecting even disguised tax increases proposed by conservatives (in the form of specially crafter tax reform).  Other conservatives, more removed from the practical arena, are opposed to any tinkering with the tax code until the entitlement issue is addressed on a more permanent basis.

[3] Like someone caught in the path of a coming tsunami, unable to decide between getting in the car or simply running  to the neared hell, the hysteric clings to the delusion that it’s really not all that dire, and walks up one flight of stairs.

[4] The sense of powerless that accompanies hysteria is so intolerable (remember that hysteria is incompatible with clear thinking and setting reasonable priorities) those in its thrall are given to grandiose gestures, as in the incoherence and sense of infantile indiscipline of the street protesters near Wall Street and (in a paradox of geography) near Oakland’s City Hall.

A DOSE OF REALISM

Here are some general observations that might be of some help:

THE TWO MEANINGS OF SYSTEMIC FAILURE:

  • A systemic process infecting various critical systems
  • A ‘design’ failure in the systems themselves

APPLICATION: Most of what is going on at present represents the inability to recognize the second meaning.  There is a design failure in the systems themselves.  And it is a familiar one, the inherent fragility of large scale “imperial systems.”

IMPERIAL FAILURES

These are scale and complexity-engendered failures that always follow the attempt to load more control than complex systems can take.  All large-scale complex systems have a scale-failure point.  This is particularly true of economic and political systems when they are just too large and complex for top-down management to work.  Examples: The EU, the Euro, the international banking system and the partly unified US credit/finance system.

Imperial failures happens among states and also within states-

Socialism in its various forms is the failed imperial model applied to economics.  The various international and pan-national regimes (whether founded on a paleo-imperial ethos or a neo-utopian ideology), is the classic failed imperial model.

The collapse of the Soviet Union is a perfect example of both kinds of failure, internal and external.

APPLICATION: Financial systems have reached a scale of complexity in which they are effectively outside the day-to-day (or even year-to-year) management by centralized bureaucracies, both political and non-political.  The inability of “science” to accurately predict the course of chaotic weather systems, let alone the financial system, should have been a hint to those social “scientists” who still think that the even more complex economic systems can be effectively managed.  This is a separate issue from the equally trenchant and accurate charge that the political class is famously incompetent at any form of management, except the more destructive forms.  The most important implications of this include these three: (1) Complex systems exhibit emergent order that is the result of the prevalent motivations of individual players. Rational self- interest, mediated by strong protections against force, intimidation and fraud, tends to produce outcomes that optimize the overall interest. (2) Failures and successes always repeat in a crud by recognizable wave-form. (3) Just as strong protections against force, intimidation and fraud tend to keep a system healthy, the compartmentalization of the inevitable failures operates as a firewall against their spread. The public policy rationale against monopolies and concentrations and against failure bailouts is the same: the protection of healthy systems from contamination and/or extermination.

NORMATIVE INCOHERENCE OR ORGANIZATIONAL INCOHERENCE

The Mediaeval and modern examples contrasted:

The Medieval system was held together by common moral system (propagated by the Roman Catholic Church following the dissolution of the pagan Roman imperial system) and a political system that remained loosely coupled in a dispersed form.

The modern system is characterized by a mix of conflicting “moral” systems (mostly in the form of secular accommodations) that are coupled to temporarily-unified political organizational units.

APPLICATION: The modern system is still suffering the aftereffects of the collapse of a moral consensus without its replacement by a new one.  As some philosophers and ecumenical theologians have begun to demonstrate, there are acres of common moral ground among the various competing cultural, religious and ideological frameworks.  But essentially tribal considerations are in the way of achieving a more general consensus, as one sober glance at current UN debates and the yawning chasm between rhetoric and reality will demonstrate.  This means that it is all too easy to load more political unification onto social/moral differences than they can take.  The prudent solution is to allow much more local variation, mediated by an emphasis on bottom-up social change and emigration and voluntary resettlement patterns. [2] Of course, we need more normative coherence, but the process cannot be rushed.[3]

FAILURE STRATEGIES AND ACCOMODATIONS

Failures either teach, or they are hidden by reallocation to a still higher level of operation where they will inevitably recur with even greater consequences.[4] Failure containment requires compartmentalization and firewalls.[5]

The nation state system and other individually separated competing utilities (think banks and communication systems) have inherent, though imperfect firewalls.  It is a fallacy to equate states and organizations to living organisms.  Their failure still permits the out-migration of the real organisms (people) within.[6]

APPLICATION: Bailouts and the artificial unification of organizations represent the same core error.

MISDIRECTED HIGH INTELLIGENCE

We see this when an extraordinary sophisticated and stubborn attention to details continues to operate within a failed analytic construct.  This style of thinking commonly leads to the reallocation of failure syndrome.  For example, Keynesian economic theory held that the manipulation of the money supply could always smooth out economic boom and bust cycles.  Just as that theory – which was first iterated when the subject economies were essentially closed systems[7] – has been discredited, ever more sophisticated computer algorithms have been generated by ever more sophisticated economists to ramp up its application to ever larger and less predictable scales.

APPLICATION:  Algorithms that disguise theft and fraud (thinking, for example, of the toxic mortgage bundling schemes) are instruments of theft and fraud.  Algorithms and complex economic models that facilitate the buildup of massive, unsustainable sovereign debt are instruments of bankruptcy.  Otherwise intelligent people who uncritically trust the purveyors of unnecessarily complex schemes with unreasonably cost-free outcomes are functional fools.

LESSONS

Beyond hysteria is the calm perspective that these problem can and will be solved as soon we recognize that the old fashioned basics, like ‘We don’t get something for nothing’; ‘If it’s too good to be true, it probably is not true’; and ‘Those who promote stealing from others intend to steal from you’, are still true and relevant.

The author, a California attorney, is the creator/editor of The Policy Think Site – www.jaygaskill.com

Copyright 2011, by Jay B Gaskill, All Rights Reserved. Forwards & links are encouraged. Permissions: law@jaygaskill.com


[1] See for example Paul Krugman’s Op Ed in the New York Times of November 18, 2011, “Failure is Good” (the title refers to the pending failure of the deficit supercommittee) herein “slashing spending” is framed as a moral issue because the necessity of balancing spending and expenditures is about “fundamental values”, as if the practical exigencies of US economic survival is not and the conservative economists who favor a culture of less dependency in the context of greater overall prosperity are morally deficient.  But the moral issue – wanting the best overall outcomes for everyone – is inextricably tied up with the practical issues framed by the question: But what is actually working here?

[2] This does not mean acquiescence in genocide, of course, or the abandonment of the US tradition of rescuing victims of tyranny, but it does mean – among other things – greater respect for immigration restrictions designed to maintain cultural stability and for gradualism where cultural evolution is concerned.

[3] As David Brooks writes in the 11-18-2011 New York Times, “The European Union is an attempt to build an economic and legal superstructure without a linguistic, cultural and civic base.”

[4] One of many obvious policy implications here is that badly managed financial institutions should be allowed to fail rather than propping them up by bleeding good financial institutions

[5] For example, US commercial banks have not been sufficiently insulated from speculative investment patterns.  The problem has not yet been actually fixed.

[6] One implication is that inevitable institutional bankruptcies should be accelerated rather than delayed and the policy emphasis should be on facilitating the great majority of well-performing employees to move to a better situation.  The crash of the Icelandic banking system was no bailed out because Iceland was not on the Euro.  The government had no choice but to let them fail.  The rapid recovery of the Iceland economy is paradoxical only if you cling to the notion that badly managed organizations must always be rescued.

[7] Keynes himself famously and seriously advanced a thought experiment where an isolated English village solved its unemployment problem when a vast cache of money was buried nearby, and workers were employed in digging it out, then spent it employing others, and so on.  This survived as an Emperor’s New Clothes fallacy for decades because no one noticed that this closed system was being clothed and fed by an economy outside that was operating on the more ruthless, value given for value received model.  The fallacy was that meaningless, fake work generates real value.  Individual nations now operate in an open environment more like the one in which the buried money in that hypothetical village can no longer buy bread made outside the tiny circle of Keynes’ hypothetical construct.

2012 -Storm Warning

Copyright © 2012 by Jay B Gaskill, all rights reserved.  Links and forwards are welcome and encouraged.  For comments and permission, contact the author at law@jaygaskill.com

The 2012 Storm

Analysis

By

Jay B Gaskill

Try the following thought experiment:

It is Monday, October 1, 2012 and the most consequential election of the 21st century takes place on Tuesday, November 6, just 30 days from now, and the polls tell us that it is too close to call.

The winner will need 270 votes in the Electoral College.  California and New York (55 & 31) will almost certainly go for the incumbent (total 86), counterbalanced by Florida -27, Texas -34, New Hampshire -4 and Ohio -20 (total 85).  For some daunting details, see the footnote.[1]

Governor Ronald Reagan won a crushing 525 electoral vote landslide in 1984 because his coalition included patriotic, socially conservative families, traditionally employed in the trades, the so-called Reagan democrats.  But, after years of downsizing and outsourcing these families left the GOP in the wake of the 2008 crash and voted for Obama’s “hope and change”.

But this time even Ohio may be in play.

In a state where half the voters are whites without a college degree, the conclusion is inescapable: The white working-class independents who voted en masse for Ohio Republicans 12 months ago nearly unanimously rejected the state GOP’s top priority. Since no Republican has ever been elected president without carrying Ohio, that’s a bad sign.”

[See the more of the article, “Losing the Working Class”, and a LINK below.]

Like everyone else facing the unsettled conditions of 2012, the Reagan democrats are insecure, anxious, even deeply frightened about our failing economy, and the very future of the USA.  Yes, they are prepared to vote against “betrayal and being short-changed”, but only if they are presented with a realistic alternative that does not worry them even more.  What do they want in a candidate?

They want preparation, common sense, competence and a sense of optimism in a new leader, without a whiff of phoniness or puffery. At the moment, they are feeling battered and misused.  Because they have been betrayed, they will respond cautiously.

Back to our thought experiment: Assume that by the eve of November 6, 2012, the economy has limped its way into a shallow, mostly jobless crawl-back, arguably a weak trend, possibly a death rattle. Assume that the national unemployment number is slightly better than it is today (probably a result of a federal spending surge utilizing unspent stimulus moneys, but who can tell?).  Assume that the incumbent has gotten good press.  Assume that, during the campaign, he has tuned his rhetoric to centrist ears.  Now run four candidate scenarios in your mind:

  • Gingrich
  • Perry
  • Cain
  • Romney

Which of these POTUS candidates would you want making the case against the administration and what, exactly would the best arguments be?

NOTE: In this field, only Gingrich and Romney have done sufficient homework to prepare for a tough campaign, and only those two have also done the necessary prep work to assume office if elected.

Is there yet another brilliant, charismatic candidate waiting in the wings? Not in the GOP.[2]

So the hope and the promise for 2012 come to this:

[A] The GOP nominee will be able to present and sell a credible economic recovery plan that does at least three things: (1) contrasts clearly with the Obama approach, (2) effectively addresses the concerns of the former Reagan democrats, (3) reassures the nervous and restores their confidence and optimism.  There always will be other issues.  For example, national security developments can cut both ways. A sitting president has ammunition (pun intended) to change the national narrative.  But, as before, in 2012 –“it’s the economy, stupid.”

[B] The fractious factions within the GOP, the conservatives and the libertarians, will close ranks with enthusiasm and empower their candidate to open the way to the formation of that much larger coalition needed to govern this country during its most serious economic challenge ever.[3]

If you have concluded that the country needs a fresh team at 1600 Pennsylvania Avenue, it’s not too early for a dose of realism with your cup of coffee.

JBG

[][][]

Losing the Working Class

http://www.weeklystandard.com/articles/losing-working-class_608007.html

Henry Olsen in – The Weekly Standard

The chief example is the Ohio referendum that repealed the GOP’s elimination of public-sector unions’ collective bargaining rights. Properly recognizing that public-sector unions have driven up compensation to unaffordable levels, union reform was a top priority of the GOP base. Ohio voters, however, disagreed by a 61-39 percent margin.

A close examination of the results shows how widespread the repudiation was. Repeal was narrowly endorsed in only six counties, all strongly Republican. Everywhere else, the margin of repeal was high. Turnout was also high, about 90 percent of the 2010 total, and slightly skewed to Republican regions of the state. In a state where half the voters are whites without a college degree, the conclusion is inescapable: The white working-class independents who voted en masse for Ohio Republicans 12 months ago nearly unanimously rejected the state GOP’s top priority. Since no Republican has ever been elected president without carrying Ohio, that’s a bad sign.

This is happening because the differences between white working-class independents and the GOP’s conservative base are becoming too substantial to ignore. The GOP base voter believes the deficit is as large a problem as the economy; the white working-class independent does not. The GOP base voter believes cutting entitlements is necessary to cut the deficit and that taxes on the rich should not be raised; the white working-class independent disagrees. The GOP base voter wants to stay in Iraq and Afghanistan; the white working-class independent wants to come home. The GOP base voter scorns Occupy Wall Street; the white working-class independent thinks the Occupiers have something of a point.

In the past, Republican politicians would respond to such differences by avoiding areas of disagreement. But that option is no longer possible. Avoiding the deficit now means America will turn into Italy later. Conservative Republicans need to understand why white working-class independents disagree with them.

Real Clear Politics – The Obama Uptick

http://www.realclearpolitics.com/articles/2011/11/14/whats_behind_obamas_uptick_in_job_approval_–_and_will_it_stick_112058.html

…it is reasonably clear that the OWS protests have shifted the political debate somewhat from a discussion about austerity and government spending to one about inequality and corporate profits. This shift has probably served to energize a lethargic Democratic base. More important, the shift also has reminded moderate and conservative Democrats why they still identify with the party in the first place. Indeed, a large portion of the president’s surge has come from firming up support among Democrats, as opposed to bringing independents and moderate Republicans back into his camp.

Moreover, the onset of the Republican primary season hasn’t been a huge boon to Republicans. The headlines have been Mitt Romney’s flip-flops, Republican dislike for Romney, Rick Perry’s gaffes, Michele Bachmann’s gaffes, and Herman Cain’s sexual harassment charges. Stories about Newt Gingrich’s infidelities and troubled tenure as speaker of the House are likely right around the corner.

And when combined with Occupy Wall Street, the political oxygen is sucked up. This has actually had the net effect of making Obama look presidential and “above the fray.” This creates a bit of a good news/bad news situation for him. It is good news because the Republican Party purposely designed this year’s primary season to stretch into April. In other words, we may see an extended period of decent job approval numbers for the president. This is key, because it can help energize the Democratic base. More importantly, it will prevent donors and supporters from writing him off.

On the other hand, it is bad news because the Republican primary will wrap up, and the protests will probably end, either with a bang or a whimper (Obama probably prefers the latter). At the same time, there hasn’t been a change in the fundamentals of Obama’s presidency.

[][][]

The author, Jay B Gaskill, is a well-known California attorney. Follow his commentary on The Policy Think Site ( www.jaygaskill.com ), the Dot 2 Dot Blog and other links.


[1] The remaining semi-solid blue states (Alabama -9, Alaska -3, Arizona -10, Arkansas -6, Georgia -15, Idaho 4, Indiana -11, Kansas -6, Kentucky -8, Louisiana -9, Mississippi -6, Missouri -11, Montana -3, Nebraska -5, North Carolina -15, Oklahoma -7, South Carolina -8, South Dakota -3, Tennessee -11, Utah -5, Virginia -13 & Wyoming 3) yield a total of 128 more. That gets the challenger only to 213 if Ohio is included.  The 57 vote gap can be made up with a limited number of plausible combinations, say Pennsylvania (21), plus New Jersey (15), plus Wisconsin (10) and Michigan (17).  Subtract Ohio and the challenger’s task moves from the “we can do it” column to the “we might well blow it” one.

[2] The latecomers in this race are learning that this campaign is a really big deal, one that requires organization, staff support and a lot of money. As I write this, there are effectively only 11 months left to unseat an incumbent who has raised more campaign money than the entire GOP field combined, and who begins the race with the nation’s two largest states in his pocket.

[3] This time there can be no WWII surge to end a depression, if in fact that war ever did.  We start the 2013 budget year owing more money to foreign lenders than we owed (in constant dollars) at the end of WWII.  Moreover, when peace broke out in 1945, the USA was the only major manufacturing country left standing; most American families had been forced to save up consuming power because of rationing; gasoline was cheap; and there was a growing world market for American goods.  We are living the negative image of that moment of triumph.

WHEN THE SLEEPING GIANT AWAKES

WHEN THE SLEEPING GIANT WAKES

A Parable for Our Times

By

Jay B Gaskill

“Sometimes the ‘people’ are right.”

Anonymous leader

ǁ

“There are two kinds of outrage:

The anger of the disappointed spoiled;

The authentic moral wrath of the common people betrayed.”

Anonymous sage

Permit me to sketch some real-world political context.

America has evolved two cooperating political elites, each of which runs one of the two parties and shares three common traits: (1) high education levels, (2) important wealth (3) a distrust of the populist vote bordering on fear.  Winning elections for each requires a periodic courting ritual during which the populist vote (on which success depends) is earnestly sought, followed by a measure of post-election betrayal. Well before the 2008 credit-bubble crash and the advent of the Tea Party movement, I noticed the growing populist pressure.

Populism in this usage represents the politically relevant precepts, attitudes and core positions that distinguish an enduring majority of adults from the political elites that depend on their approval.

For decades, the corporate country club conservatives and the Lexus limousine liberals succeeded in achieving a rough division of the populist center: social populists on one side, economic populists on the other.

That situation was mutating well before the 2008 real estate credit bubble burst.  Just before that calamity, I wrote the following (in an analysis of developments in American populism):

“While I still believe that a legitimate populist movement can accommodate local custom (when popular sentiment clearly differs from the mainstream, thinking of the accommodations for gay marriage in Vermont for example), I also believe that there can be no accommodation for the anti-democratic reversal of the popular will in the rest of the country in this important area of life, especially by judicial fiat.  When judges, for example, abuse their trust by overriding the popular will, especially on essential ‘family values’ issues, a populist rebellion is virtually inevitable.

“The coming populist reformation[1] will be driven by the events and exigencies of the next few years because these challenges will bring the failures of elites of right and left to address the core populist values and concerns into sharp relief.

“Among the prominent threads in the reemerging American populism that will shape the parties and the political discussion over the next decade, these four stand out:

“Procedural populism.  The signal anti-populist development of the last 65 years was the emergence of governance via non-elected institutions under the control of the non-populist elites of the two parties. Principally the courts and the administrative agencies, these new power centers have quietly and not so quietly set public policies in motion that never could have gathered sufficient popular support.  There are many examples, some obvious, others less so.[2] The signal pro-populist development in the same period was the emergence – principally in California producing what some political scientists are now calling ‘hybrid government’ of the popular initiative as a tool for setting social and tax policy in ways that the legislative bodies – controlled by party elites – did not.

“Me-first nationalism.  Starting with Ross Perot several election cycles ago, this is the many headed hydra that the elites in both parties fear the most, and it is the most universal form of populism.  The failure of the Soviet Empire is an international model is a classic case of a putative universal ideology hitting the nationalist wall.  Note that party elites of all stripes tend to be more internationalist than the so called ‘common people’.

“Tough minded populism vs. the wimp elites. This covers a whole range of issues that will be pivotal in the next decade, all interesting.[3]

“Common sense economics.  The revolting specter of a broken financial system fueled by pampered executives (as many of them democrat-pandering as republican-pandering) who pursue ultra-short-term paper profits over long term real world gains is so profoundly unsettling that a populist rebellion is inevitable in some form.  The fears and anxieties in the current electoral-economic situation introduce a mob psychology wild card effect that may obscure the larger trend.

NOVEMBER 7, 2011

Politics is a game played among four players, each representing one mindset.

The game is about power, challenges to boundaries, and the reallocation of other people’s money & property.

  1. For typical liberal minds, boundaries are obstacles to be eliminated, including the boundary between “mine” and “yours”.
  2. For typical conservative minds, boundaries are bulwarks to be defended, including the boundary between “my kind of people” and the “unwashed”.

[Liberals and conservatives share a great deal more than they are willing to admit.]

  1. For centrist minds, boundaries are threats to a delicate balance and boundary relaxations are always preferable to conflict.
  2. The reasonable minds, the rarest of all, are equally wary of the toxicity of the ideologues and the weakness of many centrists whose tendency to conflict avoidance undercuts courage and principle when both are most needed.

Most people agree that “extreme” ideologies[4] are harmful, yet many of them tend to ignore the extremism of the ideologues who claim to share the same general socio-political vision. But the difference is not just one of degree, as in intensity or passion. When actually adopted, all ideologies operate as powerful reality filters, screening out or distorting every inconvenient data set or challenging point of view that cannot be accommodated to the “correct” view. In a sinister operational sense, the extreme ideologies work like mind-worms, feeding on the vulnerable, substituting a secular catechism for critical thinking. The vulnerable groups include those closest to a particular ideology in the spectrum of belief, the rootless ones searching for “meaning and purpose” and all the post-modern thinkers who have abandoned their allegiance to the core moral order. They were Lenin’s “useful idiots”.  I like the term “unwitting prey” or even “…pets”.

At this juncture in history, the most toxic ideologically saturated minds are still found among the progeny of the two malign ideologies of the last century:  Marxism and National Socialism. The beliefs of Lenin survive in the guise of bureaucratic egalitarianism and those of Hitler survive as population eugenics. The true believer ideologues[5] dance on a scary precipice, unaware of the yawning abyss, one foot-slip away.[6] History taught in the classic manner, with fidelity to the past, sans ideological filters, is a powerful vaccine against the toxic infectious ideologies. We can hope  that such classic history will once again be widely taught.

Each of the four archetypal mindsets (liberal, conservative, centrist and reasonable) is “onto something”. They are not ideologues – these mindsets are traditional styles of rational thought and communication. Each is a gift to us conveying some essential part of the big picture. Each has had its day and will again. No culture can afford to ignore or marginalize a single one of them, except at a steep cost, because each mindset is part of the civilized historical tradition.

No society without liberal, conservative and centrist minds – all of whom are in a mutual dialogue mediated by the reasonable minds – can avoid the “bubble trap”. The real world abhors a bubble.  Those who insist in living in one will eventually find themselves in an unchecked downward slide. The slope is steep and the momentum of the fall is constantly accelerating. The reasonable minds may be among the first to notice the pending disaster, but only an aroused population can stop it.

“Not my problem”, you say? No part of a human society falls over the precipice without taking others down with it. I believe that during times of great imbalance – like our present situation – we are in acute danger because the consequences of a major misstep will be unforgiving: We are permitted to briefly lose our balance, but we must quickly regain our footing or we will fall.  The precipice is always near, and it’s a very long way down.

Dialogue pierces bubbles and augments balance. At times like this, when political posturing and maneuvering trump dialogue, the abyss is much closer that we think.

About that Giant

Now, here is a secret. All this time a huge giant has been sleeping under our floor.

Go with the metaphor for a moment, and ask yourself: What would a dreaming giant dream?

HINT: The giant is us, the people, not the population, but that ancient virtual collective memory that holds the precious life lessons of our ancestors.  This is our giant, the keeper of our pains, joys, successes and failures – especially of our failures. The Sleeping Giant embodies our common wisdom, our common sense and our common morality.

When the players in the political game become too corrupt, too careless, too unbalanced and too arrogant, the center does not hold and things fall apart[7].  Eventually the noise from all those gnashing teeth awakens the Giant under the floor.  Meantime the Giant dreams of wisdom ignored.

Elites are typically out of touch. It is their nature, whether conservative, liberal or centrist.  They are disconnected by circumstance, out of touch almost by definition, and always distanced by the habits of comfortable neglect. In the Giant’s world, loyalty and trust trump ideology and one’s station in life – especially the ideological fads of the elites.  In the Giant’s world, loyalty and trust start with family and friends then radiate to neighborhoods, then to communities, and so on, ending at the borders of the country. Loyalty and trust are at the heart of the ancient moral code, the “Deep Torah[8] of humanity” if you will, the main precepts of which cannot forever be ignored by any people, including, especially, by the elites.

Our daily lives, the reality “on the ground”, shapes the alpha and omega of real life.  When we say that the elites are disconnected, this is what we mean they are disconnected from – and this is why they need to be watched at all times. But the common people are too busy living and struggling with daily life to keep up surveillance of the miscreant elites.

Among all the precepts and aphorisms of the ancient moral code, five themes sound in the Sleeping Giant’s dreams like thundering heartbeats:

  1. Earning entitles one to keep its fruits – the harder the earning, the fiercer the keeping. This precept applies to all people regardless of their station. One does not initiate a general program of taking property from any group (i.e., without a fair individuated adjudication, such as reparations for theft) without threatening all groups. In the Giant’s world, the earnings of the common people the fruits of which are more precarious and therefore more precious, are to be carefully respected by the elites. Significant price inflation is a thinly disguised, elite-engendered theft of earnings.
  1. The common people and their children entitled to the same human dignity as the elites enjoy. In the Giant’s world, the common people must be every bit as well protected from predators (human, animal, institutional and inhuman) as are the elites and their children. For example, the specter of private security guards for the elites and underfunded, under-deployed police for the poor people is a violation of human dignity.  In the Giant’s world, the elites (who are functionally necessary, but not individually indispensable) will be “kept on” only so long as they honor the basic human dignity of the common people.
  1. Theft by a common person is stealing and should be punished.  In the Giant’s world, there is no theft exemption for the elites. The “Deep Torah applies to all – ruler and ruled, powerful and powerless.  Yet theft by an elite person is sometimes a mere “resource reallocation”, until the crime is discovered, when it may be called “misappropriation.” In the Giant’s world, elites do not steal from the common people…even elected elites acting under color of law.
  1. Trust is the baseline commitment of the social order and individual relationships.  When elites disparage the family ties, the loyalty and trust relationships and arrangements of the common people, the foundation of general trust is damaged. Elites do not break trust with the common people nor publically undermine its value by disregarding it among themselves. They do not debase the Deep Torah by adopting a separate moral standard for themselves.  Not without deeply angering the awakened Giant.
  1. Beware when the trust with the common people is finally broken: Then, even the most benevolent gestures of the elites become traps – hungry tigers are then considered safer company. In the Giant’s world, the elites do not trick the common people.

Our current elites employ some clever minds who value their personal status over anything else.  Some of these clever ones actually fear the Giant, but they have a plan to lull it into sleep.   These elites have kept a subset of “the population” as pets.  These human pets enjoy a very limited capacity for independent thought and action, because they have been conditioned to dependency, and they live on highly filtered information[9].  These pets can be easily manipulated and even teased into a state of faux rebellion.  Occasional pet outbreaks are needed to create conditions that will allow the elites to reestablish themselves by changing costumes.

This is why mobs of noisome pets should not be confused with a Sleeping Giant Awakening.  Two distinct things must not be confused: The anger of the disappointed spoiled and the authentic moral wrath of the common people betrayed.  Those unruly pets sleeping in tents in the public square are an intended distraction.  Moral outrage grounded in the Deep Torah will always trump ordinary discontent.

The awakened Giant is the real deal. But how can we tell the difference? How will we know when the Sleeping Giant has awakened?  Listen closely for a critical the voices cohering around five themes: (a) keeping earnings; (b) being kept safe from predators; (c) holding thieves accountable, no matter their status; (c) honoring trust relationships; (d) rejecting the falsely benevolent gestures. This is the growl of the “Deep Torah”.  It is the authentic voice of the people that, when aroused, exhibits a sudden moral coherence and unmistakable power.

You may have noticed that the Giant is stirring. It may will be fully awake.  I leave it to the reader to decode the signs, both false and true.

Timing is everything.

A fully awakened, irritated giant is a very blunt instrument indeed.  This is why populist rebellions tend not to end well, even for the common people who first cheered the “protesters”, only to discover, too late, that a new set of elites had been using them as unwitting foot soldiers all along.

There is a strategy for the survival of the good people and good institutions, the constitution of this Republic and the prospect of an American renewal during an Awakened Giant Event.

That strategy is found in five simple rules, easy to outline, oh so difficult to implement….

Rule One: The ideologues cannot be trusted.

Rule Two: Listen closely for the ancient moral message (see above).  The more quickly that message is heeded, the sooner the Giant will go back to sleep

Rule Three: When things go seriously awry, the voices of practical and moral authenticity will not diverge.  So beware those who are still trying to trick the people – even – or especially- in a “good cause.” Beware those who want to “break some eggs” to make an omelet when they really mean break some heads to make a revolution. And shun those who want to destroy human dignity and freedom to make “a better world”, because the really mean “a bigger kennel.”

Rule Four: The Sleeping Giant is us.

How awake are you?

JBG

Copyright © 2011 by Jay B Gaskill, Attorney at Law, All rights Reserved

Forwards and links are welcome.  For other permissions, contact the author via e-mail law@jaygaskill.com

The author is a California Attorney and the creator and administrator of The Policy Think Site www.jaygaskill.com and the linked blogs.


[1] This predicted reformation is slow in coming, but I believe will eventually result in the absorption by both political parties of the key enduring elements in the common wisdom, giving them standing and policy expression…but that is another topic for another day.

[2] The most recent example is the attempt by the EPA to end-run the Congress by declaring CO2 gas a pollutant (be careful when you exhale!) Earlier examples include the ADA’s administrative loose definitions of a protected disability that once was even expanded to include stupidity at the workplace.

[3] California voters, using the initiative process (functioning as a second party in a one-part polity), twice overruled the wimp elites by reinstating capital punishment for extreme murders and three strikes punishment for dangerous offenders.  There are many other examples of the ongoing disconnection between the “civilized” elites and the common sense, common people.

[4] What do I mean by  extreme ideologies? Their signature includes intellectual arrogance, closed-mindedness and ruthless political practices.  Consider two generic examples: (a)  the enforced-quality group in which Marx’s ghost can be heard saying, “All wealth is the product of an evil system”, and “The private ownership of property (especially when accumulated by the successful)  is the primary evil”, therefor let “us” (who will use the power of the state for  “social justice”) fix those structural problems for you; (b) the entrenched inequality group in which the ghost of  Hitler’s race-scientists can be heard whispering, “You know that there are too many of the wrong people in the world, it’s up to the superior ones to protect ourselves by any means necessary and “thin out” all the rest.”  I leave it to the reader to tease out how these core ideas still manifest themselves in the post-modern culture, often in stealth mode.

[5] Required reading includes the classic, The True Believer, by the late Eric Hoffer, the self-taught longshoreman.

[6] From time to time, well-meaning intellectuals have announced that we have entered a new era, free from the mistakes of the pass.  Daniel Bell (1919-2011) famously proclaimed the “End of Ideology” and Francis Fukuyama (1952- ) announced “The End of History” (arguing that Western liberal democracy is the final form of government).  These and others profoundly underestimate the human capacity to stumble into the abyss over and over again

[7] As Yeats, that prophetic poet, put it, “Things fall apart; the centre cannot hold; mere anarchy is loosed upon the world. The blood-dimmed tide is loosed, and everywhere the ceremony of innocence is drowned”… William Butler Yeats – The Second Coming.

[8] …Or the deep Tao, if you will. See C. S. Lewis’ book, The Abolition of Man. Its Appendix, Illustrations of the Tao, has a compendium of the moral precepts that are widely shared among the various religions and philosophies.

[9] The drug culture, the pop culture, a supine, uncritical, brainless mainline media, and an ideologically saturated academy are features of the kennel.

EAT THE BANKERS! A Teaching Moment in Oakland, CA

Thursday, November 3, 2011

http://jaygaskill.com/EatTheBankers.htm

EAT THE BANKERS!

A Teaching Moment in Oakland, CA

Analysis by

Jay B Gaskill

Attorney at Law

As of this moment, Oakland protesters, whose nesting areas are not all that far from my perch here, have set fires, barricaded public thoroughfares, smashed the windows of two commercial banks (Wells Fargo & Bank of America), vandalized a popular, high-end grocery (Whole Foods), terrorizing customers huddled therein, and (when I last checked) were still blocking the truck entrance to the fifth busiest container trans-shipping center in the USA, the Port of Oakland.

These unruly mobs are getting a pass from the local media, who vapidly emphasize the otherwise peaceful elements among the protesters while conveniently ignoring the fact that the very same naïve crowds have blocked authorities from entering the occupied and cordoned off public spaces.  As a perfectly predictable result, rats, feces and thuggish behavior flourish within these zones, all under the flag of “free speech.”

Sadly, the city of Oakland California has a serious policing challenge, given its outsized crime-prone subpopulation, its fiscally and politically crippled police department (whose popular police chief recently quit in disgust), superintended by a hapless, clueless mayor elected in a bizarrely gamed voting scheme in which she got about 1/4th of the votes.  Mayor Quan is a former city council person currently in the thrall of a virulently anti-police legal advisor.  Mayor Quan’s earlier claim to fame was her support of Ebonics.  Just trust me on these assertions. I know Oakland like the back of my hand.

This is just context.  My main topic is Banks & Toxic Politics.

American commercial banks have been set up to fail via a process of political manipulation.  Leading up to the toxic mortgage engendered banking collapse, American lending institutions were cajoled, regulated and coerced into making bad mortgage loans.  After the inevitable collapse, banks were “rescued” with a plan that, among other ill-considered elements, provided them with a stream of essentially interest-free loans on one side of the ledger and the irresistible opportunity to place that same money in federally guaranteed T-bills and other protected instruments at a favorable interest rate, enabling them to survive on paper without actually doing any real banking in the traditional, old fashioned sense.

This was bank welfare.  The OWS mobs are angry at the banks, in part, for not making enough consumer loans and not giving enough interest on deposits.  You don’t have to be an Einstein to figure out that the banks are behaving in exactly the way that government programmed them to behave.

Karl Marx invented the term Capitalism.  In his time, free enterprise – defined as the operation of the system of regular, voluntary exchange of goods and services, supported by a legal system that punishes fraud and enforces legitimate contracts, and free from political manipulationdid not really exist except as a rare exception to the general rule.  Political favoritism has distorted and corrupted the market system from the beginning of human history.  When Adam Smith wrote about the invisible hand that makes the market system work, he was talking about a system that was essentially free from political gaming.  The invisible hand that is operating in the current financial crisis is the clumsy hand of government itself.

And the protesters and our compliant media have fallen for the scam hook, line and sinker.

JBG

As Published on The Policy Think Site and its linked blogs. www.jaygaskill.com. Copyright © 2011 by Jay B Gaskill, All Rights Reserved. Forwarded links with appropriate attribution are welcome and encouraged.  For all other reproductions, permissions and comments, contact the author at law@jaygaskill.com .

The author is the California attorney who served as the Seventh Alameda County Public Defender, headquartered in Oakland, California.

Related articles:

Ms. Quan’s unfortunate election:

http://jaygaskill.com/QuantumVote.htm

The Demonstrations:

http://jaygaskill.com/TANTRUMS.htm

Oakland’s Thug Population

http://jaygaskill.com/TheOaktownChronicle.htm