Is Greed the Problem with Capitalism?

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With the opening last fall of Money Never Sleeps, the sequel to Wall Street, Americans were again subjected to Hollywood’s version of how the economic system works: big business is evil, and greed is at the heart of our economic problems. The original Wall Street movie was released during the Reagan administration — aperiod that initiated significant economic expansion.Nonetheless, the movie offered a stern warning about what to expect from greed run rampant. The villain of the story was Gordon Gekko (Michael Douglas), the powerful head of a mergers and acquisitions firm. Toward the end of the movie Gekko makes a now-well-known speech about why “greed is good,” a speech that is meant to highlight the pro-capitalistarguments often made by businesses and free market advocates. Gekko tells a group of shareholders of a company he is trying to acquire that,

“Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, [for] knowledge has marked the upward surge of mankind.”

Of course, true to Hollywood form, in the end Gekko winds up implicated in a major fraud, thus revealing the true moral of the story, which is of course, that “greed is bad!”

Ironically, the current economic crisis has been an opportune time for Hollywood to make money by highlighting the immorality of greed (as in Money Never Sleeps). For many observers it was greed by the managers of financial institutions that led to easy loans with little to no down payments; greed by homeowners that led to purchases of houses they couldn’t afford; greed on Wall Street that led to the creation of such clever new financial instruments as mortgage-backed securities and credit default swaps; greed by CEOs that led to corporate extravagances and ridiculously high executive compensation packages; and greed by consumers that led to excessive use of credit cards to buy things now, rather than waiting till they earned the money to pay for it.

Tom D’Antoni in the Huffington Post declared that “the concept that ‘Greed is Good,’ is dead. It rose to its despicable zenith in tandem with the rise of Reagan, and has been the guiding principle of industry, finance and government ever since. . . . Greed brought us to this place . . . unregulated, untrammeled, vicious greed. Greed has no morals or ethics. Greed has no regard for others. Greed feeds only the greedy and feeds on every thing and everyone within grasping distance.” John Steele Gordon, author of a book on financial history, wrote, “There is no doubt at all about how we got into this mess. … Greed, as it periodically does when traders and bankers forget the lessons of the past, clouded judgments.”

 

Religion and greed

The world’s religions almost unanimously contend that greed is wrong. Although not explicitly proscribed in the Ten Commandments, greed is implicated in their command not to covet one’s neighbor’s property or spouse. The Bible contends that “the love of money is the root of all evil” (Timothy 6:10). In the year 590, Pope Gregory declared greed to be one of the seven deadly sins, along with lust, pride, gluttony, sloth, envy, and wrath. Among the seven, greed is often considered one of the worst, if not the worst, mostly because greed can inspire many of the other sins.

In almost every major religious tradition, greed is condemned unequivocally. The Qu’ran states, “Anyone who is protected from his own stinginess, these are the successful ones.” (64:16) The Tao Te Ching states, “When there is no desire, all things are at peace” (Chapter 37). In the Bhagavad Gita, Lord Krishna declares, “There are three gates leading to this hell — lust, anger and greed. Every sane man should give these up, for they lead to the degradation of the soul” (16:21). Sulak Sivaraksa, a leading Buddhist writer, states that “Buddhism condemns greed, which can easily lead to aggression and hatred.”

We do not appeal to other peoples’ humanity when we seek our sustenance, but rather to their self-interest, or in this case their greed.

Reacting to the recent economic crisis, Dr. John Sentamu, Archbishop of York, attacked exploitative moneylenders who pursued "ruthless gain"; he urged banks not to "enrich themselves at their poor neighbours' expense." Pope Benedict, in his 2008 Christmas message, said, “If people look only to their own interests, our world will certainly fall apart.” The Dalai Lama asked, “What is the real cause of this sort of economic crisis?” His answer: “Too much speculation and ultimately greed.”

 

Greed as a necessity

Greed is an easy target. It is not hard to convince most people that greed is the primary source of many of our economic woes. But is it really?

Stephen Pearlstein points out what many economists believe. He writes, “In a capitalist economy like ours, the basic premise is that everyone is motivated by a healthy dose of economic self-interest. . . . Without some measure of greed and the tension it brings to most economic transactions, capitalism wouldn't be as good as it is in allocating resources and spurring innovation.”

This is the central idea behind Adam Smith’s oft-quoted line about the butcher, the brewer, and the baker in The Wealth of Nations:

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” (Wealth of Nations, Book 1, Chapter 2)

Smith is arguing that the economic system provides for our wants and needs because, first and foremost, people are trying to help themselves, and they do so by producing and selling meat, beer, and bread to others. These market outcomes are not achieved because of charity. We do not appeal to other peoples’ humanity when we seek our sustenance, but rather to their self-interest, or in this case their greed.Nonetheless the modern economist’s acceptance of greed as a positive force in society has not been readily accepted, given centuries of moral teachings to the contrary.

 

Seeking a middle way

Is there a resolution to the greed paradox? Is greed evil? Is it a necessary evil? Is greed something that humankind should seek to eliminate, perhaps replacing it with altruism? Or is greed something so ingrained in the human psyche that there is no hope of eliminating it?

Perhaps we simply need to learn how to live with greed. Perhaps there is a middle way, a method of channeling greed in good rather than bad ways.

Aristotle argued that “virtue is concerned with passions and actions, in which excess is a form of failure, and so is defect, while the intermediate is praised and is a form of success” (Nicomachean Ethics, Book 2, Chapter 6). It is the middle way that is the goal. Indeed, dictionary definitions of greed highlight not only self-interest but an “intense, selfish desire” (New Oxford American) or “an excessive desire to acquire or possess more than one needs or deserves” (American Heritage). Greed is usually not implicated if someone’s desires are average or if one achieves a moderate standard of living.

Religious writings sometimes take account of this. Thus, one hadith, or saying of the prophet Muhammad, states, "Eat what you want and dress up as you desire, as long as extravagance and pride do not mislead you” (Hadith as reported by Abd’allah ibn Abbas, 1:645). In Judaism too, one Midrashic interpretation asserts, “Were it not for the yetzer hara [the evil urge], a man would not build a house, take a wife, beget children, or engage in commerce” (Bereishis Rabbah 9:7).

There is no community or society in the world that fails to benefit from the voluntary exchanges and market activities that occur in abundance in everyday life.

Returning to the issue of our current financial crisis, some observers recognize that greed cannot be eliminated. Michael Lewis and David Einhorn of the New York Times write, “ ‘Greed’ doesn’t cut it as a satisfying explanation for the current financial crisis. Greed was necessary but insufficient; in any case, we are as likely to eliminate greed from our national character, as we are lust and envy.” Robert Sidelsky writes that John Maynard Keynes “believed that material well being is a necessary condition of the good life, but that beyond a certain standard of comfort, its pursuit can produce corruption, both for the individual and for society.”

Steven Pearlstein suggests a different perspective, that greed may not be about the degree of desire, or how much one acquires, but about how one acquires wealth: “Even before they decided to give away most of their money, nobody seemed to begrudge Bill Gates or Warren Buffett their billions or criticize them for their ‘unbridled’ greed. That seems to have a lot to do with the fact that Gates and Buffett made their money on the basis of their own ingenuity, skill and hard work.”

 

Methods of satisfying greed

The American economist Henry George (1839–1897) is mostly famous for his theory of the Single Tax, but in his book Protection or Free Trade there is a passage that can help resolve some of the tension about greed and profit seeking: “Is it not true, as has been said, that the three great orders of society are ‘working-men, beggar-men, and thieves’?” (pp. 21–22).

Prima facie this passage may seem unremarkable, or at worst confusing: after all, what exactly is an “order of society?” But if we think about it carefully in light of the current discussion, it actually provides the seeds, or kernels, for understanding “greed.”

First, let’s recognize that what George has in mind are three primary ways in which people obtain benefits for themselves, or in other words “profit.” As I’ll argue, how a person ultimately judges profit-seeking activities and whether he views greed as good or bad will depend largely on which one of George’s “great orders” he believes to be most prominent in society. But first let’s discuss each of these profit acquisition methods, beginning with the last one, “thief.”

 

Thieves: involuntary transfers

One of the simplest methods a person can use to satisfy his greed for food, clothing, automobiles, cameras, computers, or the money to acquire these things is simply to take them away from someone else. Theft has been a part of life since the beginning of society, and it is likely to remain a part of society for a long time to come.

When the rightful owner of something has it stolen by another, the thief clearly benefits. He is now in possession of the valued item. The victim suffers a loss, since he does not possess and can no longer receive benefits from the product. The victim will surely feel that an injustice has occurred and will demand the return of the stolen property and the punishment of the perpetrator, if those responses are at all possible. But regardless of what happens afterward, theft involves a transfer of an item from a legitimate possessor to an illegitimate possessor, and the transfer always occurs involuntarily. Thus the term “involuntary transfer” offers a better moniker, especially because in many situations the transfers may technically not be considered theft, but will have similar characteristics.

Around the world societies evaluate outrighttheft in similar ways. It is generally considered bad, or wrong, or perhaps evil, with perhaps only a few exceptions tolerated. These exceptions are rare, and societies have put into place an elaborate system of laws that prohibit theft in a variety of situations while providing penalties for those found guilty of having violated these laws. Suffice to say that the acquisition of benefits by means of theft is unacceptable in all societies around the world. Although this is a seemingly obvious point, it forms the basis for most of the cry-outs about injustices around the world. In brief, people claim an injustice whenever they perceive that someone is getting “ripped off” in some way.

 

Beggar-men: voluntary transfers

The second of George’s orders of society — that is, another major way in which people acquire the goods and services that their greed desire — consists of those who are given the items voluntarily by someone else. A beggar stands on the street corner and solicits money from passersby. The money they give him represents a transfer of goods and services from the giver to the recipient. Although the giver loses, the money obtained by the beggar is not ill-gotten, in a traditional legal sense, because it has been given to him willingly; it is a voluntary transfer.

From the giver’s perspective this action is called charity and the action is held in high esteem in most societies in the world. Charity is not self-serving; it is in the service of others. It is not consideredharmful, but helpful. Charity is encouraged and promoted in all of the major religions. Some people, such as Mother Teresa, who have spent their lives giving to needy people, are respected or even beatified by their religious groups.

 

Working-men: voluntary exchange

The third order of society that George mentions is “working-men.” This is another method an individual can use to acquire the goods and services that his greed may inspire. Work generates an income that can be used to purchase consumption goods, but it is important to recognize the underlying process. Work in a commercial societyis an activity devoted to producing a good or service that someone else will wish to purchase; a product that is desirable. Through the free voluntary exchange of the product for money in the marketplace, a business generates the revenue that is used to pay its workers. That money, or income, is then used by the workers to purchase other goods and services produced by other workers. In the end, when you strip away the money part of the transactions, what is really taking place in market activity is the voluntary exchange of one good for another. And since both parties to a trade exchange their goods voluntarily, it must be that both benefit from the transaction, for if not, why trade?

Voluntary exchange is the cornerstone of the world’s economic prosperity. The very first lesson in Smith’s Wealth of Nations is the principle of the division of labor: productivity can increase as the production process becomes more specialized; that is, as labor or workers are divided into more specialized tasks. But the only way to take advantage of these benefits afterwards is through exchange. If you cannot exchange, there is no incentive for specialization.

We should never portray greed in general as good or bad, right or wrong, but as something that can be satisfied in either acceptable or unacceptable ways.

Based in part on this fundamental principle, economists have long supported the free market, which essentially means allowing free and voluntary exchanges, without social or governmental impediments. Indeed, societies everywhere generally accept and promote trade both within and beyond their borders. There is no community or society in the world that fails to benefit from the voluntary exchanges and market activities that occur in abundance in everyday life. To summarize: if greed inspires work that in turn inspires voluntary exchanges in the marketplace, then the outcome is mostly good for everyone involved.

 

Distinguishing “good” greed from “bad” greed

Greed can generate either good or bad outcomes, depending on which great order of society, or in other words which method, is involved in its satisfaction. If greed inspires a person to work long hours in a business providing valuable goods and services to others in order to satisfy the needs of himself and his family, then greed should be perfectly acceptable on pragmatic grounds. If greed inspires a person to innovate and create new products that others will desire in the market, then greed is good. In each of these cases greed is satisfied through voluntary exchange. However, if greed inspires a person to acquire what he desires by taking the rightful possessions of another person without that person’s consent, then greed is not good. In this case greed does not encourage useful behavior in the marketplace, but rather fear that one’s marketable goods will be appropriated by others. For similar reasons, greed is also wrong when it inspires someone to put roadblocks in the way of others who are trying to sell their products in the marketplace. In both these cases greed is satisfied by means of involuntary transfers and is rightly condemned. Yet if greed urges one to beg for food and clothing, or to seek the charitable contributions of others, and if those items are given voluntarily, then greed is satisfied in an acceptable manner; that is, a manner that has no deleterious effects on other people’s ability to benefit themselves by means of free exchange. The compassion of charitable people, helping those less fortunate, engaging in voluntary transfers, is clearly unobjectionable.

We should never portray greed in general as good or bad, right or wrong, but as something that can be satisfied in either acceptable or unacceptable ways. The distinguishing feature isn’t the presence of greed itself or even the intensity of the greed, but the way in which greed is satisfied. Following the suggestion of George’s great orders, the greed satisfied by a working man is commendable, the greed of a beggar-man is unfortunate but acceptable when necessary, and the greed satisfied by thievery is the primary source of injustice in the world.

 

Greed and the economic crisis

Many criticisms about greed’s role in the current economic crisis are really complaints about involuntary transfers. Hollywood and liberal Democrats look at the crisis and see injustice in the high salaries of CEOs, the comparativelylow wages paid to average workers, the excessive loans made to people who could not afford the homes they were buying, and the political clout of business insiders who got rules written on their behalf. But the reason people see injustice is mostly because they believe that someone is getting ripped off. It may be the consumer or the taxpayer or the low-paid worker at the company, but in any case, the perception is that one group is receiving less because someone else is receiving more.

Frequently these complaints are correct. Big business does sometimes engage in fraud. Consider the recent scandal involving Bernie Madoff. Madoff offered investors better than average returns largely by fabricating them in financial statements and by using the principal deposited by new investors to pay the returns of investors lucky enough to get out early. His setup was a classic Ponzi scheme that inevitably collapsed when too many people demanded their money back at the same time. Clearly Madoff was greedy — as were the investors who were looking for better returns than they had any reason to expect from an honest investment scheme. However, this case is a clear example of greed fueling involuntary transfers rather than valuable production and trade. The investors were led to believe that their money was wisely invested in companies making above average profit when in reality new investor money was transferred to exiting investors as needed. As long as deposits exceeded withdrawals the Ponzi scheme could continue.

Many other prominent examples of insider trading, accounting scams, and other shady dealings have been uncovered over the years and have resulted in prosecution and jail sentences. Yes, businesses may be exploitative. Cries of injustice by the general public rang out when huge bonuses were announced for executives at the financial firms that were bailed out by the government. After the billions of TARP dollars were transferred to these failing institutions, many of the banks were quickly out of trouble and the systemic crisis was averted. However, announcements that these same companies would pay millions of dollars in overdue bonuses to executives touched off a wave of indignation.

Many companies profit both by selling desirable goods and by taking advantage of involuntary transfers.

The source of the anger is obvious. In the midst of the crisis these institutions laid off a large portion of their work forces. Meanwhile, their overextended positions on loans, with effects multiplied by their own enormous size, contributed to the crisis. Since bonuses are typically made to reward good behavior, it seemed inappropriate for executives who were implicated in the crisis and were “saved” by a taxpayer-financed bailout to be able to walk away a few months later with hefty bonuses. Reward appeared to be disconnected from achievement. Most observers would contend that these companies were restored to profitability, not by the skill and hard work of executives producing a superior product for their customers, but by involuntary transfers from taxpayers. So again, there is a sense that involuntary transfers helped to satisfy the greed of a few individuals.

The key for high salaries to be viewed as equitable, or just, is that they are deserved. As mentioned earlier, relatively few people seem to begrudge the high salaries and enormous wealth of Bill Gates, or popular figures in sport. Their earnings are generally recognized as a result of the voluntary exchange process. These people earn money by providing valuable goods and services to others around the world.

Basketball stars seldom lobby to advance their interests, but big business often does, and this is a large source of complaints about greed. Robert Reich goes so far as to describe lobbying as political corruption:

“If we define political corruption as actions causing the public to lose confidence that politicians make decisions in the public's interest rather than in the special interest of those who give them financial support, the biggest corruption of our political process is entirely legal. It comes in the form of campaign contributions that would not be made were it not for implicit quid pro quos by politicians, bestowing favors of one sort or another on the contributors.”

But what sort of favors does he mean? He continues:

“The fights that actually preoccupy Congress day by day, which consume weeks or months of congressional staffers' time and which are often the most hotly contested by squadrons of Washington lobbyists and public-relations professionals, are typically contests between competing companies or competing sectors of an industry or, occasionally, competing industries. . . . Many of these battles (e.g. over health care reform) continue but have moved into the regulatory process, where different companies, sectors, and industries are seeking rules that advantage them and disadvantage their competitors.”

Reich is arguing that the business of government has become the provision of rules and regulations that favor some over others. In other words, he is describing a completely legal, but involuntary, transfer process promulgated by government. The winners are those who have the most clout among legislators. Often they are the ones (big business and big labor) who can offer the most in campaign contributions. The losers are either the less influential competitors, or the taxpayers who must provide funding for the subsidies provided, or the consumers who pay higher prices produced by taxes or regulations.

The same process of involuntary transfer appears in connection with financial sector reform. Again, greed is said to be the source of corruption, but it is just a smokescreen. People demand that something be done; they demand that government prevent financial crises, such as occurred in 2008. Unfortunately, no one quite knows how to do that. Nevertheless, lack of knowledge won’t prevent changes from being made. That’s because there are plenty of influential organizations standing in the wings with suggestions. While all of these suggestions will be presented as important to the national interest, the changes will be particularly helpful to the organizations themselves.

Even more likely is that good ideas for regulatory reform will be paired with ideas that serve particular corporate interests. This is one of the reasons that so many pieces of legislation are thousands of pages long these days: to buy political support, commonsensical reforms must be combined with favors for powerful interests. It is no wonder that, after decades of rule writing like this, our regulatory system is a twisted web that requires companies to hire huge teams of experts and consultants simply to untangle.

 

So is greed the problem with capitalism?

Liberal Democrats and conservative Republicans ought to find these examples of involuntary transfers equally objectionable. Confusion arises because of the focus on greed as the culprit. Critics of business and free markets see the greed that is satisfied through fraud and other involuntary transfers, and therefore condemn all efficientprofitseeking activities. But what about businesses that are making money and paying high salaries to their executives because of the desirable goods and services they are selling to their customers — doesn’t greed inspire their activities? And if we could stamp out greed from our psyches, wouldn’t we also be eliminating a motive that makes the modern economy work? Of course the answer is yes to those questions, which is why supporters of free markets are quick to condemn the “greed” arguments made by the Left.

One apparent problem is that many companies profit both by selling desirable goods and by taking advantage of involuntary transfers. The two activities are often confounded within the same business. For instance, executives at Enron perpetrated an accounting scam that prevented shareholders from knowing that the company was sinking deeply into the red, but at the same time the company provided valuable energy services to its customers. Although some portion of the riches made by Enron executives were fraudulent, some other portion was not. Similarly, some companies that use political influence to gain favorable regulatory treatment — treatment that effectively transfers money in their direction — simultaneously produce and sell legitimate products in the marketplace. Their high salaries and profits, no doubt sought and achieved by greed, are partly due to acceptable voluntary exchanges and partly due to objectionable involuntary transfers.

This confounding effect leads to many problems of interpretation. For example, high CEO salaries are often explained by using marginal productivity theory, according to which competition in the CEO market drives the prices for those positions to the levels observed. Under this interpretation, CEO salaries are the deserved share of production in a voluntary exchange market system and thus are acceptable. On the other hand, one could interpret high CEO salaries as the consequence of an exploitative process, in which CEOs are rewarded in the competitive market because they have effectively increased their companies’ shares of wealth by means of involuntary transfers from taxpayers or consumers. Since it is very difficult to measure which portion of a large company’s income is attributable to which kind of process, different interpretations are possible. However, here the disagreement is not about principle but about the interpretation of data.

 

Conclusion

Unfortunately, the right lessons about greed and capitalism are unlikely to be found either in recent Hollywood productions (which indiscriminately condemn all products of greed) or in recent economic theory. For theory, it may be best to revert to the old classics: read Smith’s Wealth of Nations and Theory of Moral Sentiments; read Frédéric Bastiat’s The Law; read Friedrich Hayek’s The Road to Serfdom; read Henry George’s Protection or Free Trade.

In movies, the classics are also best. I mean, for example, a movie from 1954 entitled Executive Suite (starring William Holden and Frederic March). The film explores two different approaches to business; one based on reverence for the bottom line no matter what methods are used to achieve it; the other based on hard work, innovation, and the production of superior goods that the workers themselves can be proud of. By the end of the movie, the moral superiority of one over the other is obvious. The greed that inspires work, innovation, and pride (voluntary exchange) wins out over the greed that inspires fraud, blackmail, and accounting tricks (involuntary transfers).

We need to resurrect this understanding of business. We need to remember how aspiration, inspiration, and greed, appropriately directed, can create a workplace filled with well-treated, well-motivated workers striving to produce a superior product for their customers. Indeed, Hollywood can show us a way out of the current economic crisis; only it is not today’s Hollywood.

 

Works Cited

D’Antoni, Tom, “Finally the Death of Greed,” online at The Huffington Post, Dec. 11, 2008.

George, Henry (1949), Protection or Free Trade, Robert Schalkenbach Foundation, New York.

Gordon, John Steele, “Greed, Stupidity, Delusion — and Some More Greed,” online at the New York Times, Sept. 22, 2008.

Lewis, Michael, and David Einhorn, “The End of the Financial World as We Know It,” New York Times, Jan. 3, 2009.

Pearlstein, Steven, “Greed Is Fine. It's Stupidity That Hurts,” Washington Post, Oct. 2, 2008.

Reich, Robert, “Everyday Corruption,” The American Prospect, June 21, 2010.

Sivaraksa, Sulak, “Buddhism Nationalism and Ethnic Conflict,” an interview conducted in July 1993, published in the Tamil Times. Online at http://federalidea.com/focus/archives/112.

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Behind the NPR Fiasco

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“You who think that you’re so great! You who judge humanity to be so small! You who wish to reform everything! Why don’t you reform yourselves?”

— Frédéric Bastiat

When a fundraising scandal recently ensnared National Pubic Radio, some opinion-makers rushed to revel at the arrogant organization’s woes. I resisted not because I’m a spoilsport but because, living all of my adult life on the West Coast, I’ve absorbed enough Zen philosophy to give wide berth to schadenfreude. It can be a prologue to one’s own misfortunes.

Some weeks have passed, now, and it’s safe to consider what happened. And why it matters.

The facts of the scandal are fairly straightforward. James O’Keefe — the right-wing media provocateur — had a couple of colleagues pose as members of a U.S. Islamic group interested in donating money to NPR. These representatives of the “Muslim Education Action Center” were put in touch with Ron Schiller, NPR’s head of fundraising, who arranged a lunch meeting. The fake Muslims came to the meeting equipped with hidden audio and video devices.

Over the course of the two-hour lunch, they said outrageous things about Israel, Republicans, and the Tea Party. Schiller, practiced in the obsequious manners of big-dollar fundraising toadyism, agreed and agreed. He agreed to some things that implied NPR has an anti-Israel bias and other things that indicated he and his colleagues are insecure strivers with naught but contempt for middle America.

For all his sucking up, Schiller didn’t get the $5 million check. The fake Muslims said they had a few things to think over first. And they hustled out with their material.

In a telephone call recorded after the lunch, the fake Muslims asked Schiller’s lieutenant (NPR’s “senior director of institutional giving”) whether she could have the $5 million donation treated as anonymous. The fake Muslims claimed that they were concerned about being audited by the government; she replied that this was possible and that she would do everything she could to obscure the gift’s provenance.

O’Keefe whittled the two hours of video into an 11-minute excerpt. And he released his excerpt to the internet and television news outlets, which repeated snippets of the NPR fundraiser sucking up to the Muslim Brotherhood and calling the Tea Party a collection of ignorant bigots.

Outrage — some genuine, some clearly manufactured — followed. And a couple of obsequious fundraisers weren’t going to satisfy the establishment Right’s partisan bloodlust. Besides, before his lunch with the fake Muslims, Schiller had already announced that he was leaving NPR to take a similar post with the left-leaning Aspen Institute. So, the Right turned its attention to a bigger target: NPR’s chief executive, a woman named Vivian Schiller (who is, as noted repeatedly, no relation to Ron Schiller).

Schiller’s boast that NPR didn’t need the government money that it normally receives played into the hands of NPR’s political adversaries.

Vivian Schiller had been an executive at the New York Times Company before moving to NPR and had been on the radar of establishment Republicans for some time. She rose to the top of their hit lists after firing NPR and Fox News commentator Juan Williams for . . . well, for splitting his time between NPR and Fox News.

On March 9, NPR released this statement from its Board of Directors’ Chairman Dave Edwards:

“It is with deep regret that I tell you that the NPR Board of Directors has accepted the resignation of Vivian Schiller as President and CEO of NPR, effective immediately. The Board accepted her resignation with understanding, genuine regret, and great respect for her leadership of NPR these past two years.”

Edwards said the decision to part ways with Vivian Schiller proved the Board’s “commitment to NPR’s standards.”

While the organizational elite talked about standards, NPR’s trench diggers made like the Ministry of Truth — rewriting history to justify throwing Vivian Schiller under the bus. According to NPR’s own media correspondent, David Folkenflik: “some at NPR found Vivian Schiller’s leadership under fire wanting.” And he quoted one longtime network employee saying “we have not been well served by recent management. Many of our managers are talented and solid, but others have not been and have exposed us to some terrible, terrible hits.”

All of this was petty distraction. The big issue looming behind the quibbles over O’Keefe’s video antics—one Schiller’s embarrassing comments and the other Schiller’s shaky management—was, of course, money. When the New York Times reported on Schiller and Schiller’s fumbling pas de deux, it tried to set the frame:

“In the midst of a brutal battle with Republican critics in Congress over federal subsidies, NPR has lost its chief executive after yet another politically charged embarrassment.”

One of Ron Schiller’s most embarrassing comments on the O’Keefe video was a boast that NPR didn’t need the government money that it normally receives. This played into the hands of NPR’s political adversaries.

For years, establishment Republicans have been calling for cuts in the federal funds given to NPR and its parent entity, the Corporation for Public Broadcasting. These calls have grown louder since control of the House of Representatives changed hands in 2010. And they’ve changed from “cut the government funding” to “eliminate the government funding.” The day that Vivian Schiller resigned, House Majority Leader Eric Cantor released the following statement:

“Our concern is not about any one person at NPR, rather it’s about millions of taxpayers. NPR has admitted that they don’t need taxpayer subsidies to thrive, and at a time when the government is borrowing 40 cents of every dollar that it spends, we certainly agree with them.”

NPR has long played Enron-like accounting games when explaining how much government money it receives each year.

Like most flimflam artists, its executives prefer to talk in percentages than absolute dollars. They say that NPR only gets 2 or 3% . . . or maybe 5% . . . of its operating budget in the form of direct government assistance. Well, sort of direct; the money goes to the Corporation for Public Broadcasting first and then to NPR. Strictly speaking, this explanation is true. But it’s also incomplete.

NPR counts more heavily on programming fees collected from its “member stations,” in most cases low-on-the-dial FM operations affiliated in some manner with colleges or universities around the country. These fees — which account for somewhere between 15 and 25% of NPR’s operating budget — are usually paid with federal government grants made to the local stations.

It’s easy to rationalize an earnest, middlebrow radio network as, well, maybe not the worst waste of $40 or $50 million in taxpayer money.

If establishment Republicans like Rep. Cantor have their way and eliminate the federal subsidies of NPR and its member stations, the network will lose as much as a third of its revenue base. Despite the tough talk, that would make a major dent in its business model. In absolute dollars, NPR’s annual budget has ranged between $150 and $170 million in recent years; so the cut would be something like $40 or $50 million from that.

Establishment Republicans have an intricately-wrought animosity to National Public Radio.

As several sharp media observers (most notably, Timothy Noah of the online magazine Slate.com) have pointed out, Republicans have been calling for cuts to NPR’s government subsidies for decades. The cuts rarely ever take effect. Instead, the politicians and network dance a kind of statist tango in which the two sides exchange insults, realize a mutual utility and then decide to coexist rather than taking action against one another.

To be sure, NPR has a left-wing bias. This bias is most evident in the network’s framing of topics in the news — the production-booth decisions about establishing the terms of debate on a particular topic, defining the parameters of coverage, formulating the questions asked of interview subjects. And, perhaps most important, determining which topics aren’t covered at all.

And NPR’s coverage of the present administration is a study in euphemism, rationalization, and justification. Every failure or setback is “unexpected,” any modest success is “profound” and “important.”

Despite this corporatism and institutional arrogance, NPR produces some good work. Its overall tone is generally earnest rather than partisan. And it puts on some damn good shows — including its weekend programming staples Car Talk and the documentary series This American Life. When you’ve listened to one of these — or a set of Ella Fitzgerald’s best work — it’s easy to rationalize an earnest, middlebrow radio network as, well, maybe not the worst waste of $40 or $50 million in taxpayer money.

Perhaps most important to establishment Republicans, the government subsidies give them influence with NPR. And its earnest, middlebrow listeners. As long as the network relies on government funds, it has to be “fair” to both establishment political parties. And, in this context, “fair” means perpetuating topics and coverage that serves the interests of the establishment parties.

So, why the difference this year? Why the executive resignations instead of another statist tango? Was the difference James O’Keefe? Or forces beyond his media trickery?

Probably the latter.

An NPR employee in a position to know told me that the organization elite worries that establishment Republicans aren’t interested in the tango this time around. Influenced by Tea Party activists, particularly in the House of Representatives, the GOP may actually cut NPR’s allowance significantly, if not completely. That’s why Ron Schiller’s boast about not needing government money and obsequious remarks about ignorant Tea Partiers were such a double-whammy. And why NPR’s Board wanted more than just the head of a middle-level executive who was already halfway out the door.

NPR’s institutional elite may still be as earnest and dedicated as the network itself; but it breeds monsters.

NPR fired Vivian Schiller to show true believers in the Congress that it’s still willing to dance the statist tango. Now, it waits to see if they’re impressed. We’ll find out this summer, when Speaker Boehner assembles his first budget.

One last point to consider, with regard to arrogance of institutions like NPR.

Here in the States, public radio is like your uncle, the charming communist who teaches sociology at the local community college. Earnest. Dedicated. Credentialed. Green. Reform-minded. Smart in a million minor ways. So, why do many of its employees make bone-headed decisions in the things they say and do?

Ron Schiller isn’t the only one who’s done something stupid. Last year, it came out that the publicity director for one of NPR’s larger member stations had posted to the left-wing Internet user group JournoList that she would “Laugh loudly like a maniac and watch his eyes bug out” if right-wing radio personality Rush Limbaugh were dying in front of her.

The publicity director, a woman with the Dickensian name Sarah Spitz, later issued a watery apology:

“I made poorly considered remarks about Rush Limbaugh to what I believed was a private email discussion group from my personal email account. …I apologize to anyone I may have offended and I regret these comments greatly; they do not reflect the values by which I conduct my life.”

That common weasel phrase “may have offended,” so fatal to the spirit of apology.

NPR took great pains to distance itself from Ms. Spitz. It emphasized that she had never been an employee of the network — although it had run a few pieces she’d submitted from her occasional on-air work at the local station where she was an employee.

The term “cognitive dissonance” applies here. Some small minds don’t like the confusion caused by holding conflicting or inconsistent ideas, so they flee to orthodoxy. Structure and agreement. Arrogant institutions offer these things; but decadent institutions (which can also be arrogant) aren’t able to manage their orthodoxy and structure. Counter-intuitively, they become more orthodox because they are institutionally decadent. So it is with NPR. Its institutional elite may still be as earnest and dedicated as the network itself; but it breeds monsters. Small minds that seek agreement instead of wisdom, tormented by insecurities that they barely perceive.

They can’t imagine anyone disagreeing with the institution’s orthodoxy. Just as they can’t imagine anyone voting for McCain. Or Barr. Or anyone other than the overwhelmed mediocrity now occupying the White House. This lack of imagination becomes a kind of mental defect; and the people become fruit ripe for plucking by someone like James O’Keefe.

I’d turn back to O’Keefe and tell him that such ripe fruit is also low fruit. But who am I to get between a man and his livelihood?

As for NPR, if it loses its government subsidies, the good programs it produces will find value in the open market. And value eventually finds a home.




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This Could Be the Start of Something Big

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The first battle of the 2012 campaign has just ended — and it doesn’t bode well for the Democrats, in the short run at the state level, or in the long run at the federal level.

The location was Wisconsin, historically a stronghold of organized labor, the Democratic Party, and the Left generally. But the state has been trending rightward in recent elections, and last year it elected a Republican, Scott Walker, as governor, and a majority of Republicans to the state legislature. Interestingly, however, these are not the sort of Republicans you would expect from a somewhat purple state — RINOs (or Republicans in Name Only) — but honest-to-God RCCs (Republicanos con Cojones).

Governor Scott Walker clearly has a pair. During his campaign, Walker made it clear that he was serious about reducing spending, especially the outrageous compensation packages that public employee unions had negotiated in sweetheart deals with past Democratic administrations. The pattern in Wisconsin was similar to what happened in most other states: a vicious cycle of crony unionism. Public employees unionize, use their massive dues to elect sympathetic politicians, then in bargaining with those politicians receive lavish compensation packages. This enables the unions to collect even more dues, elect even more sympathetic politicians, and get even more of the taxpayers’ dollars. It’s very convenient — for the unions.

In the 2008 election cycle, unions (now predominantly unions of government employees) gave about $400 million to Democratic campaigns, especially Obama’s. Heck, AFSCME (the American Federation of State, County and Municipal Employees, the biggest government workers’ union) alone gave the Dems $90 million during the last (i.e., 2010) election cycle.

The public choice tipping point occurs when the pain inflicted on citizens by the rentseekers who have captured a government agency becomes too great to ignore.

So the money that taxpayers pay in salaries to the public employees provides (in the form of union dues) the funds that elect politicians who will in turn raise taxes and give more money to the public employees (and hence their unions). The public, rationally ignorant — that is, having better things than state politics to worry about (such as earning an honest living) — are typically oblivious to the corruption, until the deficits and taxes become outrageously high. That point, which you might call “the public choice tipping point,” occurs when the pain inflicted on the citizens (in increased taxes, increased costs of compliance, or decreased liberty) by the rentseekers who have captured a government agency becomes too great to ignore.

Perhaps the classic illustration was the transition to the all-volunteer army. We kept the draft going from World War II through the Korean War, and long past. It took the debacle that was Vietnam and the student protests it aroused to get the government to change from conscription to a volunteer services model.

Governor Scott took office with the state deficit already at $137 million, but slated to rise to $3.6 billion in the next two years. As he promised during his campaign, he introduced legislation that requires the state employees to contribute more to their health and pension funds. Specifically, his law requires public workers to pay 12.6% of their healthcare insurance premiums from their pay, and contribute 5.8% of their pay to the pension system — an amount that is still quite low compared to similar amounts in private industry.

In so doing, he went to the heart of the state’s fiscal woes. The public sector unions had sweet compensation packages, ones that include not only high pay but also incredible perks (tenure, virtually free healthcare, and pension plans requiring little employee contribution). The average compensation for Wisconsin public school teachers is over $101,000 per year — for essentially eight months of work.

But Walker also proposed to eliminate the power of government workers (except firefighters and police officers) to bargain collectively for non-salary compensation, and eliminate the state’s role of “enforcer” in collecting dues from employees for the union. His legislation further required annual union elections, in which a majority (as opposed to a mere plurality) of workers must approve the union.

Here, Walker showed real understanding of the problem: if he just asked for increased employee contributions to their health and pension plans, the unions might have gone along this year, but the minute the public’s attention was diverted, they would just get those concessions rescinded, especially if union dues elected a Democratic governor. Government worker unions fully understand rational ignorance.

A recent report shows that fully two-thirds of eighth-grade students in Wisconsin’s public schools can’t read proficiently.

Initially, the unions fought all the provisions of the law, but as the public learned about the lavish compensation packages government workers receive, public sympathy evaporated. Also responsible for reducing taxpayer sympathy was the report that emerged, just as the controversy was getting intense, that fully two-thirds of eighth-grade students in Wisconsin’s public schools can’t read proficiently. According to the US Department of Education, in last year’s National Assessment of Educational Progress tests only 2% of Wisconsin eighth-graders scored as “advanced” in reading, and only 32% as “proficient.” The remaining 66% were below proficient (44% rated “basic,” 22% “below basic”).

The taxpayers of Wisconsin have paid exorbitantly for this laughably lousy quality of education. They pay more per public-school student than any other Midwestern state.

So the unions modified their demands. They said they would agree to increased contributions to the healthcare and pension plans; they claimed that they objected only to the loss of collective bargaining “rights” — allegedly “natural rights” as fundamental as free speech. And with their PR plan in place, they went to war.

The unions employed all their classic tactics. Of course, teachers called in sick en masse, cancelling classes and snarling the schools. There were weeks of massive demonstrations, with as many as 100,000 demonstrators on the streets of Madison, occasionally closing the capitol down, with the usual chanting, screaming and pushing, all aimed at intimidating Walker and the Republicans into submission. Many of the demonstrators were paid for and bused in by the unions in a classic display of “astroturfing.” The protestors were egged on by the usual repellent, aged leftist icons, from Jesse Jackson to Michael Moore to Susan Sarandon. And the unions paid for endless ads aimed at demonizing Walker and the Republicans in the legislature.

In the meantime, the Democratic state senators left the state, in order to deny the Republicans a quorum for considering the governor’s legislation.

Also in the fight — while of course pretending to be above it all — was President Obama. He clearly viewed Wisconsin as the first battle in his reelection campaign, and promptly accused Walker of “assaulting” workers’ rights.

Against this formidable array of foes and this well-strategized campaign, Walker stood firm. After an extended period of what seemed like stalemate, the Republicans figured out how to separate the essential restrictions on unions and make them legislation not requiring a special quorum. They passed the legislation, and Walker signed it into law. The deed was done.

Walker took a major hit in his poll numbers, yet his victory should worry the Dems about the next election, and elections thereafter, at least at the state level.

One cause for worry is the fact that in the battle of Wisconsin the unions had to expend a lot of money — for ads, for demonstrations, for agitprop in general — cash that now isn’t available for the 2012 election cycle. Second, they face a loss of membership. Average yearly union dues are in the range of $700 to $1,000 in Wisconsin, and now that the government won’t be deducting those dues, members may decide they no longer want to pay. One suspects that fear of lost members and members’ dues is what really drove the unions to fight so furiously.

Many of the demonstrators in Madison were paid for and bused in by the unions in a classic display of “astroturfing.”

If similar battles occur in other states, such losses will bite the unions hard. And it may well happen. After all, if the economy in Wisconsin responds well to Walker’s actions, he will rise again in the polls, and that would encourage other governors to follow his lead. Indeed, similar battles have already been going on elsewhere. In Ohio, Republican Governor Kasich is trying to limit public employee bargaining “rights” and is facing demonstrations because of it. In Indiana, Republican legislators have introduced right-to-work legislation that will apply to all unions, and they also saw their Democratic colleagues walk out the door. (While Republican Governor Mitch Daniels doesn’t support this right-to-work movement by his colleagues in the legislature, he did manage to get a law restricting the right of public employee unions to bargain collectively back in 2005).

Republican leaders at the state level — in the face of burgeoning state budget deficits now totaling about $125 billion for the 50 states — seem to appreciate the urgent need for measures that limit the power of unions to game the system. The three most effective measures appear to be laws limiting the collective bargaining privileges of public employee unions, right-to-work laws allowing all workers the right not to be forced to support their unions, and paycheck protection laws that require unions to get the explicit consent of workers before using their union dues for political purposes. These types of laws are kryptonite to the unions.

All of this raises an interesting question. Why are Republican leaders suddenly so bold at the state level, but still so timid at the federal level? Why are some state Republicans willing to address growing deficits in their states, even at the cost of taking on the special interest behemoths that are the unions, while Republicans in Washington seem reluctant to address the federal deficit, which dwarfs into insignificance the state deficits?

A number of reasons explain the disparity. First, the 2010 Republican electoral triumph was manifested more on the state than the federal level. Yes, the GOP took back the House of Representatives, but (because of some unwise voter choices in the primaries, and the large numerical advantage that the Democrats had enjoyed in the Senate before the election) failed to get even a tie in the upper house. You can’t stop a devoutly leftist president — one willing to use the formidable power of the executive branch to keep increasing the size and regulatory scope of the federal government — when you don’t control Congress.

Second, most state constitutions require budgets to be balanced, whereas the federal constitution has no such requirement. This means that to handle the rapidly rising costs of public employee salaries, healthcare expenses, and pension payouts, most states can only raise taxes or float bonds. But taxpayers are already financially stretched to the limit, and bonds are costing more as investors find out how shaky state and municipal finances really are. The recent revelations that states and municipalities already have taken on $3 trillion in bonded indebtedness, and are about $3.5 trillion underfunded in pension and healthcare liabilities, have really hurt the market for muni bonds.

The federal government has a seductive option not open to the states: just print more money. This is of course precisely what the Fed is doing right now.

Add to this the possibility — dare I say the likelihood? — of a bankruptcy in a big city (my favorite candidate is my hometown, Los Angeles). In that event, or the event that a state defaults on its bonds (my favorite candidate is my home state, California), the market for muni bonds would dry up immediately, and with it the ability of states to borrow money at reasonable rates.

The third major difference between the challenges confronting state-level and federal-level Republican leaders has to do with competition. If the politicians in a state jack up taxes to solve a budget shortfall, the productive people (aka taxpayers) and businesses can and will move elsewhere.

This has already had an effect even in such historically high-tax states as New Jersey and New York, where there is now a broad awareness of how many of their productive people and businesses have fled to low-tax havens such as Florida and Texas. The old phrase “Gone to Texas” is now a frightening motto now to the high-tax states.

But the federal government faces no such competition. If I leave California for Florida, the cultural adjustment is minor. To move from America to another nation takes a major adjustment, one far too expensive for most people to make. And most other nations where American might otherwise want to live have equally statist governments.

The fourth major difference lies in the power to print money. Faced with deficits, states have only three options: borrow money, cut spending, or raise taxes. But the federal government has a seductive fourth option: just print more money. This is of course precisely what the Fed is doing right now. It allows all politicians at the federal level to avoid cutting programs and thereby incurring the wrath of special interests.

There is a fifth difference, and it is the most important. On the state level, the Republicans are moving to cut lavish government worker benefits, which are the major cause of the state budget problems, because most citizens are not themselves government workers. The other major choices — raising taxes and cutting programs — are politically unpalatable. Try convincing the average voter that we need to eliminate half the firefighters so that the few who are left can get lavish pay and retire at age 50 on a $250,000 pension for life.

But on the federal level, the programs most responsible for bankrupting this nation are Social Security, Medicare, and Medicaid, not federal employee compensation (or defense spending or discretionary spending in general). Those programs are still popular among Americans, even Tea Party members. A recent poll reported in Policy Review is telling on this point. If you ask Americans where we should cut, the results are dismal. On Social Security, only 9% of the respondent’s would cut it, compared to 84% who would rather increase it or keep it the same. Medicare? Only 12% would cut it, compared to 82% who want to increase it or keep it the same. Medicaid gets only 15% support for cutting, versus 78% who want to increase it or keep it the same. About the only federal project that Americans want to cut is foreign aid.

So in the short term, it is doubtful that Republicans will step up to cut these programs, and if they did, they would probably be hurt politically. But long term, the fiscal crisis that many states are now facing will hit the federal government. The three programs I identified are estimated to face long-term underfunding to the tune of over $100 trillion. As each year passes, their deficits will only balloon. At some point, rational ignorance concerning them will tip into rational knowledge — to the grave damage of the political party that created, expanded, and repeatedly campaigned on them.




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The Tail Slapping the Dog

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I grew up in a blue-collar world listening to jokes and snide remarks about government workers. They were uttered frequently by my father, and the fathers of most of my friends, especially during tax season. I came to perceive that government, at all levels, was riddled with chumps, lackeys, and dullards — people who couldn’t make it in the private sector but found a home in the lackadaisical workplace of government.

It was tacitly assumed that public employees earned less money than their private sector counterparts and that “psychic income” explained their willingness to do so. Psychic income has been defined as “something apart from money that you get from your job, and which gives you emotional satisfaction such as a feeling of being powerful or important.” Anyone who has dealt with government bureaucrats (from IRS agents to building inspectors and DMV clerks) can attest to its allure. My father probably would have described psychic income as a negative salary differential that gave this army of self-important, insecure underachievers a pass. That is, as long as they made less money, their shoddy (good enough for government) work could be tolerated.

That was back in the late 1960s. The Great Society was shifting into high gear. Big government was booming, and the demand for government workers was exploding. In those auspicious days, the job of many public servants was to invent jobs for more public servants. As government revenues continued (1969 to the present) to grow more than 15 times faster than median income, additional public servants were needed just to spend the extra tax money.

During the recession, when nongovernment workers were losing jobs and taking pay cuts, the government was hiring and giving out raises.

But my father’s suspicions about the negative salary differential were partly wrong. Federal civil servants were already making more money than their private sector brethren. And they, as well as state and local public servants, were on track to make much more. I didn’t have the heart to tell my father that the lower salary — the only redeeming characteristic of the shiftless and slothful government workforce — was an illusion. And the grudging tolerance of his generation was being augmented by the unwitting generosity of mine to unleash relentless public sector growth. My generation rewarded public sector workers with unprecedented income — both real (salary and benefits) and psychic (power and importance), sweetening the deal with unprecedentedjob security. The tail began wagging the dog.

Today, the average federal civilian worker earns twice as much in wages and benefits as the average worker in the private sector ($123,049 vs $61,051, annually). The benefits (healthcare, sick days, vacation time, retirement plans, etc.) are profligately generous, as are the taxpayer contributions that pay for them. For example, in 2007, state and local governments paid an average of $3.04 an hour toward each employee's retirement; private employers paid only $0.92/hour. And, in recent years, the pace (of both hiring and wage increases) has accelerated. For example, when the recession started, the Department of Transportation had only one person with a salary of $170,000 or more. That number has now reached 1,690. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009.

We are told (by President Obama and many others) that such obscenely generous compensation is required for attracting the best and the brightest to run government programs. Just think of the mess that Social Security, Medicare, Medicaid, the Postal Service, Amtrak, public housing, education, etc. would be in if managed by less competent professionals. And who could do a better job fighting the wars against poverty, drugs, cancer, AIDS, etc. than the people presently employed? With successes such as these, no wonder they have moved on to protecting us against such menaces as trans fats, sugar, secondhand smoke, bicycles, and toys (the lead-painted ones from China and the obesity-inducing ones from McDonald’s).

And since we must be regulated in both good times and bad, public service is a recession-proof industry. During the recent recession, the federal government added 192,700 jobs (+ 9.8%). State and local governments added a paltry 33,000 (+ 0.2%), but the private sector lost 7.3 million (-6.3%). The average federal government salary increased 6.6%; the average state and local government salary increased 3.9%. To summarize, during the recession, when nongovernment workers were losing jobs and taking pay cuts, the government was hiring and giving out raises.

It has reached a point where even big-government advocates have become appalled. For example, Mort Zuckerman, billionaire businessman and generous contributor to the Obama campaign, has recently discovered that “public workers have become a privileged class — an elite who live better than their private-sector counterparts. Public servants have become the public's masters."

It is of no small significance that the big gainers in the government hiring binge are regulators, lawyers, and public health and safety experts. They are the most annoying of public servants. Operating as social engineers, and under the assumption that without their guidance we (individuals, families, and businesses of all types and sizes) will make bad decisions, they serve two principal purposes: (A) ensuring that we obey every silly law with childlike compliance, and (B) writing more silly laws. This is the tail slapping the dog.

Feckless public servants lavished enormous retirement benefits on themselves, used taxpayer money for payroll contributions, managed to come up $7 trillion short, and now expect taxpayers to foot the bill.

Much of the sting from the slap comes from their colossal ineptitude. They are simply terrible at what they do. The vigilant financial regulators who protected us from the subprime mortgage debacle are a case in point. They include the elite that was running HUD, Fannie Mae, Freddie Mac, and the SEC (whose crack securities experts were downloading porn while credit default swaps and Bernie Madoff ran amok). Their predecessors were equally inadequate in preventing the S&L crisis, the junk bond fiasco, the Enron and WorldCom scandals, and the dotcom bubble.

It should be no great surprise, therefore, that our public masters running government pension funds have reached no higher level of competence. According to a recent report from the Employee Benefit Research Institute, federal pension plans now have unfunded liabilities exceeding $1.6 trillion. Unfunded state and local pension liabilities are estimated at $3.6 trillion. With healthcare benefits added in, state and local government unfunded retirement liabilities could be as large as $5.2 trillion. Consequently, our children face a huge future slap in the form of a tax bill approaching $7 trillion. To summarize: feckless public servants lavished enormous retirement benefits on themselves, used taxpayer money for payroll contributions (at a rate three times that of theprivate sector), managed to come up $7 trillion short, and, instead of going to jail, now expect taxpayers to foot the bill.

Then there is Public Service Recognition Week (PSRW), a nationwide campaign honoring public servants and educating citizens about the sacrifices they make while serving the nation. Federal, state and local public servants spend the first week of every May honoring themselves and bragging about the terrific jobs they are doing. They have exhibits showcasing “the innovative and quality work performed by public employees.” They even have parades “recognizing and thanking their unsung heroes.” This is the tail slapping the dog with disdain.

Public servants have come a long way from the banal, ambitionless, unproductive horde of my father's generation.They are now grossly overpaid, insidiously more powerful, and routinely unaccountable for bad, often abysmal, performance. No doubt most are good people with good intentions, some making legitimate sacrifices. I would go to a parade honoring most policemen, firefighters, teachers, and emergency workers. But there should also be a parade ridiculing those whose malfeasance, indolence, or avarice has failed the public and contaminated the perception of civil service. Regrettably, such a parade could not be held; it would last well over the week allotted.

Today there are simply too many public servants — even good ones. With staggering deficits and staggering public debt, we can no longer afford them. Public resentment deepens the more their compensation is scrutinized, as all levels of government begin trying to cut their budgets. Most are overpaid, especially at the federal level. And today's administrators, regulators, inspectors, social engineers, and the like have painted a disturbing "public masters" portrait of themselves. Furthermore, psychic income as a reward for sacrifice is a thing of the past. As public sector payrolls expand during private sector contraction, it's difficult for taxpayers to see the sacrifice. Public servants have become the "haves," and taxpayers, who pay their salaries, have become the "have-nots." Psychic cost — the economic burden of the government workforce — is a more realistic concept.

From 1787 through the 1920s, federal government spending didn’t exceed 4% of GDP, except in wartime. It has now reached 25% of GDP. Combined federal, state, and local government spending has reached 43% of GDP, and the average taxpayer has to work from January 1 to the middle of each April to pay for this largesse. But even that is not enough. In recent years, federal spending has exceeded tax revenue. It has taken an unprecedented leap since 2008, producing today's massive annual budget deficit of $1.5 trillion. To pay off this deficit, the average taxpayer would have to work until mid-May —and consequently have to miss the Public Service Recognition Week parades.

quot;public masters




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Reclaiming the Word “Liberal”

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I propose that we call left-liberals just that, not “liberals” without qualification. Doing so would help reclaim the original name of an honorable old political tradition. It would resist the purloining and perversion of the word “liberal” as used in the United States. It would avoid ambiguity by bringing American usage into line with usage in much or most of the world outside the United States, where the word “liberal” retains its classical meaning, as I shall try to show. Left-liberals contrast sharply with classical liberals; they incline to interventionist and redistributionary policies extending into ever more aspects of life.

John Kekes’ Against Liberalism (1997), although a generally meritorious work, illustrates the ambiguous use of words. From a self-styled conservative, I expected an attack on his doctrine’s classical rival. But no: Kekes muddles classical and left-liberalism together, making his attack less incisive than it might have been.

Beyond inviting misunderstanding, controversialists put themselves at a disadvantage when they let their opponents define the terms of debate. When classical liberals and conservatives let “liberal” be purloined and even use it themselves (as a term of abuse), they concede too much to their opponents.

Words and Policy

The word “liberal” derives from the Latin for “free.” Classical liberals do not all share the same detailed understanding of their values; but to minimize repetition in what follows, it is convenient to list typical characteristics. Classical liberals typically believe in the importance of individual responsibility; in the freedom to live one’s own life, to travel, to change residence, and to choose one’s own occupation; in freedom of speech and press; in tolerance of the opinions and lifestyles of dissenting minorities; in capitalist enterprise with secure property rights and free markets for domestic and international trade; in freely and honestly elected representative government of defined and limited powers that protects human rights; in the rule of law, equality before the law, independent administration of law and justice, and separation of church and state.

Left-liberals share many of these values, of course; the chief difference concerns the character and scope of government, which affect the degree of respect that left-liberals have for others among those values.

Liberalism, if not yet so called, became a powerful force in the Age of Enlightenment. It rejected hereditary status, the divine right of kings, absolute monarchy, and established religoin. Leaders of the American and French Revolutions used liberal philosophy, including insistence on consent of the governed, to justify overthrowing tyrannical rule. The 19th century brought more or less liberal governments to countries in Europe and the Americas.

When classical liberals and conservatives let “liberal” be purloined and even use it themselves (as a term of abuse), they concede too much to their opponents.

An early political use of the term “liberal” dates from the Cortes of Cádiz, which adopted the Spanish constitution of 1812. There the conservatives derided their majority opponents as “liberals.” The liberals wanted to carry on the Enlightenment philosophy of Charles III, adding several ideals of the French Revolution. They fought for civil liberties and against absolute monarchy. Even though the constitution of 1812 remained in effect only for brief intervals, it served as a model for liberal constitutions of Latin countries in the nineteenth century. (These facts are found partly by Googling for “liberals” and “liberals Cadiz” and in the Wikipedia entry on “Constitución española de 1812." Club Liberal Español is also useful.)

Elsewhere also, and perhaps especially in Great Britain and its colonies, liberal aspirations included removing various restraints on residence, occupation or employment, and property ownership; increasing the flexibility of land inheritance; modernizing onerous old legal structures and practices; removing various legal discriminations; extending the franchise and (in Britain) remedying the over-representation of rotten boroughs in Parliament. Workers eventually gained the right to form unions.

How, then, did the word “liberal” acquire its changed meaning? Well, the early liberals worked for freedom from burdensome and oppressive old laws and regulations. Liberalism meant action. The ideal of change toward increased freedom and modernity drifted into accepting change almost for its own sake — or so I conjecture. Many conditions in the world plausibly seemed open to improvement — even in the liberal direction — by changing or adding some laws and regulations.

The case for a typical one of these interventions, taken by itself, may indeed be strong; yet a great accumulation of individually plausible interventions may become oppressive and make the task of monitoring government all the more difficult. Overlooking this point commits the fallacy of composition, the fallacy of supposing that what is true of the individual case is therefore true of such cases taken together. (The standard example compares one spectator standing up to see a parade better, and all standing up to see the parade.)

Even so, advocates of each particular intervention tend to focus on it, not perceiving or worrying about the fallacy. Some interventions may have unintended side effects that seem to require still others as correctives (as Ludwig von Mises explained). Ongoing growth of government activity motivates special interests to seek more interventions on their own behalf or in self-defense against privileges given to others. The political expediency of a “moderate,” middle-of-the-road position — the Hotelling effect, so called following Harold Hotelling’s article in the Economic Journal (1929) — allows the more active side of the road to drag along what is considered the respectable middle, thus reinforcing the drift. Many or most participants in an interventionist drift may well be high-minded people; but the drift does offer opportunities to control freaks, who may relish the prospect of power for their own purposes in a semi-socialist state.

The original term “liberal” persists, in the United States, anyway, even for an orientation that has metamorphosed into almost its opposite. The process illustrates the Hegel-Marx notion of a change of quantity into quality, of degree into kind (as rising temperature changes ice into fluid water and then into steam). An itch to change things has taken hold, with politicians and special interests constantly imagining what further government interventions into what further aspects of life might do some good.

Participants in the Drift of Meaning

John Stuart Mill illustrates a stage in the slide toward left-liberalism. Mill was a genuine classical liberal, concerned with removing interferences with individual freedom. He was an early feminist, urging that women should have fully as much control as men over their own persons and property. His On Liberty is a classic defense of the individual’s right to act as he wishes, even mistakenly, provided only that he does not infringe on the rights of others. He championed freedom of speech and controversy and freedom even from pressures to conform to general opinion; he valued eccentricity. On Liberty urged the benefits of private enterprise and the spirit of innovation.

In the last chapter of his Principles of Political Economy, a chapter entitled “Of the Grounds and Limits of the Laisser-faire or Non-Interference Principle,” Mill reviews the various arguments against extending the scope of government. Still, he considers how government intervention might enhance freedom. He distinguishes between two types. One is “authoritative interference” — requiring or forbidding private actions. A second type, alternative to commands and penalties, includes giving information and advice. But the scope for intervention, as imagined by Mill, is much wider.

Liberalism meant action. The ideal of change toward increased freedom and modernity drifted into accepting change almost for its own sake.

Mill wants to free individuals from finding their future selves bound by very long-term contracts. He would accept intervention when the consumer has inadequate knowledge of the market or is unable to judge the desirability or quality of some good or service, education perhaps being an example. Intervention might be justified when some persons exercise power over others, as over children and animals. The government might intervene to remedy defects of delegated decisions or management, as by giving shareholders more power over the companies they own. Intervention might help give effect to the desires of the persons concerned, as when, for example, workers might want shorter hours but could hardly demand them individually rather than collectively. Mill sees a case for public alongside private charity. Government might properly regulate or own such natural monopolies as gas and water. It might pursue any object of general interest in default of private action — roads, docks, harbors, canals, irrigation, hospitals, schools and colleges, a national bank, a manufactory, a postal service, an established church. (He even mentions printing presses!) Private alternatives would not be banned; private and public education might exist alongside each other. Government should regulate the colonization of new lands (e.g., Australia). In general, government might undertake any beneficial activities that private agencies would find unprofitable; it could support what are now called positive externalities. Mill’s example was voyages of geographical or scientific exploration; nowadays we might think of the space program.

Earlier in his Principles (Book II, Chapter I), Mill expressed some interest in and even sympathy for socialism in some sense or other. The decision between it and the present system of private property “will probably depend mainly on one consideration, viz. which of the two systems is consistent with the greatest amount of human liberty and spontaneity” (Ashley edition, 1929, p. 210). “It is for experience to determine how far or how soon any one or more of the possible systems of community property will be fitted to substitute itself for the ‘organization of industry’ based on private ownership of land and capital. . . . [However,] the object to be principally aimed at, in the present stage of human improvement, is not the subversion of the system of individual property, but the improvement of it, and the full participation of every member of the community in its benefits” (pp. 216–217). Thus, even Mill’s interest in (though not commitment to) socialism reflected his concern for individuality and personal freedom and opportunity.

I get the impression from his Principles that Mill’s acceptance of intervention and his interest in socialism were rather reluctant. He wanted to serve and enhance the autonomy and effectiveness of the individual; personal freedom was his touchstone, but he thought that wise government guidance could enhance it. He wanted to give a fair shake to doctrines or practices that he himself may have contemplated only reluctantly or tentatively.

Like Mill, Thomas Hill Green (1836–1882) exemplifies the drift (especially in his lecture on “Liberal Legislation and Freedom of Contract”; see also the Wikipedia entries on Green and on “Social Liberalism”). He was a philosopher, adherent of the Liberal Party, political radical, temperance campaigner, and prominent figure among those, also including L.T. Hobhouse and John A. Hobson, who became known as the New Liberals. These men used the classical language of liberalism in support of state intervention in economic, social, and cultural life. Green favored factory legislation for safety and health, restrictions on child and women’s labor, public schools, reform of inheritance of land, protection of tenant farmers against arbitrary landlords, and restrictions on the sale of alcohol. He defended such interventions against the objection that they impair freedom of contract.

In distinguishing between negative freedom and positive freedom, Green made a now notorious play on words. He called the latter “true freedom,” charitably interpreted to mean individuals’ efficacy in pursuing their own interests and in political participation. Sir Isaiah Berlin made the same distinction in his “Two Concepts of Liberty” (1958), but he did so to warn against the equivocation involved.

Even Mill’s interest in (though not commitment to) socialism reflected his concern for individuality and personal freedom and opportunity.

John Maynard Keynes, member of the Liberal Party in Britain, was arguably a figure in the leftward drift. At least two schools of interpretation of his General Theory demonstrate the ambiguity of his position. One school stresses his evident appreciation of private property and a market economy; he had no particular quarrel with how the price system allocates resources. Writing during the Great Depression of the 1930s, however, he did worry about a persistent tendency toward lack of enough total demand to maintain prosperity with full employment. That defect could be remedied rather straightforwardly by monetary policy and especially by government fiscal policy, both without detailed control over the allocation of labor and other resources. On this interpretation, Keynes remained basically a classical liberal. The rival interpretation sees him as a meddlesome interventionist, or worse. It takes literally some of his stray remarks, such as his comment about the “socialization of investment,” as if he meant more than policy to stimulate enough investment to absorb otherwise excess saving — as if he did envision widespread government ownership of the means of production — in a word, socialism. Actually, he did not go that far.

The Oxford Liberal Manifesto of 1947/1948, written by Salvador de Madariaga and adopted by delegates from 19 countries, also illustrates how classical liberalism became stretched. Unsurprisingly, it urges protecting the standard freedoms and enhancing the several components of political liberty. But it goes further. Its concern for the freedom and wellbeing of persons extends to education; security from the hazards of sickness, unemployment, disability, and old age; and continuous betterment of conditions of employment and housing. Economic freedom must be protected from monopolies and cartels. “The welfare of the community must prevail and must be safeguarded from the abuse of power by sectional interests” (Wikipedia entry and text of the Manifesto).

So the Manifesto almost welcomes myriad detailed interventions. It allows politicians opportunities to perceive or invent ills that their legislation and regulation might remedy. In H.L. Mencken’s much quoted exaggeration, “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” As if to illustrate Mencken’s point, a recent call-in session on C-SPAN recognizes appropriate federal government concern about . . . bedbugs.

The word “liberal” in the sense of left-liberal is (or was until quite recently) accepted gladly, and even as a self-congratulatory term, by American adherents of that political persuasion; and most do so use it still. However, many conservative politicians and commentators, such as Rush Limbaugh, have come to use it as a pejorative. Thus even conservatives join in perverting the unmodified word to mean incessant leftward change.

International Usage

This drift toward perverting the word has not occurred, however, in all writings and all countries. In some English-speaking countries outside the United States (Canada, Australia, and the United Kingdom), usage of the term “liberal” seems to be complicated by their having thus-named Liberal (or Liberal Democratic) political parties. But in the UK, anyway, the classical usage still seems to prevail. The London Economist does routinely and unambiguously so use the word. For example, its issue of 16–22 October 2010 hails Mario Vargas Llosa, winnner of the Nobel Prize for literature, as “A Latin American Liberal”: “His liberalism is universal, inspired by such thinkers as Karl Popper and Isaiah Berlin.” In most other countries and languages, also, “liberal” means classical advocacy of a free-market economy; personal rights, liberties, and responsibilities; equality before the law; and a democratic element in limited government.

Liberal policies could plausibly drift into left-liberal interventionism, as I have argued, without any sharp break point bringing a change in terminology. But why did the change of meaning occur mainly in the United States while “liberal” retains its classical meaning in so many foreign countries? Well, in some developing countries where free markets and democratic politics have not yet fully emerged, classical free-market liberalism may still be only an aspiration of an intellectual minority and not yet an actuality subject to being democratically corrupted by organized interests; the process described by Mancur Olsen in his Rise and Decline of Nations (1982) has not yet taken hold. But this mere conjecture leaves unsolved the puzzle of why “liberal” or “liberalism” does indeed retain its classical meaning in many countries outside the United States.

As if to illustrate Mencken’s point, a recent call-in session on C-SPAN recognizes appropriate federal government concern about bedbugs.

But it does. Evidence follows. The Atlas Foundation, founded by Sir Antony Fisher and now headquartered in the United States, is an umbrella organization for classical-liberal programs and thinktanks around the world. Atlas lists many dozens of them that it supports or that cooperate with it. I tried to find all of these web sites (and also found a few others). Unsurprisingly, most by far of the American thinktanks use “liberal” or “liberalism,” if at all, in the American leftist sense. In other countries, also, by no means do all or even most of the free-market thin tanks explicitly label themselves “liberal” either by their names or in their homepage self-descriptions. That is understandable. They may not want to risk frightening away potential supporters by one explicit label. They do, however, express sympathy with the tenets of classical liberalism, which they review.

Yet some do explicitly name themselves. Examples include Club Liberal (Spain), Unión Liberal Cubana (located in Spain), Instituto Liberal (Brazil), Instytut Liberalno-Konserwtywny (Poland), Liberaljnaja Missija (Russia), Association for Liberal Thinking (Turkey), Center for Liberal-Democratic Studies (Serbia), Centre for Liberal Strategies (Bulgaria), Liberal Group (India), Liberal Network Europe (Bulgaria), Liberales Institut (Switzerland), Libertarni Klub (Slovenia), Eurolibnetwork (France), Liberal Youth Forum (India), and Red [Network] Liberal de América Latina (16 countries).

Tanks describing though not actually naming themselves as liberal include Free Market Center (Serbia), Free Market Foundation of Southern Africa (South Africa), Fundación para el Análisis y los Estudios Sociales (Spain), Institut Constant de Rebecque (Switzerland), Institut Turgot (France), Institute for Development and Social Initiatives “Viitorul” (Moldova), Institute for Economic Studies Europe (France), Instituto de Ciencia Política (Colombia), Instituto de Estudos Empresariais (Brazil), Instituto Liberdade (Brazil, formerly named Instituto Liberal do Rio Grande do Sul), Istituto Acton (Italy), Istituto Bruno Leoni (Italy), Liberté Chérie (France), Mont Pelerin Society (international), Prague Security Studies Institute (Czech Republic), Center for Political Studies (Denmark), Centre for Independent Studies (Australia). The Centre for Civil Society (India) straightforwardly calls itself “liberal,” as in announcing a “Colloquium on the Indian Liberal Tradition” and issuing invitations to the 2011 regional meeting of the Mont Pelerin Society, whose theme would be “India as a Global Power: Practicing Liberal Values at Home and Abroad.”

In addition, many of the tanks not explicitly so naming their philosophy do present articles or other content using the word “liberal” (or “liberalism”) in the classical sense. Examples include Andes Libres Asociación Civil (Peru), Center for Free Enterprise (Korea), Center for Institutional Development (Romania), Centro de Investigación y Estudios Legales (Peru), Centro para la Apertura y el Desarrollo de América Latina (Argentina), Education Forum (New Zealand), Eudoxa AB (Sweden), F.A. Hayek Foundation (Slovakia), Free Market Center (Serbia), Fundación Pensar (Argentina), Imani Center for Policy and Education (Ghana), Instituto de Libre Empresa (Peru), Free Market Center (Serbia and Montenegro).

Why did the change of meaning occur mainly in the United States while “liberal” retains its classical meaning in so many foreign countries?

Many institutions indicate their orientation by naming themselves after classical liberals. A list, partially overlapping the preceding ones, includes: John Locke Foundation (US), Locke Institute (US), James Madison Institute (US) Henry Hazlitt Foundation (US, now dissolved), Alexis de Tocqueville Institution (US), Bastiat Institute (US), Milton and Rose D. Friedman Foundation (US), Istituto Bruno Leoni (Italy), Adam Smith Institute (UK), Adam Smith Society (Italy), Adam Smith Centre (Poland), David Hume Institute (UK), Institut Turgot (France), Institut Constant de Rebecque (Switzerland), Fundación José Ortega y Gasset (Spain), many named after F.A. Hayek (Austria, Slovakia, Russia, Germany, Canada), and many named after Ludwig von Mises (US, Belarus, Belgium, Mexico, Argentina, Russia, Brazil, Romania, El Salvador, Czech Republic, Slovakia).

Conclusion

It is understandable how change in the liberalizing direction might have gained momentum and drifted into change valued almost as itself. But where should an originally admirable drift stop? It is odd that continual change through legislation and bureaucratic regulation, however democratically adopted, should be made a philosophical ideal. Political philosophy might better present a stable vision of the good society, one in which individuals can successfully pursue their own goals in life in peaceful and productive cooperation with others through trade and otherwise.

A stable society does not mean stagnation. A stable political framework does not obstruct — it fosters — an environment of progress in science, technology, and culture, a rising standard of living, and a widening of people’s opportunities.

Reclaiming the word “liberal” in its classical and international sense will help clarify discussion of such issues. Instead of outright and confusingly reversing how the word “liberal” is commonly used in the United States, qualifying it as “left” serves clarity.“Left” is not an abusive term employed instead of argument; it describes but does not in itself evaluate. Conceivably left-liberals are correct about the issues that concern them. Furthermore, they typically regard being politically somewhat to the left of center as the moral, humane, compassionate, and progressive position. In the many parliaments where the seating pattern distinguishes between left and right, delegates seated on the left are not ashamed of sitting there.

Two alternatives to the terminological rescue that I suggest come to mind. The left-liberals might be renamed “progressives.” Some of them call themselves that already; and some conservatives, such as Glenn Beck, even use “progressive” as a term of abuse. However, the word already names a specific policy stance in early 20th-century America. Furthermore, it concedes an undeserved terminological advantage to the “progressives,” as if they were for progress and their opponents were against it.

Or classical liberals might give up, concede the unqualified term “liberal” to their opponents, and call themselves “libertarians.” But one might plausibly distinguish between libertarians and classical liberals. I sometimes say, only half in jest, that libertarianism is classical liberalism for children, while classical liberalism is libertarianism for adults.

Most briefly, explicitly distinguishing between left and classical liberalism will promote clarity in discussion, particularly when international usage is taken into account.




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1989 in the Muslim World?

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On December 17, Tunisian street vendor Mohamed Bouazizi, driven to desperation by mistreatment at the hands of petty officialdom, drenched his body with gasoline (or paint thinner, according to some accounts) and set himself alight. His death touched off a chain reaction in much of the Muslim world. Protestors took to the streets of Tunis, and their protests culminated in a popular revolution that ousted the country’s corrupt president. The tumult spread to Egypt where, remarkably, a massive yet largely peaceful protest movement succeeded in forcing Hosni Mubarak, who for 30 years had ruled the land like a pharaoh, to step down. At this moment street protests and violence are occurring in Morocco, Algeria, Libya, Jordan, Bahrain, Yemen, and Iran — an upheaval reminiscent of that which swept Eastern Europe after the fall of the Berlin Wall in 1989.

Will the outcome be the same? Are the Middle East and North Africa on the verge of changes that will transform the lives of the people living there? Americans cannot but hope that the early promise of this revolution will be sustained. But I would sound a note of caution. There are reasons to believe that the events we are witnessing represent a false dawn.

That a region-wide conflagration had to come at some point was obvious, though exactly when it would occur no one knew. Demographics (a major youth bulge exists in all the countries in tumult), economics (the region is plagued by high long-term unemployment and soaring food prices), and government corruption provided the tinder that allowed Bouazizi’s fire to spread. Conditions in the Middle East are as backward and absurd as those that prevailed in Eastern Europe in 1989. But Eastern Europe’s problems were in a sense artificial, caused by the warped imperatives of Marxism-Leninism. The problems of the Muslim world are more fundamental.

 Although Iran, the one non-Arab nation involved, has a democratic tradition of sorts (no thanks to the US, which overthrew a democratic government there in 1953), the Arab world does not. Despite the hopes and dreams of foreign policy liberals in the West, there is no evidence to indicate that the Arab peoples have any talent for democracy. Indeed, history seems to show that the reverse is true. Egypt, the political and cultural center of the Arab world, will be the test. Some observers believe that the Egyptian middle class, educated and secular to the extent that it is largely immune to the lure of radical Islamism, will take the nation into a liberal democratic future. But given the abject poverty of the Egyptian masses (living on two dollars a day, as we were reminded again and again during the uprising), and the country’s apparent aversion to liberal values (i.e., free markets and functional democracy), this seems very doubtful indeed. East Germany was pulled up from dictatorship and poverty by rich West Germany, with the latter expending a vast amount of wealth in the process. Who will be Egypt’s mentor and bankroller? The US? Not likely, given the state of our economy and the massive federal budget deficit — not to mention the fact that Egyptians will likely spurn our advice and even our money if any strings are attached. The only nation with enough wealth available to prop up Egypt economically is the kingdom of Saudi Arabia. But we may take it as certain that the Saudis have no desire to see their neighbor become a thriving democracy. The Egyptians will have to pull themselves up by their own bootstraps, something they have never demonstrated an ability to do. Should they fail, the lure of Islamism will be strong and perhaps irresistible.

Eastern Europe’s problems in 1989 were in a sense artificial, caused by the warped imperatives of Marxism-Leninism. The problems of the Muslim world are more fundamental.

Final victory for the protestors in Egypt came about not as a result of their undoubted courage and determination, but because the Egyptian Army refused to stage a Tiananmen Square. That they refrained from doing so was the result, in part, of US “advice” to exercise restraint. The American and Egyptian militaries have maintained close ties since the 1970s. Egyptian officers attend US military schools and training courses, and Egyptian forces are equipped with US weapons. The relationship is so close that the US has permitted production of the M1 battle tank on Egyptian soil.

The US, therefore, has leverage with the Egyptian military. At the same time, we must listen to what that military says, for maintenance of the 1978 Egyptian-Israeli peace treaty remains the top priority of US policy in the Middle East. Egypt is the irreplaceable linchpin of America’s Middle East strategy. If the transition to democracy in Egypt fails from the outset or is derailed by democracy’s inability to cope with the country’s massive economic and social problems, look for the Egyptian army to take a hand. And don’t be surprised if the US backs any action the army may take, even if it comes to the establishment of a new dictatorship. The US must retain Egypt within the orbit of its influence, or find its entire Middle East policy ruined.

There remains a third possibility beyond a successful transition to democracy or a reversion to military dictatorship — a recurrence of the events witnessed in Iran in 1979. This possibility has been pooh-poohed by some experts, who are convinced that the Muslim Brotherhood (founded in 1928 and after the army the largest and best organized actor in Egypt) is neither strong enough nor willing to impose an Islamic regime. The Brotherhood itself has done much to dampen fears, denying that it harbors ambitions to remake Egypt and even going so far as to promise not to field a candidate in the next presidential election. But consider this: on February 18 the radical Sunni cleric Sheik Yusuf al-Qaradawi, who had been forbidden to preach in Egypt for 50 years, and who supports attacks on both Israel and US forces in Iraq, spoke to over a million people (as estimated by the New York Times) gathered in Cairo’s Tahrir Square. He exhorted them to demand of the army that it clear out all holdovers from the Mubarak regime and prepare the way for a new government forthwith. And he urged Egyptians to keep up the pressure until all their demands are met.

Needless to say, such a forcing of the pace will lead to disappointment, more protests, and perhaps a move by the army to “restore order.” Already the army has warned that the country must get back to work; indeed, anything like permanent revolution in Egypt will mean bankruptcy for the Egyptian state. If chaos rather than order results, and the army begins to disintegrate, with conscripts deserting or joining the ranks of the Brotherhood, nothing will stand between the Islamists and their achievement of power in the state. And an Islamist regime would undoubtedly, sooner or later, turn Egyptians’ frustrations outward against Israel and the US. The US would then be effectively shut out of the Middle East (unless it could somehow maintain a precarious position on the Arabian peninsula), while Israel, already facing the demographic challenge of a Palestinian birth rate far higher than that of its Jewish inhabitants, would find itself surrounded once again by hostile states, now motivated by religious fanaticism. One can play out this scenario in various ways, none of which ends well for the US or Israel.

There is no evidence to indicate that the Arab peoples have any talent for democracy.

To the west of Egypt lies Tunisia, the birthplace of revolution, and its neighbors Libya and Algeria, both of which have experienced major unrest. Libya is to an extent a special case, being a collection of tribes rather than a true nation state. As of this writing civil war is raging there between supporters of the regime and rebels. Even the armed forces are divided. It is difficult to predict a winner at this point; however, the longer the fighting continues, the more the possibility of radical Islamists gaining a foothold increases. Recall that in the 1990s Islamists won free elections in Algeria, only to be prevented from taking office by the army. Throughout North Africa the armed forces are the main, or sole, bulwark against radical Islamism. Even in Tunisia, which thanks to French influence has what most of us would regard as a normal attitude toward alcohol and sex, riots have broken out in which fanatical Muslims sought to close down brothels and ransack bars.

But North Africa west of Egypt remains, for the US (though not Western Europe), a sideshow. It is to the east, in the oil-rich Persian Gulf region, that events of world-historical importance are being played out. The principal centers of events here are Iran and, surprisingly, tiny Bahrain.

Iran of course is the other great and ancient civilization besides Egypt in the Middle East. It has more of a democratic tradition than any country south of Turkey, a sizable middle class, and the potential to build a thriving economy based on more than its immense oil and gas reserves. Its peoples are not Arabs but belong to various ethnic groups, with Persians making up a slim majority. The vast majority of its citizens are followers of the Shia sect of Islam, whereas in Egypt the people are Sunni. Since the overthrow of the Shah in 1979, Iran has been under Islamist rule. The Iranian revolution was a delayed reaction to the Anglo-American coup of 1953, which overthrew a democratic government and restored the Shah to power. But for that cardinal Anglo-Saxon sin, Iran might today be a rock of pro-Western stability in one of the most important regions of the world. Instead, it is the West’s most dangerous adversary this side of China.

The tide of history is undergoing a major turn. The whole edifice of Western and especially American policy in the Middle East is crumbling.

In 2009 pro-democracy activists took on the Iranian regime after an election that was widely (though not universally) perceived as fraudulent. They were crushed. In the wake of Egypt, street protests once again sprang up. It is believed in some quarters that these protests mark the death knell of the Islamist order in Iran. On the February 20 edition of Fareed Zakaria’s CNN talk show, the ubiquitous (and apparently immortal) George Soros declared that the Iranian regime would be swept from power within a year. This seems to me a fundamental misreading of the situation. The Revolutionary Guards Corps, the real power in Iran, is as entrenched as the People’s Liberation Army in China. It has the means to crush any popular revolt, and will do so.

The uprisings in the Arab countries should be seen as anti-Western and anti-American (for who supported the autocrats? and who will be blamed if the revolutions don’t deliver democracy and prosperity?), and therefore helpful to the Iranian cause. Iran will reach out to Islamists in the Arab world with a message of unity against the common enemies, America and Israel. Such an appeal will have a potent effect on people looking to blame their problems on malevolent outside forces. In February, for the first time since the overthrow of the Shah, Egypt allowed Iranian warships to pass through the Suez Canal (something Egypt could not legally prevent in any case, but nevertheless a definite straw in the wind).

Watch Bahrain to see which way the tide turns. This small Persian Gulf nation has a Sunni ruling family but a majority Shia population. So far, the protests there have been contained, but if the Shia chase out the rulers, Iranian influence will be at the very doorstep of Saudi Arabia. (Saudi Arabia’s Eastern Province, where the oilfields lie, is connected to Bahrain by a causeway. And its population is overwhelmingly Shia.)

Throughout North Africa the armed forces are the main, or sole, bulwark against radical Islamism.

The Saudis are very, very nervous. They have been urging the Bahrainis to take a hard line with the protestors, while at the same time announcing new giveaways of money for the average man in their own country. How secure the House of Saud really is remains to be seen, of course, but I would point to the fact that more jihadists come out of Saudi Arabia than any other Arab country. If Bahrain goes, and a Sadrist, pro-Iranian regime emerges in Iraq (as may very well happen in time — see my January 27article, “The Return of Moktada”), Saudi Arabia is probably doomed. At a minimum, the Eastern Province and its oil riches will be the target of Iranian pan-Shia propaganda and subversion. How the Saudis and the US will cope with such a situation appears problematical to say the least.

Even if the pro-Saudi ruling family holds on for the time being in Bahrain, one cannot but think that the tide of history is undergoing a major turn. The whole edifice of Western and especially American policy in the Middle East is crumbling. The majority of the peoples in the region have no love for us, or any strong interests in common with the Western world. We are witnessing not a liberation of the peoples as in 1989, but the end of a neocolonial epoch that began with the overthrow of the Ottoman Empire in World War I. In terms of economic impact, and particularly regarding energy, this will have a profound effect on an America already suffering from severe recession and catastrophic fiscal problems. And the effect on Israel will be even worse.

The history of revolution in countries with little or no tradition of self-government is instructive. Moderates overthrow oppressive autocrats, only to be removed by more ruthless and better organized actors — actors who are invariably more oppressive and murderous than the original autocrats. Robespierre, Lenin, Mao, Khomeini are the winners; the moderates are exterminated and the people are worse off than ever. When possible, popular discontent is then deflected upon an external enemy, as when the French Revolutionary armies swept over Western Europe. Such a future may await the West in the Middle East.




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Cuba, While Collapsing

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On January 14, President Obama announced that he would issue an executive order loosening US travel restrictions and remittances to Cuba. Though the administration has yet to spell out the details of the change in policy, several areas have been targeted.

Students seeking academic credit and church groups traveling for religious purposes will now be able to visit the island. But it’s the broadening of the definition of “cultural” groups permitted to travel to Cuba that could really open up the island to US tourism — depending on exactly what the new guidelines allow. The indications, according to Arthur Frommer, a travel guide writer, are that these, if not broad indeed, will be fuzzy enough to allow the entire head of the camel to slip into the tent. Additionally, authorized charter flights to the island will be able to depart from any US international airport equipped with proper customs and immigration facilities. Right now, only LAX, Miami, and New York City can offer flights to Cuba.

Predictably, Republicans reacted skeptically — or unfavorably. Hence, Obama’s end-run around Congress. But the reformed Cuban American National Foundation, once the hardest of hardliners, welcomed the proposal, stating that “it’s going to help the interaction between regular Cubans and US citizens; it’s going to help Cuban people inside the island to gain independence from the Cuban government, especially now that roughly a million will be without jobs” — a reference to Raúl Castro’s decision to reduce the government workforce.

Bribery has become endemic. It is, in effect, an institutionalized way of getting things done and maximizing foreign exchange.

Right now, because of currency transaction restrictions, cash is king, which means that US visitors must lard themselves with reams of the green stuff to last their stay — a situation vulnerable to scams and ripoffs. Luckily, Cuban moral standards in the crime-against-US-tourists realm have not depreciated noticeably. But they have snowballed in Cubans’ relations with their own government, an area in which there does seem to be a convoluted method to this madness.

US State Department memoranda, recently leaked by Wikileaks, between Washington DC and the US Interest Section (USINT) in Havana indicate that bribery — high, low, and everywhere — has become endemic. It is, in effect, an institutionalized way of getting things done and maximizing foreign exchange.

The leaks themselves, unlike some Iraqi and Afghan communiqués, are definitely not sensitive. In fact, ever since the profoundly anti-Castro James Cason became our “ambassador” in Havana in 2002, the USINT has — as an official policy position — decided to pour sugar into the Castros’ gas tank. It wouldn’t surprise me if our mission welcomed the leaks. According to the USINT’s website, “The objectives of USINT in Cuba is [sic] to promote a peaceful transition to a democratic system based on respect for rule of law, individual human rights and open economic and communication systems.”

The most recent propaganda war began in the late 1990s, when the Cuban government erected a billboard in front of the mission with a cartoon revolutionary shouting to Uncle Sam, “Señores Imperialistas ! No les tenemos absolutamente ningún miedo!” (Messrs. Imperialists! We have absolutely no fear of you!”) This was followed — during the Elián Gonzales case — by the building of the Jose MartíAnti-Imperialist Plaza just east of the mission, where rallies, protest meetings (particularly targeting US policy), and concerts are held. At first, the USINT pulled its punches by displaying innocuous Christmas figures of Santa Claus, Frosty the Snowman, and a sleigh — censored symbols of a past era. But then, in January 2006, the USINT unleashed the full weight and measure of American creativity. That month, a scrolling electronic billboard in the windows of the top floor of the mission began displaying a quotation by George Burns: “How sad that all the people who would know how to run this country are driving taxis or cutting hair.”

Ever since the profoundly anti-Castro James Cason became our “ambassador” in Havana in 2002, the USINT has — as an official policy position — decided to pour sugar into the Castros’ gas tank.

The Cuban government responded with a huge protest march and the erection of a large number of flagpoles flying black flags with white stars, in a vain attempt to shield the billboard (which brings to mind the old Cuban saying about the fool who tries to deny reality: “You can’t cover the sky with one hand over your eyes”). There was also a Granma International editorial condemning the billboard as “the systematic launching of the crudest insults of our people via the electronic billboard, which, in violation of the most elemental regulations of international law, they think they can maintain with impunity on the façade of that imperial lair.” Apparently, George hit the funny bone again.

Cuban corruption, according to the leaked communiqués, includes bribery, inappropriate “tips,” illegal commissions, influence peddling, graft, embezzlement of state resources, and every other sort of unauthorized expedient used to gain advantage — from the highest levels of the bureaucracy, to ordinary members of the Cuban Communist Party, to the police, the security organs and anti-corruption watchdogs, to professionals of every stripe, right down to the average citizen navigating the reefs of Cuban quotidian life.

Many of the cables refer to illegal commissions either paid to fictitious third parties and deposited in foreign banks or paid openly to the Cuban concessionary and deposited in open accounts. One memo, quoting a Swiss businessman, says, “Like any other place in the world, a million dollar contract assumes $100,000 in the bank [as commission to the Cuban provider].”

If planning to visit Cuba, bring lots of cash — or blue jeans, perfume, soap, spices, sporting and electronic equipment, whatever we usually take for granted in a free society.

A Cuban told the USINT political advisor that “some entire government departments are run as, in effect, mafia fiefdoms. The director of the state bread distribution department placed friends in central hubs and now controls the entire chain of state bakeries.” Along these lines, many of the state jobs most susceptible to skimming, graft, or rent seeking are available only on a commission basis from the functionary in control. As another memo stated, “For example, a position with access to gasoline can cost thousands of dollars because it would permit the beneficiary to traffic in the combustible. Employment in the tourist sector, with access to its tips, can cost hundreds of dollars. A job with Cimex (the import/export bureau) would cost more than $500.” Government departments in charge of transport, construction, health, and food distribution are thoroughly suborned and maintain parallel black markets in lumber, cement, paint, meat, drugs, and many other goods.

Another cable cites the case of a woman who admitted to having her teeth fixed “paying hard currency to a clandestine dental clinic, run by dentists from the Ministry of Health and furnished with equipment stolen from the state.”

Michael Parmly, chief of USINT from 2005 to 2008, writes that the police “are famous for taking bribes. They’re so corrupt that the government replaces the entire force with new recruits from the eastern extremity [rural backwaters] of the island periodically. With time, the rookies become as corrupt as the old hands and they need to be replaced with a new crop.”

A previous Spanish ambassador characterized the situation to the USINT in this way: “Corruption is necessary to survive. When in the majority of Latin American countries a corruption scandal consists of one person stealing $11 million, in Cuba it’s that each one of the 11 million Cubans steals one dollar.” In 2009 the USINT provided this summary to Washington: “Corruption in Cuba is an accepted tool of survival. Cubans average an income of $18 monthly, and the security organs are well aware of it.” Madrid’s El País adds,Nevertheless, conduct considered corrupt in the United States, such as conflicts of interest or influence peddling, is business as usual in Cuba. The authorities tolerate corruption up to a certain point, but for serious corruption they respond with severity.” Makes one wonder how they define “serious.”

Now corruption is not normally part of the libertarian theoretical arsenal. Nonetheless, in this case (and probably in others as well), I will attempt a defense of the practice.

First, it is a relief valve for the constraints placed on normal market activities by unrealistic regulations — especially when they are “regulations without representation.”

Second, “corruption” is more understandable within certain frameworks and traditions. Modern political systems that evolved from Roman tradition — a tradition based less on ideology than on personal loyalty, patronage, and nepotism — are often perceived as corrupt by people nurtured wholly within Enlightenment political tradition. The Roman tax collection system is particularly instructive. Government collected taxes by selling the position of tax collector to the highest bidder. The price was determined by an estimate of the taxes that could be collected. The revenue agent then pocketed whatever he could garner from taxpayers — that was the return on his investment.

The Castro regime attempted to shift the traditional order — extant under Batista and his predecessors, albeit modified considerably over time — to an ideologically-based system. The draconian approach failed. Now, if anything — and in spite of many Cubans’ naïve admiration for the ideals of socialism — ideologically-based standards have suffered a crushing blow. Damage has been done that will be difficult to reverse when the regime collapses.

Bradley K. Martin, in his account of North Korea and the Kim dynasty (Under the Loving Care of the Fatherly Leader), interviewed many defectors from the hermit kingdom. North Korea has a much worse reputation than Cuba. It is surprising, therefore, that the North Korean defectors’ attitudes have much in common with Cuban attitudes. For one thing, reverence and admiration for Kim the Elder is widespread — for fighting the Japanese and imperialism and for socialist idealism, which the defectors are at pains to reconcile with the North’s economic failure, the primary reason for their escape. Similarly, in Cuba much of the populace still admires Castro’s accomplishments and idealism.

“When in the majority of Latin American countries a corruption scandal consists of one person stealing $11 million, in Cuba it’s that each one of the 11 million Cubans steals one dollar.”

In the course of describing how things get done in North Korea, Martin quotes one defector’s eloquent defense of the country’s widespread corruption: “I feel it’s justified. The official works hard to [fulfill the petitioner’s request], so there should be a payoff for him. Above that official there may be higher officials. This lower official has to work hard to [get his own requests fulfilled], has to pay off higher-ups. I just thought that was the way things were. I thought it was understandable. This system is prevalent throughout society. For example, if I couldn’t make it to the factory one day, I’d see the manager and give him some gifts and ask him to look the other way. In North Korea most bribery involves goods, not money. When my father worked as an official at a county economic committee he received so many ‘presents’ from farmers — potatoes, green onions and so on. If a person receives a present in the form of goods, that’s a ‘friendly present’.”

Conchita, a woman I know, understands. The not-so-recent émigré’s extended family and friends keep trickling into the USA, while she keeps visiting people who are still on the island. Those experiences, and her American dream job, conducting publicity for one of the state lotteries, invest her with an extremely pragmatic attitude to government in all its forms. She cultivates contacts in official and unofficial, high and low places. Her advice, if planning to visit Cuba, is to bring lots of cash — or blue jeans, perfume, soap, spices, sporting and electronic equipment, whatever we usually take for granted in a free society — to facilitate every contingency and make a Cuban’s day.




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It's the Population, Stupid

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The Kyoto Protocol is an international treaty designed to lower global temperature by having industrialized countries reduce their greenhouse gas emissions. That the United States, the largest energy consumer, has not ratified the treaty frustrates climate control advocates. They do not understand our failure to embrace such a climate change hat trick: empower globalism (i.e., increase the power of the United Nations), augment environmentalism (i.e., enrich environmentalists), and, of course, regulate capitalism (i.e., punish free enterprise). It’s a win-win-win proposition, except for one problem. The scheme won’t work. World population guarantees stark failure.

This is not to say that we are on the verge of a Malthusian collapse. But no matter how zealously the apostles of climate control push their questionable emissions reduction schemes, there is no doubt that anthropogenic demography will trump anthropogenic temperature. Any emissions reduction goals that may possibly be achieved will be negated so readily and predictably that only colossal incompetence and irresponsibility can explain why global warming scientists proposed them in the first place.

To quantify this folly, let’s take a look at how Kyoto would play out with full US participation. Don’t be alarmed by the math. Remember, mathematics is the language of science (although the verdict is out on whether the global warming variety is actually scientific). In any case, this is only middle school algebra, and all the terms and numbers are from UN sources.

Annual global energy consumption (GEC) can be estimated by

         GEC = n1*c1 + n2*c2

where n1 is the population of the industrialized world (North America, Europe and Oceana) and c1 is its per capita energy consumption; and n2 and c2 are the corresponding parameters for the developing world (Asia, Africa and Latin America). According to 2010 UN population figures, n1 = 1.12 billion and n2 = 5.79 billion. According to the International Energy Agency (IEA), c1 = 4720 and c2 = 976, where these values are measured in kilograms of oil equivalent (KGOE). Thus, without Kyoto, the current GEC would be

         GEC = 1.12*4720 + 5.79*976 = 10,937 billion KGOEs.

Let r be the emissions reduction rate for industrialized countries. Since developing countries are not required to reduce emissions, annual GEC under the Kyoto scheme would be given by

         GEC = (1 — r)* n1*c1 + n2*c2.

Initially, a 5.2% emissions reduction below 1990 energy consumption levels was set for industrialized countries. But for this illustrative analysis, let’s assume a 10% reduction from 2010 levels. Then, with US participation, the current GEC would be

         GEC = (1 — 0.1)* 1.12*4720 + 5.79*976

          = 10,409 billion KGOEs.

Thus, if the US joined other industrialized countries in reducing emissions by 10%, a GEC of 10,409 billion KGOEs would be achieved — a level that would eventually reduce global temperature by a degree or so, the proponents hope. That is, we must continue at this level until the International Panel on Climate Change (IPCC) tells us that environmental catastrophe has been averted — at least until 2050. However, in 2050, n1 = 1.19 billion and n2 = 7.96 billion. Then, GEC will be

         GEC = (1 — 0.1)* 1.19*4720 + 7.96*976

          = 12,824 billion KGOEs.

Oops! That’s a 2,415 billion increase over the planet-saving 10,409 level. Scientists at the IPCC apparently forgot to take into account the 37% population increase in developing countries. No problem. The emissions reduction rate required for industrialized countries to bring world GEC back into alignment can be easily found by solving for r:

         r = (GEC — n2*c2)/n1*c1

          = (10,409 - 7.96*976)/1.19*4720 = 0.47.

Oops, again! And, this time, it’s a very inconvenient oops. At 47%, we’ll have to try 4.7 times harder than before. If you have turned your thermostat down three degrees to save Mother Earth today (e.g., from 75 degrees to the Obama-recommended 72 degrees), plan on turning it down over 14 degrees by 2050. At 47%, the Prius of 2050 might be the ten-speed bicycle; the Energy Star clothes dryer, the clothesline.

It gets worse — much worse. With their cheap labor and emissions reduction exemptions, developing countries will become the manufacturers of the most energy-intensive products used by developed countries. Among other products, they will, no doubt, produce all of our windmills and solar panels. Their factories will use more energy and their, now wealthier, employees will increase purchases of products (electrical appliances, automobiles, etc.) that consume more energy. Therefore, assume, quite reasonably, that developing countries increase per capita energy consumption to, say, 1300 KGOEs — a 33% increase, but still a small fraction of what people in developed countries consume. In this case, the 2050 GEC would be

         GEC = (1 — 0.47)* 1.19*4720 + 7.96*1300

          = 13,325 billion KGOEs.

Oops, again! And, this time, it’s a fatal oops. Even with the industrialized world complying at a 47% emissions reduction rate, a slight 324 KGOE increase in developing world energy consumption results in a 2916 billion increase over the 10,409 level needed to save the planet.

Luckily, solving the above equation for a new planet-saving emissions rate is unnecessary. Noting that 7.96*1300 = 10,348, energy consumption by developing countries alone effectively breaks the planet-saving energy budget of 10,409. That is, under UN-projected population growth and a reasonable estimate of energy consumption growth in developing countries, the emissions reduction rate for industrialized countries required to make the Kyoto scheme work is 100%.

The Kyoto Protocol is a parasitic scheme in which the population of developing countries acts as an inherent flaw, bounding the effectiveness of the scheme to a level well below that required for its success. Proponents would have us believe that emissions reduction by industrialized countries is the solution. But, as shown above, the Kyoto goal is unachievable even in the 100% reduction case. It is the population growth of developing countries that bounds Kyoto’s success. Ignoring it ensures Kyoto’s failure. Under Kyoto-style schemes, global temperature will be as unconstrained as the delusions of climate control advocates.

It’s one thing to propose a stupid plan. Sometimes, even a stupid plan has a chance of eventual success. But it’s quite another to propose a plan that defies middle school algebra.

Congratulations! If you made it this far, you are smarter than a global warming scientist.




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Welcome, Oscar

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I wasn't a fan of the Motion Picture Academy's decision to expand its field of Best Picture nominees to a crowded 10. But maybe the Academy is onto something. This year it has given its membership the opportunity to recognize a range of work that includes small independent films, big-budget blockbusters, thoughtful biographies, an animated film, a comedy (of sorts), and even an old-fashioned western.

With one exception, I have reviewed all the nominees in Liberty — and I have “viewed” that exception, even though I didn't review it. I don't know which of these fine films will take home the statue, but I think I'll be satisfied this year no matter what. Here is a quick review of each of the Best Picture nominees.

Inception. The most exciting, astounding film of the year, this psychological thriller stunned audiences with its mindboggling cityscapes folding into themselves, how'd-they-do-that weightlessness, multiple layers of reality, and action scenes worthy of a James Bond film. Added to all that are the creative musical score by Hans Zimmer (also nominated for an Oscar); knock-out performances by Joseph Gordon-Levitt, Leonardo DiCaprio, and Marion Cotillard; and an intellectual script that challenges the viewers' perception of reality and of how beliefs are formed. Months after the film’s release, fans are still arguing about its central meaning: the action takes place inside a dream, but whose dream is it? (I know — do you?) Unaccountably, writer-director Christopher Nolan was shut out of the nominations for Best Director. Also, the film was probably too popular at the box office to take home the prize. But I'm glad to see it nominated. It’s my favorite studio film this year.

Winter's Bone. This rugged little indie film was my happiest surprise of the morning when the nominees were announced. Ree Dolley (Jennifer Lawrence, nominated for Best Actress) is the most libertarian heroine in the movies this year. When her meth-lab father puts the family farm up for collateral with a bail bondsman, then vanishes from town, Ree must track him down and bring him to court to keep from forfeiting the homestead. She is the kind of self-reliant heroine one can genuinely admire. A high school student raising her two young siblings, she briefly considers joining the Army to take advantage of the $40,000 enlistment bonus — but she does not consider turning to the government for welfare handouts. Despite her family's deep poverty, there is no evidence of social workers, child protective services, section 8 housing, or even food stamps. The film is set in the Ozarks, in a closed, insulated community where people eat off the land, or they don't eat at all; and Ree manages not only to eat but to triumph over her difficult surroundings. I'm delighted that this film will be brought back for viewing, now that it has been nominated for Best Picture.

127 Hours. If Ree Dolley is the most libertarian heroine of 2010, Aron Ralston (James Franco, nominated for Best Actor) of 127 Hours is her male counterpart. When Aron gets pinned by a large boulder after falling into a crevasse while hiking in a Utah canyon, he sets to work figuring out how to free himself – which he does in a heroic and horrifying way. This film could have been claustrophobic and gratuitously graphic, but instead it is a celebration of level-headed innovation and the drive for self-preservation. Moreover, it is a powerful metaphor for life in the new millennium. We hurtled our way through the go-go ’90s, pumped up by a soaring stock market and roaring real estate investments, only to be pinned down by boulders that were, as Aron philosophizes, “there all along, just waiting to meet me in that canyon.” Too many people waste precious time crying over their problems or waiting for “someone” (read: the government) to fix them. But as Aron Ralston’s story clearly demonstrates, the key to success is to assume that no one is coming to bail you out. Instead of worrying about the cellphoneyou don’t have, assess the tools you do have. Keep a positive spirit. Be resourceful and self-reliant. Be a problem-solver. Remember to thank the people in your life and tell them that you love them. And don’t be afraid to let go of the thing that is holding you back, even if it is as precious as an arm.

The Fighter. This film about boxing brothers Dicky Eklund and Micky Ward received its nomination largely on the strength of its cast and director (David O. Russell, also nominated). The film boasts three Best Supporting nominations, and each of them is richly deserved. Christian Bale seems to be Hollywood's go-to guy when directors need an actor to lose a ton of weight (The Machinist, Rescue Dawn), but it isn't just the weight-loss that garnered Bale the nomination. As the wide-eyed, hyped-up, drug-addled, former boxing legend Dicky Eklund, he lights up the screen with his cocaine-induced enthusiasm and gut-wrenching pathos. And Melissa Leo, who plays the family’s hard-driving, chain-smoking, no-nonsense matriarch in tight pants and high heels, is my favorite Supporting Actress of the year. Leo is over-the-top perfect in this role, from the moment she prances into the gym, clipboard in hand, to supervise Micky's training session. Alice is the ultimate stage mother: pushy, strong, manipulative, and naively confident in her ability to manage her sons’ careers. Going head-to-head with her, on Oscar night and in the film, is Amy Adams as Micky's girlfriend Charlene, who stands up ferociously to the matriarch and her seven big-haired daughters in this film. Adams is a skilled actress, at home playing charming ingénues in romantic comedies or gritty working girls in dysfunctional dramas like this one. But Leo is my Oscar choice, because of her performance in The Fighter and also because I admired her equally strong performance as the investigator in this year's weaker prison film, Conviction. Mark Wahlberg's performance as Micky is strong as well, but he wasn't nominated for an Oscar, possibly because he's the straight man in the cast, and those characters are often overlooked by the Academy. It's a shame, because Wahlberg shepherded this story for several years and is the driving force behind the film.

The King's Speech. Let's get serious now. While the films listed above are my personal favorites this year, The King's Speech is the film that I expect (and hope, since it is better than those listed below) to see storming the stage at the end of Oscar night. It's a film about triumph over personal and public obstacles, as the unassuming man who would become King George VI struggles to overcome his speech impediment and prepares to lead England during World War II. Colin Firth and Geoffrey Rush are glorious as the prince and the speech therapist, sparring like equals despite their difference in social class. Helena Bonham Carter captures the tender affection and twinkling eye that would characterize Elizabeth, the Queen Mum, throughout her life. All three are nominated. Indeed, The King's Speech leads the pack for nominations, with an even dozen. It is likely to walk away with at least half of those.

The Social Network. Mark Zuckerberg isn't even 30 yet, and already he's been immortalized with a film about him. Reportedly the multibillionaire whiz kid, who changed the way people communicate with one another when he created Facebook (even I use it now!), isn't very happy about the way he is portrayed in the movie. But no matter — this film is going to be the way people remember and define Mark Zuckerberg. A fascinating look at the relationships among conception, production, and capitalization in a startup business, the film focuses on the intellectual property lawsuit brought by classmates against Zuckerberg (Jesse Eisenberg, nominated for Best Actor) and the frenzied atmosphere that surrounded the beginning of the business. The musical score by Trent Reznor and Atticus Ross(also nominated) contributes to that atmosphere and is likely to win.

True Grit.Wouldn't it be fun if Jeff Bridges (nominated for Best Actor) won in this category? Then we would have two men receiving Oscars for the same role, and both for the wrong reasons. Let's face it — John Wayne was a star, not an actor.He was good in True Grit (1969), but there was nothing outstanding about his performance. It was just his turn, and everyone knew it. Jeff Bridges’ Rooster Cogburn is better in every way than Wayne's. But better than Colin Firth in The King's Speech? Or Jesse Eisenberg in The Social Network? Or James Franco in 127 Hours? It's an impressive field of actors this year, and Bridges should be grateful that Crazy Heart came out last year instead (he won the Oscar for that film). Nevertheless, I could see the Academy voting for Bridges, just for the notoriety of having two men win for the same role. Cynicism aside, I have to report that this is a wonderful movie. But it's Hailee Steinfeld (nominated for Best Supporting Actress) as Mattie Ross, not Jeff Bridges, who lifts the film to greatness. Whether she's negotiating with horse traders, sparring with Texas Ranger LaBoeuf (Matt Damon), or confronting Tom Chaney (Josh Brolin), the man who killed her father, she dominates each scene with her combination of spunk, courage, intelligence, and vulnerability. Her relationship with Rooster develops slowly and genuinely, building to the scene where he literally drives her horse into the ground as he races against time to save her. It's a thrilling film in every sense. Those Coen Brothers (nominated for Best Director) can do just about anything.

Toy Story 3.Pixar was a brand new animation company when it introduced Toy Story in1995, and the franchise has grown stronger with each installment of this clever series and its cast of beloved toys led by Woody, Buzz, Jessie, and Mr. Potato Head. Now Andy, their owner, has grown up, and as he goes off to college his mother encourages him to donate his old toys to a neighborhood preschool. Their zany adventures continue as they try to survive the rough-and-tumble children and get back home to Andy. As witty and poignant as any of the films in the series, Toy Story 3 deserves its nomination for Best Picture. Incidentally, Andy's decision to give his toys to a neighbor girl, while perhaps satisfying popular cultural values, broke this mother's heart. I want Andy to come back five years from now with a family of his own who will play with his old toys!

Black Swan is a satisfying psychological thriller that explores what it means for a performer to enter a role and become a character. Nina (Natalie Portman, nominated for Best Actress) is technically a superb ballerina, but she lacks the depth of character to reach into the dark soul of the black swan in "Swan Lake." As she prepares for the role she must deal with an overbearing mother, a lecherous director, a creepy competitor, and her own repressed sexuality. Not my favorite film of the year, but certainly a creative and visually impressive work.

The Kids Are All Right. I haven't watched this film, but I've seen it. I was flying across country two days before Christmas in one of those planes with individual movie screens in the back of each seat that allow passengers to choose their own entertainment. I was quietly minding my own business, playing Trivial Pursuit, when I suddenly received an eyeful from the screen between the seats in front of me: two naked men were simulating sex on a screen within the screen, followed by what looked like a stern talking to from a concerned Annette Bening — evidently the "son who's all right" was caught watching porn. A few moments later I glanced in that direction again and saw Bening apparently watching TV in bed. Suddenly her blankets started rumbling like an earthquake, she started smiling, and Julianne Moore emerged from under the sheets. And then the men's naked bodies were onscreen again (I guess Mom #1 needed to discuss it with Mom #2, or something). I stopped playing my game and opened a book so I wouldn't have to look in that direction anymore. I don't pretend to know what this film is about, and I don't have an opinion about whether it deserves an Oscar nomination. I just don't think a version offering unedited, unexpected nudity should have been shown on a Christmas flight full of children. Or old fogeys like me.




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The Return of Moktada

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On January 5th, radical Shia cleric Moktada al-Sadr returned to Iraq from more than three years of self-imposed exile in Iran. He brought with him the specter of renewed violence in that war-torn country.

For those readers who have done their best to forget America’s Iraq misadventure, here’s a bit of background. Al-Sadr is the son of a revered Shia imam who was murdered by Saddam Hussein in 1999. He became prominent by leading Shia opposition to the American occupation after 2003. In 2004 his militia, the Mahdi Army, twice battled U.S. troops. Though not victorious, the Sadrists lived to fight another day. Al-Sadr also avoided arrest by U.S. forces on a warrant issued against him for the murder of another cleric. America thus failed to nip in the bud the young cleric’s militant movement.

During the civil war of 2006-07, the Sadrists carried out brutal sectarian cleansings in Baghdad and elsewhere. Even the onset of the American surge of ground troops in early 2007 failed to slow the pace of the carnage. At the same time, the Mahdi Army began to slip out of al-Sadr’s control; by the summer of 2007 the frenzy of violence caused even many Shia to turn against the Sadrists. Then the weight of American power began to have an effect; many Sadrist cadres were killed or captured by US troops. At the end of August al-Sadr declared a unilateral ceasefire and took himself off to the Iranian holy city of Qom, where he sought safety and the opportunity to polish the rather rough edges he had displayed as a political and religious leader.

In his absence the government of Prime Minister Nouri al-Maliki, given a breathing space by the apparent success of the Surge, was able to consolidate its hold on power. In early 2008 Iraqi government forces, backed by US and British logistical, intelligence, and air support, defeated the Sadrists first in Basra, Iraq’s second-largest city, and then (though less decisively) in Baghdad itself. The Sadrist movement had reached its low point. Even so, however, it had once again survived. “We may have wasted an opportunity . . . to kill those that needed to be killed,” an anonymous US official stated at the time. Today that official looks more and more like a prophet.

After the Basra and Baghdad defeats the Sadrists eschewed the gun in favor of the ballot. They scored surprising successes in local elections in 2009. Then, in national elections this past March, they emerged as the second largest Shia bloc, barely trailing al-Maliki’s party. As a result, al-Sadr became a kingmaker; Maliki’s reappointment as prime minister in late 2010 was possible only because the Sadrists supported him. In return they received ministerial posts and at least one provincial governorship. They are in the enviable position of having power without true responsibility: if the government succeeds, they will share in the credit; if it fails, they will blame al-Maliki and bring the government down. The Sadrists have made it clear that al-Maliki has only so much time to restore services, revive the economy, and end what’s left of the American occupation.

An anonymous US official stated that “We may have wasted an opportunity . . . to kill those that needed to be killed.”

The question of a continued American presence is a vexing one for all concerned — except the Sadrists. There are less than 50,000 US troops left in the country. Under an agreement negotiated by the Bush administration, all US forces are supposed to leave by the end of 2011. The Obama administration has stated that it would consider an extension of the US military presence only if Iraq requests it. Al-Maliki would very much like to see some US troops remain, as would the Kurds and most of the Sunnis. But al-Maliki risks looking like an American puppet if he asks for an extended troop presence. The Sadrists, on the other hand, are unequivocally opposed to any US troops remaining after the Dec. 31, 2011 deadline. Their attitude is not merely designed to appeal to Iraqi nationalist feeling. At some point in the future the Sadrists could decide to seize power. They probably would have a good chance of succeeding, provided US troops are not available to stop them.

The US State Department is supposed to take over the American role in Iraq’s security after 2011. Its active arm will be thousands of contractors (that is, mercenaries) whom it has been hiring and trying to put in place before the last uniformed Americans depart. While the Wikileaks revelations have shown that US diplomats are an intelligent and dedicated group of professionals, the idea of putting diplomats in charge of security in a place like Iraq seems a dicey proposition indeed. The employment of contractors will undoubtedly lead to incidents in which Iraqi civilians are killed. The reaction of the Iraqi populace, and specifically the remaining militias, is all too easy to predict. Recall the burned bodies of American contractors hanging from a bridge in 2003.

The Sunni insurgency, despite heavy blows inflicted by US and Iraqi forces, remains able to carry out widespread and damaging attacks. It may in fact be on the brink of a resurgence, for many Sunnis who joined the pro-US, pro-government Awakening movement have grown disaffected with a Shia-dominated government that has cut back on cash payments and jobs for Sunnis.

We have then the makings of a new explosion in Iraq, with no prospect of an American “Surge II” should the worst occur. Into this maelstrom steps Moktada, the prophet and redeemer of the Shia masses and of the armed fanatics who thirst to avenge past beatings received at the hands of the Americans and al-Maliki. One is reminded of the situation in St. Petersburg in 1917, with al-Maliki in the role of Kerensky and al-Sadr as the “plague bacillus,” Lenin. Admittedly the two men are, for the present, partners, which Kerensky and Lenin never were. But one cannot help but feel that, given the past, their paths must diverge. It may be one, or two, or four years before the situation plays out. But I can’t help but think that one or the other of these men is going to wind up dead.

 




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