Friday, September 28, 2012

Ayn Rand's America?

About two months ago, after Mitt Romney picked Paul Ryan for Vice President, I decided that I had to read Ayn Rand's novel Atlas Shrugged, which Ryan, along with other Republican luminaries like Grover Norquist and Ron Paul, like to cite for its brilliant insights about what was wrong with America. I needed two copies from two different libraries--I've been moving around a lot this summer--and the 1100-plus pages were intimidating, but I did it. It has left me sadder and wiser. Atlas Shrugged is by no stretch of the imagination a great book. When it came out in 1957 Rand, an apostate Russian Jew who had lived through the early stages of the Russian Revolution and emigrated to the United States, had made her reputation with The Fountainhead, whose hero, Howard Roark, was a brilliant architect seemingly modeled on Frank Lloyd Wright. (No, in case you are wondering, but I saw the movie.) Atlas Shrugged drew wretched reviews from most of the press and it was not, by the standards of the time, an enormous best seller, peaking at no. 4 on the New York Times list and spending about four months on the list altogether--this in an era when a blockbuster like Advise and Consent or Anatomy of a Murder could sit atop the list for a year. Rand was out of sync with her times, as she well knew, and she became a cult figure, like all extreme right wingers in those distant days. Although I have seen claims that the book still sells 500,000 copies a year, it's a safe bet that most of them go unread--but there's no question that not only Ryan, but Mitt Romney as well, have imbibed its philosophy, and my job this week is to try to explain it.

Atlas Shrugged combines an extreme and almost bizarre political philosophy with the atmosphere of a bad adventure story for young adults. It is in many ways a work of science fiction. While it seems to be set in contemporary America--that is, in the mid-1950s--the text does not include a single reference to real people, living or dead, or to real events that might allow the reader to situate him or herself. The only salient political fact it records is that the United States is an island of moribund capitalism in a largely Communist world of "Peoples' States." That world does seem to be at peace--war plays no part in the plot, although domestic lawlessness becomes a major theme of it. It is not even clear that the US Constitution remains in effect, since Rand refers to a "Legislature," not Congress, and while the book includes a laughable chief executive named Thompson, he is not identified as the President. The country is governed by decrees issued in Washington, and they shamelessly violate certain aspects of the Constitution, for instance by favoring some states over others. I don't think there are any references to elections, either, and certainly no election plays any part in the plot. Railroads play a key role in the story--the heroine, Dagny Taggart, and her brother James are the scions of a leading one--giving the yarn a nineteenth century flavor. The plot revolves almost entirely around five major characters.

Dagny Taggart is the first--a brilliant, visionary railroad executive who constructs a key railroad line out of Colorado. To do so, she uses Rearden Metal, a brilliant new invention made by Hank Rearden, an alloy mixing copper and steel capable of revolutionizing economic life. Francisco D'Anconia, a Chilean, is the heir of the world's richest copper mines. Another key character is a pirate--really, a seagoing pirate--named Ragnar Danneskjold. Last, but hardly least,is the mysterious John Galt, whose name has become a byword at the beginning of the book even though no one has any idea who he is. All these people are supermen and women, as we shall see, but Galt really takes the prize. While Rearden has invented a miraculous metal that he can produce as cheaply as steel, Galt, it turns out, has invented--but hidden from the world--a perpetual motion machine. All five of them seem to be in their thirties. In an Arthurian touch, D'Anconia, Danneskjold and Galt were the three most brilliant pupils of a particular professor of philosophy named Hugh Akston.

About 45 years ago, I took a course on French Communist and Fascist novels of the early twentieth century from Frederic Jameson, then a brilliant Harvard assistant professor, as I was to become myself ten years later. Atlas Shrugged is in a very real sense a Fascist novel, because although none of its heroes have the slightest interest in politics, the author is obsessed with the idea that they are supermen destined, in their own way, to rule the world. Meanwhile, however, the book is also permeated with a strong flavor of adolescence. Of the five heroic figures, only one, Rearden, is married--most unhappily--and none of them has any children. They are a heroic gang, and Dagny, significantly, has affairs with three of them in the course of her life. Rand tries to give these sexual encounters the cosmic significance that the union of human gods deserves, but her own severe limitations as a writer, combined with the rigid conventions of writing about sex that prevailed in the 1950s, make these scenes fall very flat. Neither pregnancy nor birth control plays any role in the plot at all. Rand's own life had something in common with these plot elements: she surrounded herself with acolytes, some of whom she seduced, but periodically purged them from her circle when they no longer lived up to her high standards.

It is now time to turn to the plot. Seen mainly through the eyes of Dagny Taggart and Hank Rearden, the American economy is collapsing because of attempts by most of its leadership--and the entire political leadership as well--to run it on altruistic principles. The United States is not socialist, but decrees go out freezing the market shares of every corporation, forcing holders of patents (like Rearden) to surrender their exclusive rights to make their products, and favoring cronies. While this is happening, leading economic figures--a banker named Midas Mulligan, an oil man named Ellis Wyatt--begin disappearing, often wrecking their enterprises as they do so. Eventually, Dagny Taggart discovers that the mysterious John Galt has lured them all into a valley in the Southwest by convincing them that they are, literally, too good to function in a corrupt world of "looters" that refuses to recognize their value even though it needs them to function at all. Galt has a plan: nothing less than to bring about the collapse of the American economy and society, so as to force its remnants to accept the leadership and the values of him and his friends. Using a trick of light, he has managed to make the valley invisible from the air--child's play, obviously, for a man who could invent a perpetual motion machine. Meanwhile, he and the other worthies--including both a distinguished physician driven away by socialized medicine and a composer who could not bear to share his beautiful music with an unworthy world--are living a simple life in which gold is the only medium of exchange. Dagny, though sorely tempted to remain, decides to return to the world as it is to try to save her railroad. Of couse, she can't--she finds only even worse destruction, including in the end the destruction of the magnificent bridge her grandfather had built across the Mississippi.

In the midst of this chaos, the chief executive decides to address the nation. It is at this point that Galt cuts into the airwaves and speaks for more than two hours, telling the world the unpleasant truths that it does not want to hear. You are dying, he says, because you believe in altruism, in the need of men to work for one another rather than for themselves. The intellect--by which he means the ability to make things other men need--is for him the only source of true value, but in today's world great intellects only serve the needs of "the Looters" who now run the show. There are two enemies of reason: faith, and collectivism of all kinds. There is no higher power, Galt insists, and no one owes anything to anyone but himself--except as a result of contracts freely entered into. No one, he insists, should feel the slightest guilt over achievement, wealth, or superiority to others, all of which are nothing less than his just deserts. "I am the first man," proclaims Galt, "who would not do penance for my virtues or let them be used as the tools of my destruction. I am the first man who would not suffer martyrdom at the hands of those who wished me to perish for the privilege of keeping them alive. I am the first man who told them that I did not need them, and until they learned to deal with me as traders, giving value for value, they would have to exist without me, as I would exist without them; then I would let them learn whose is the need and whose the ability--and if human survival is the standard, whose terms would set the way to survive." Beneath the libertarian philosophy here, it seems to me, is a childish tantrum, a scream that I and I alone know what the world needs, and you shall all die if you do not give me exactly what I want. Galt lives out this fantasy.

Nor is this all, for at one point, Galt proposes a theory of labor-management relations dear to the hearts of many American businessmen. "When you work in a modern factory, you are paid, not only for your labor, but for all the productive genius which has made the factory possible: for the work of the industrialist who built it; for the work of the inventor who waved the money to risk on the untried and the new, for the work of the engineer who designed the machines of which you are pushing the levers, for the work of the inventor who created the product which you spend your time on making, for the work of the scientist who discovered the laws that went into the making of that product, for the work of the philosopher who taught men how to think and whom you spend your time denouncing. . .How many tons of rail do you produce per day if you work for Hank Rearden? Would you dare to claim that the size of your pay check was created solely by your physical labor and that those rails were the produce of your muscles? The standard of living of [a medieval blacksmith] is all that your muscles are worth; the rest is a gift from Hank Rearden." How many of the American industrialists and financiers who have moved literally millions of industrial jobs offshore over the last forty years have at some level been animated by feelings like those, I wonder? Surely they have had no trouble concluding that they have every right to build Apple products, for instance, in China rather than in the United States, where wages would have been much higher.

The last frantic 200 pages or so of the book revolve around the Looters' attempts to force Dagny, Rearden, and eventually Galt to do their bidding to restore public confidence. Galt is captured because he returns to New York City out of love for Dagny, who leads the authorities to him. Then he is tortured with electric shocks in an attempt to force him to give in, but stoically refuses. (The scene has obvious echoes of 1984, but Galt, unlike Winston Smith, can resist anything.) Again and again Rand drives home the lesson that her supermen can take anything that ordinary mortals have to hand out and come back for more, and the climax occurs when Dagny, Rearden, D'Anconia and Dannerskjold together free Galt from a couple of hundred guards, relying on a few pistols and their force of personality. Then our heroes decamp again to the remote valley to wait for the final collapse of the United States as we have known it, and on the last page, Galt announces that the time for their return has come.

After finishing Atlas Shrugged I understood how the talk show host Mark Stein, who sometimes subs for Limbaugh, could have explained to his listeners that the American economy would not recover until the Koch brothers were allowed to make and keep every penny that they possibly could. Rand couldn't have said it better herself. But more importantly, I understood not only why Paul Ryan had the effrontery to tell the AARP that Obamacare had to be repealed and Medicare drastically reformed, but also why he smirked at them when they booed him. They were merely confirming their status as unworthy looters accustomed to living off their betters. Ryan has said that Rand inspired him to enter public service, which can only mean that his idea of public service is to remove all obstacles to getting rich. And having seen Mitt Romney talk about the 47% of our society who see themselves as victims for whom the government has a duty to provide everything they need, I have to think that in his heart of hearts, this is the way he sees the world, too.

Rand, for the record, had no clue about the workings of a modern economy. What never occurs to Galt, evidently, is that without wages higher than those of a blacksmith, her supermen will find no market for their products. One of the things that made the New Deal great was the recognition that redistribution of income was an economic necessity, rather than a moral right. Germany, more than any other society I know of, still realizes this today and prospers as a result. But as Jonathan Chait noted in an excellent piece on Rand a few years ago, Rand is far more interested in her view of morality than economics. Rich people are morally superior--an idea that naturally appeals to them. Of course, today's superrich--with the obvious exceptions of Bill Gates and the late Steve Jobs--differ in one major respect from Rand's heroes: instead of new metals and perpetual motion machines, they make credit default swaps and hedges. But since Rand is convinced that income correlates perfectly with moral worth, as long as it's "earned" rather than "looted" from others by taxes, her acolytes have no trouble coping with that difference.

NPR recently did a story about Rand's influence on Capitol Hill. I quote:

"Every time you submit to a regulation, it diminishes your liberty," says Republican Rep. Steve King of Iowa, speaking just off the House floor a few weeks ago. King says he loves Rand.

Freshman Rep. Mick Mulvaney, a South Carolina Republican, has read Rand's novels six or eight times each.

"It's almost frightening how accurate a prediction of the future the book was," Mulvaney says.

In Atlas Shrugged, which Rand considered her masterpiece, the wealthy corporate producers are the engines of the American economy, but they are constantly stymied by invasive legislation and terrible government regulations.
The painting of Ayn Rand by Nicholas Gaetano that was used for a U.S. postage stamp.
Mark Wilson/Getty Images

The painting of Ayn Rand by Nicholas Gaetano that was used for a U.S. postage stamp.

That's exactly what Florida Republican Rep. Allen West sees happening in America today — and, he says, it's very dangerous.

"If you start to demonize a certain segment of your society that are the producers, eventually they'll stop," he says.

That's just what they did in Atlas Shrugged. Rand's wealthy heroes go into hiding, leaving behind the welfare class — Rand calls them "the moochers" — and the government, or "the looters."

Put in today's language: "Job creators in America basically are on strike."

This idea that Boehner put forth in a recent speech before the Economic Club of Washington, D.C., could have come straight from Atlas Shrugged.

Businesses, Boehner said, need to be set free. Instead, "they've been antagonized by a government that favors bureaucrats over market-based solutions. They've been demoralized by a government that causes despair, when what we really need is to provide reassurance and inspire hope in our economy."

Boehner uses the language of slavery when he says, "We need to liberate our economy from the shackles of Washington."


In my opinion such fanaticism has an ironic source. I am quite convinced that since earliest childhood, each of us has known in our heart that we depend in thousands of ways upon our fellow men and women. Because they are so often undependable, this can be frightening at any age. In adolescence, when so many of us discover that we have feelings that our parents would not accept, it's easy to decide, in reaction, that only our feelings count. Rand appeals both to our fear and resentment of dependence on others--by claiming that the great masses depend upon a few supermen who should rule the world--and to the adolescent belief that no one else matters. I have often said that few historical forces are more powerful than a bad conscience, and even Mitt Romney must have trouble explaining to himself exactly why his life is worth hundreds of millions of dollars while others' lives accumulate almost nothing. On that fateful day in Florida, he shared his thoughts on that matter with some of his fellow rich. As for politicians like Boehner and Ryan, they owe almost everything to the superrich who fund their campaigns. They certainly can't claim to be acting like Randian supermen themselves, but at least they can enable them. And if doing so wrecks the American economy and reduces millions of us to poverty, well, we deserve it.

"Every epoch is immediate to God," wrote the founder of modern history, Leopold von Ranke, a century ago. To an irreligious person like myself, that means that all of human history reflects one part or another of human nature--and selfishness and feelings of entitlement are surely just as much a part of human nature as feelings of solidarity, common purpose, and a common fate. What we might have learned from the nineteenth and twentieth centuries is that no society based completely either on solidarity or on selfishness can survive. Yet in this crisis as in the last one--chronicled so brilliantly by Orwell--more and more people take refuge in empty, reassuring certainties, and the educational system is not doing much to help.

Mitt Romney and the anonymous spectator at his fund-raiser last spring performed an enormous service by bringing his remarks about the 47% to light. The Obama campaign and its surrogates are already screening devastating ads based upon it, and I'm sure there will be more. One of the most depressing aspects of the last decade or so is the extent to which Randian ideas have filled an intellectual vacuum. Educated Americans in particular have lost any real sense of who our fellow citizens are and how they live--and how our economic health depends, in the long run, upon theirs. Now we may start paying attention to the plight of families living on $25-50,000 per year--the families whom the federal tax code, as I pointed out last week, now frequently exempts from income taxes, but who are contributing a great deal to society through other taxes while struggling to make ends meet. It is beginning to look as if the right-wing tide has peaked. Some day, Ayn Rand will return to the obscurity which she so richly deserves.

Sunday, September 23, 2012

A Note on ads and false emails

Many of you have noticed that there are between one and three ads on this blog, under the archival listings on the right-hand side of the page. You may also be wondering why today, for instance, the ad is for the Romney campaign. I think I can explain it.

Google adsense picks the ads, based I presume on where people who come here are coming from and where they go afterwards. The fraudulent email with my name on it comparing Obama to Hitler is still circulating and is still a significant source of traffic for this blog--and will probably continue to be so throughout the election season. Snopes.com is now the main referring site, too, even though it only accounts for a small fraction of hits, and that's another tip-off that that email is bringing some people here.

The ads make me about $100 a year in a good year, by the way.

See this weekend's new post below.

Friday, September 21, 2012

Jobs and Taxes

47% of Americans, Mitt Romney told a room full of well-off Republicans last May, pay no income taxes, believe they are victims entitled to government housing, health care, and food, and will therefore be deaf to his platform of lower taxes and will inevitably vote for Barack Obama. Romney's chances of winning the election were already only about one in four, and the fallout from these remarks should reduce them further. They are however a fascinating commentary not only on how rich Republicans think, but on the consequences of the economic changes of the last few decades.

The image of a huge mass of undeserving Americans wasting their tax money has of course been part of Republican campaign rhetoric since the New Deal. Their rhetoric has had an effect, and dependency in certain key categories has been reduced. Bill Clinton gave into the Republicans in the midst of an election year and ended welfare as we knew it--and it had never been a truly big-ticket item in the federal budget anyway. The growth in "entitlements"--a very prejudicial word whose history deserves to be studied in depth--relates mainly to Social Security, Medicare, and Medicaid, especially the last two. Paul Ryan has made clear that he would like the last to to shrink, leaving older and poorer Americans without resources to pay for health care. In a week or two at the most, I shall have a long post--an essay, really--shedding some light on the intellectual roots of that idea. But I want to focus today on something else, on the make-up of that 47% and exactly what it reflects about how America has changed. To begin, we must review the data on who doesn't pay taxes, and why, available here.

Of the 47% of households not paying federal income tax, fully 43% of them--nearly half--are elderly. Most or all of their income, presumably, is Social Security, some of which is tax exempt and which is not high enough to make them pay taxes after standard deductions anyway. But Romney pays no penalty for attacking them, because they do not see themselves as worthless freeloaders. They feel, with perfect justice, that they have earned their benfits and do not see themselves as victims. They should however have the grace to realize that they are not paying for any genuine freeloaders lower down the age scale--but many of them clearly don't see that at all. In any case, if we take them away from our total of non-taxed households, we are reduced to 20% of households not paying taxes.

After the elderly the next largest group of households not paying income taxes--30% of Romney's 47%, or 14% of households--are benificiaries of the earned income tax credit, which allows the working poor--now including households earning as much as $45,000--to claim credits of several hundred dollars per child. This has been our principal response to the stagnation of decline of real wages in the lower half of the income spectrum, and it has been steadily increased under both Republican and Democratic Administrations. What Romney and his audience should have understood--but naturally didn't--is that this 14% of households are hard-working, poorly paid Americans, whose minimum wage is substantially lower in real terms than it was four decades ago, and who need in effect to be exempted from federal income tax to allow them to live at all. The federal government does have a serious long-term fiscal problem at the moment, and one reason is that so many people are exempt from taxes, but the solution is to pay them truly living wages, something Republicans consistently oppose. As it is, these people--the working poor--are NOT living on government entitlements, but we have had to exempt them from the income tax to allow them to subsist. Meanwhile, they pay an effective 13.2% payroll tax anyway, which is the maximum that Mitt Romney has been paying on his millions of income every year. These people are probably the most highly stressed people in the country right now, and they are the ones who have the biggest reason to resent Romney's remarks. Obama ad-makers, take note.

Another 17.6% of the 47% fall into three categories. The first receives a large portion of its income from other cash transfers, including Supplemental Security Income, which goes mainly to disabled people, and Temporary Assistance to Needy Families, what is left of the welfare program. It may also include people trying to live on unemployment benefits. That 2.8% of all households is probably the only group of households that comes close to fitting Romney's description of the entire 47%, and that numerical discrepancy should disqualify him from serious consideration as President. The other two significant categories are those whose standard deduction lowers their taxable income to zero--in other words, more working poor and unemployed people with little or no income at all--and those benefiting from "education credits" who evidently are spending a large portion of their income on education to better themselves. We have now accounted for 74% of the non-taxed households in the country, and very few of them resemble Romney's image of them all.

And what about the rest? I won't detail the whole list, but I want to mention two categories. 5.1 % of untaxed households avoid income taxes with a mixture of tax-exempt interest and itemized deductions and 1.3% pay "reduced rates on capital gains and dividends (zero rate on gains and dividends that would otherwise be taxed at 10 or 15 percent, 15 percent rate combined with credits)." I don't understand that last category and I would appreciate hearing from anyone who does, but this total of 6.4% seems to be composed of extremely well-off Americans. Ironically, it is almost identical in size to the group exempted from income tax because their income comes from disability or TANF--the closet group, once again, to Romney's definition of freeloaders.

What all this means is fairly clear and I've written about it here before. The income tax is more progressive than it was, say, at the height of the Reagan era, although less so than it was under Clinton. (Another interesting fact that is beginning to emerge is that people making from $50,000 to perhaps $200,000 probably pay the highest share of their income in taxes of anyone, and a much higher share than the superrich.) A significant number of low-income working Americans are in effect exempt from it, for the very good reason that they can't afford it. But the tax system as a whole is much more regressive because, to repeat, these working poor are paying a full 13.4% of payroll taxes (counting the employer contribution as employee income, as most economists do.) We are all very concerned right now with the problem of unemployment, but I'm not so sure that it's a bigger problem, in the long run, than our expanding low-wage economy, the outcome of decades of globalization and the erosion of organized labor. That is what is leaving more and more Americans without income to fuel economic growth.

I have not had time to study the Republican reaction to Romney's remarks, although I heard Sean Hannity explain the night they were revealed that what Romney said was absolutely true. (No surprise there--not a week goes by without him mentioning the same figure.) Romney himself did not back away from them. I think they would doom him to a landslide defeat in a country whose educated population understood the basic facts of our economic life, but we are no longer such a country. The average voter doesn't understand that aside from the elderly and those receiving unemployment benefits, there aren't even 5% of households living off the government. He will probably lose, but the faith-based ideology he is selling will remain strong and influential in Washington. I'll have a great deal to say in the coming weeks about the sources and content of that ideology, because yesterday, after a prolonged struggle of six weeks, I completed a project I had undertaken in order to understand what has happened to my own country. I finished Atlas Shrugged.



Saturday, September 15, 2012

Immediate causes and long-run causes

About 2500 years ago, Thucydides the Athenian posited the difference between the immediate and long-term causes of wars. The war between Athens and Sparta ostensibly began because of a war between Corinth and Corcyra, a revolt in the Athenian client of Potidea, and Athens' blockade of neighboring Megara, but Thucydides adds that what really made war inevitable was the growth of Athenian power and the fear that that occasioned in Sparta. In the same way, the video The Innocence of Muslims and the killing of three American diplomats, including Ambassador Christopher Stevens, is merely the tip of a very large iceberg that broke away from an arctic glacier many decades ago, and a frightening symptom of what two related trends have made possible.

After nearly 70 years of relative peace around the world, we have forgotten that our civilization was originally established by force. Violence ruled the world directly for much of mankind's history, and there was no taboo against the use of private violence even as recently as 1000 years ago or less in Europe. As university students once learned in western civilization courses, monarchies established bureaucratic forms of government in the seventeenth and eighteenth centuries, while the English-speaking world established genuine traditions of self-government. A parallel development occurred in the Ottoman empire, which ruled an astonishing conglomeration of peoples, including millions of Christians and Jews, for centuries. Then the American Revolution gave the world the idea of individual rights and true self-government, which repeatedly set the world on fire over the next 150 years. In the first half of the twentieth century those ideas tore apart one empire after another in Central and Eastern Europe and the Middle East. The new nations that emerged all followed some form of the western bureaucratic or democratic model, but the process was not accomplished without millions of deaths. Then in the 1990s threev more multinational states disintegrated--two of them, the Soviet Union and Czechoslovakia, without significant bloodshed.

The Arab world for half a century has been ruled by bureaucratic and military dictatorships, some of them heavily supported by western nations, including the United States. Meanwhile, thanks largely to the Israeli-Palestinian problem, the west in general and the United States in particular have become more and more unpopular among the Arab masses. In the 1990s, the late political scientist Samuel Huntington, who was never afraid to take a big idea and run with it, foresaw a clash of civilizations. Tragically, in the first decade of this century, an American President, George W. Bush, did his best to make that prophecy come true. I was struck that one of the two people behind the video that has outraged so many Muslims, Steve Klein, is a Vietnam veteran with a son who was wounded in Iraq. No matter how noble George W. Bush's purposes, the conquest of a Muslim nation was certain to arouse hatred throughout a region where memories of colonialism are still fresh. Barack Obama tried to show in his first year that his heart was in the right place, but he esa\calated the war in Afghanistan nonetheless. Meanwhile, among the tens of thousands of American casualties are a certain number who have come home bitter, or who have aroused bitterness among their families. The filmmaker, Nakoula Basseley Nakoula, has now been revealed as a Coptic Christian--a minority in genuine danger in Egypt--and a petty criminal. And that leads us to the truly novel and terrifying aspect of these events.

In the nineteenth and twentieth centuries revolutionaries and anarchists often tried to set revolutions off with violent acts. The most successful, undoubtedly, was Gavrilo Princip, the Bosnian terrorist who assassinated the Archduke Franz Ferdinand in 1914, triggered the First World War, and, although he did not live to see it, helped bring about the creation of Yugoslavia. But as late as 9/11/2001, such an act had either to kill a leading political figure, or several of them, or kill a large umber of innocents to have widespread consequences. That is no longer the case. A single internet video or cartoon from a newspaper is enough to send thousands into the streets, threatening the safety of westerners in much of the Muslim world and making a mockery of international law. It seems inconceivable that this will be the last such incident.

And these demonstrations are happening, of course, because the new governments in nations that have overthrown dictatorships lack the authority of their predecessors. It will take years for them to establish legitimacy, and the process, as in the great transformations of the past, is likely to be violent. Crucially, many Muslims obviously do not respect western ideas of free speech where religion is concerned. Attacks on Mohammed strike thousands as deadly insults reflecting shame not only on their perpetrators but upon foreign authorities who allow them to happen. In the age of the internet we cannot stop such attacks from arousing notice.

Two trends within the United States will also make things worse. The Republican Party is so desperate to return to power that it will try to exploit any setback for the US abroad and blame it on President Obama. He is in no way to blame for any of this, but we are already hearing that greater firmness would have avoided these problems. One would have thought that Republicans would know by now that attempts to impose our will and our values on Muslim nations do not work. Prominent Americans, however, cannot shake their sense of superiority. In a column two weeks ago Thomas Friedman bitterly criticized the new Egyptian President, Mohammed Morsi, for attending a non-aligned summit in Teheran. I felt like screaming in Friedan's ear that Morsi does not care what he thinks, and that to Muslim nations the pariah in the Middle East is not Iran, but Israel.

The other American trend is now forty years old, and relates to our changing attitude towards free speech. I remain totally opposed to any restrictions on free speech, include laws against hate speech, but the time has come to face a necessary truth: free speech has to be exercised responsibly to work. Beginning in the 1960s the idea has grown that the purpose of speech is to be outrageous, and that the more outrageous speech might be, the more protection--if not celebration--it deserves. Free speech that, for instance, points out abuses by our own government or calls attention to real dangers overseas has enormous value, but free speech that simply insults millions of Muslims does not. Yet Mitt Romney initially criticized the Embassy in Egypt for attacking the video that caused the trouble.

The United States in my opinion is in for a rude awakening, because we simply have no means of imposing our values upon the rest of the world any more. As I have mentioned many times, governmental authority is in the midst of a huge long-term decline that began in the 1980s, if not the 1960. Populations have grown worldwide while armies have shrunk. (One of the half-dozen nations remaining with a large army by historical standards is, not coincidentally, Syria.) For the first time, the mass of people in nations like Egypt, Tunisia, Yemen, and Iraq are asserting their rights--and they do not share our values. That, sadly, will make effective, informed diplomacy all the more necessary. We could not afford the loss of Christopher Stevens.

Saturday, September 08, 2012

The President's Speech

Barack Obama’s acceptance speech showed him at his best—so much so that Republicans raced to their computers to argue that it had fallen flat. It didn’t: the enthusiasm factor within the Democratic Convention was far, far higher than that within the Republican one throughout the proceedings. Obama rediscovered his candidate’s voice, which ironically, in my opinion, is much more presidential than what we have heard from him for most of the last four years. He spoke in firm, measured cadences, and I noticed only one brief moment when he affected a touch of his put-on down home accent. He also returned repeatedly the great problem of our times, but the gingerly way in which he handled it showed that any real solution is many years away.

Obama began with an echo of Franklin Roosevelt, to whom he actually referred once, talking about the need to give today’s Americans the chances that his maternal grandparents had as a result of the Second World War, the GI Bill, and the general commitment to the well-being of ordinary Americans that was the hallmark of the New Deal and the decades that followed. He argued, rightly, that the Republicans offered nothing but a return to the policies of Ronald Reagan and George W. Bush—the policies that produced the recession. He spoke proudly, with good reason, of the auto industry bailout, which is very likely to win him the election because of its impact on Michigan and Ohio. And then, later in the speech, he spoke at length about the nation’s biggest problem. I quote:

“As Americans, we believe we are endowed by our creator with certain inalienable rights— rights that no man or government can take away. We insist on personal responsibility and we celebrate individual initiative. We're not entitled to success. We have to earn it. We honor the strivers, the dreamers, the risk-takers who have always been the driving force behind our free enterprise system— the greatest engine of growth and prosperity the world has ever known.

“But we also believe in something called citizenship— a word at the very heart of our founding, at the very essence of our democracy; the idea that this country only works when we accept certain obligations to one another, and to future generations.
“We believe that when a CEO pays his autoworkers enough to buy the cars that they build, the whole company does better.

“We believe that when a family can no longer be tricked into signing a mortgage they can't afford, that family is protected, but so is the value of other people's homes, and so is the entire economy.

“We believe that a little girl who's offered an escape from poverty by a great teacher or a grant for college could become the founder of the next Google, or the scientist who cures cancer, or the President of the United States— and it's in our power to give her that chance. . . .

“As citizens, we understand that America is not about what can be done for us. It's about what can be done by us, together, through the hard and frustrating but necessary work of self-government.”

That last line, of course, was an echo of JFK—but in far more tentative language. Obama was stating the basic, critical philosophical difference between the two parties. Is society an organism that thrives or falls together, or merely a field of battle in which the strongest must inevitably triumph? Is individual success, as Ayn Rand would have it, a mark of superior virtue before which we must all bow? (I recently heard Mark Stein, a stand-in for Rush Limbaugh, explain that the economy would never recover until we allowed the Koch brothers to make all the money that they possibly could.) Obama is evidently counting on this contrast to win the election, and because most Americans still do not blindly worship the rich and many have some understanding of how men like Mitt Romney actually make their money, this will probably work. But meanwhile, he could not resist trying to exploit the gender gap as well—even to say “a little girl or boy” was too egalitarian, it seems, in an era when boys have a disturbing habit of growing up and voting Republican. The omission of boys got a huge hand from the audience, but I wouldn’t have joined in.
The values that Obama proclaimed have been under a devastatingly effective attack for more than thirty years now, and they have had enormous intellectual and institutional consequences. He could have gone much further. The idea of thinking about the well-being of an institution, rather than simply of its bottom line, has become almost unheard of, not only in corporations or teachers unions, but also, I regret to say, in universities. And if one cannot think about the genuine well-being of an institution and the people who need it, one cannot think about the well-being of society as a whole. And that is why, I think, that despite his somewhat inspiring rhetoric, Obama could offer so little in the way of specifics—much less give us any hope that his victory would allow him to realize any of his ideals to a substantially greater extent.

Obama called once again for the restoration of the Clinton tax rate on incomes over $250,000—but he cannot bring himself to suggest that ALL employed Americans should pay the rate that put the budget into surplus in the 1990s while keeping unemployment low. The tragedy is that he could make the latter measure happen—as he could have two years ago—simply by allowing the Bush tax cuts to expire at the end of this year, but if he compromises, as he did in 2010, he will probably be unable to increase the tax burden, which the federal government really needs to do for many reasons. He did not suggest dropping the carried interest tax provision which allows hedge fund managers and bankers to pay just 15% while salaried Americans pay more than 30%. He spoke once of global warming, but he reaffirmed that he is committed, like the oil industry, to increasing domestic production of fossil fuels. He made no new proposal to deal with mortgages on underwater homes, now generally recognized as the biggest single failure of his Administration.
He confined his criticisms of the Republicans, too, to generalities rather than specifics—a sharp contrast with Harry Truman in 1948, who ran under circumstances that are in many ways very similar. Why not blast Governors Chris Christie of New Jersey and Rick Scott of Florida for turning down billions of dollars for mass transit projects in the midst of the worst unemployment since the 1930s? Why not lay out some specific infrastructure targets and link them to a jobs program? Most of all, why not state, in simple language, that the Republicans have fought everything he has tried to do since January 21, 2009, and point out how they have made it nearly impossible for the federal government to function by blocking every appointment that they could? Was he too frightened to play into Republican propaganda even to call for the election of a Democratic Congress? He never did.

And all this suggests why the very likely Obama victory—more likely nearly every day, according to the authoritative Nate Silver—will probably mean four more years of gridlock and economic stagnation, or at best, very slow growth. The country needs radical changes in institutions and values, but the two generations that hold power—Boomers and Xers—are, with very rare exceptions, not interested in them. The Democratic Party as well as the Republican depends too heavily upon huge contributions to suggest that marginal tax rates on incomes in the millions ought to be at least 50%--but that is the real answer to the problem of enormous wealth that is destroying our political process. An Obama victory would have the salutary effect of proving that even after Citizens United, the Presidency can’t be bought, but money will still rule in Congress, making any kind of New Deal reforms impossible for a long time to come. It is interesting that Warren Buffett, from the Silent Generation, is the only superrich public figure calling for higher tax rates on his own class. He remembers the day when this was the norm, and the economy thrived. Boomer Bill Gates, who has worked with Buffett on many other projects, hasn’t endorsed the Buffett rule.

The re-election of Obama may mean the beginning of the end of social issues as the focus of American politics—particularly with respect to gay rights. (The abortion issue, I am sorry to say, seems to touch such deep emotional chords that I am beginning to doubt that it will ever go away.) The Tea Party is a largely older movement, and Father Time will start cutting it back in the next four years. Ironically, professionals like Karl Rove will have do some serious rethinking about the Republicans' future, it seems to me, if Romney is badly beaten and Tea Party candidates do badly again. But I don’t think there will be a real rebirth of economic progressivism in my lifetime, because the trends have been running in the wrong direction for too long, and they have had too profound an effect. Perhaps the best the Paul Krugmans, the Warren Buffetts, and, yes, the David Kaisers can do is to keep the vision of a more economically just society—one which we all experienced in our youth—alive for new generations. The pendulum will eventually swing back, and a true historian must accept all this as a reflection of essential aspects of human nature.


Saturday, September 01, 2012

State by State

Let's begin with a riddle: what do Mississippi and New York have in common? Or Oregon and Florida? Or Louisiana and Maine? Or Massachusetts and Utah? In what category is Nevada tops in the nation, and North Dakota last? What key statistic appears to have no connection to the coming vote in the Presidential election?

The answer, ladies and gentlemen, is simple, and, to me, quite shocking: the unemployment rate. In the midst of one of our most bitter debates on business climates and the role of government, what kind of state you live in appears to have almost nothing to do with your chance of finding a job. Even more amazing, your local unemployment rate has very little to do with how your state is likely to vote in November.

Let's start with a basic statistic and a fundamental fact: our national unemployment rate, 8.3%, is extraordinarily high several years into a recovery--unprecedentedly so since the Great Depression, which was much worse. But that rate is very far from uniform across the country, and an unemployed worker's chances of finding a job are much, much better in certain places than others. The median state unemployment--that is, the figure for the state in the middle of the table--is 7.6%, indicating that unemployment is higher, on the whole, in more populated states than less populated ones. Five states have unemployment rates of 5.0% or less--a figure which, not too long ago, would have been regarded as acceptable. Four of them are quite rural--North Dakota, Nebraska, South Dakota, and Vermont--and at least two of them, North Dakota (the nation's leader at 3.0%) and Oklahoma, are in the midst of energy booms. But politically, these states cover the entire perspective, from darkest red (Oklahoma) through purple (the Dakotas, certainly in state elections) to Vermont, probably the most liberal state in the country. And this pattern continues from one end of the table to the other. (The data I am using is here.)

The states with unemployment from 5.3 to 5.9% are somewhat more similar. They are Iowa, New Hampshire, Wyoming, Minnesota, and Virginia. Virginia is the most urbanized state that we have encountered so far, and one that includes a great many federal employees. It is also the first from the old Confederacy on the chart, and the last one we will see until no. 19, Texas. Four of them are definitely in play in this election and they are all relatively rural. But when we get into the six per cents, further anomalies emerge. Dark red Utah, with 6.0% unemployed, is virtually tied with Massachusetts, at 6.1%, the solid blue, once-industrial state with by far the lowest unemployment as we speak. Then come Kansas, Hawaii, Montana, New Mexico and Delaware--two red and three blue. Twelve states have unemployment rates in the seven per cent range--still, let us remind ourselves, below the national average. They are Maryland, Missouri, Ohio, Texas, Arkansas, Wisconsin, West Virginia, Idaho, Louisiana and Maine (the median states), Alaska, and Pennsylvania. I was very surprised that Maryland's rate is a full point higher than Virginia's, since I would have thought the federal government employed a larger proportion of its population, but so it is. This is a more urban group, all in all, than the states we have looked at earlier, and it doesn't include any dark blue states, but it's the most significant group electorally. The election will be decided in large part in Ohio and Pennsylvania and both of them have lower than average unemployment. In Ohio, that is largely because of the auto industry bailout that Mitt Romney opposed.

Moving into 8.0% or more--and in fact, nearly all these states are slightly above the national average--we find Indiana, Alabama, Arizona, Colorado, Kentucky, Tennessee, Connecticut, Washington, Oregon, Florida, the District of Columbia, and Illinois. Five of the first six are pretty solid red (Indiana is not going to vote for Obama again), five of the last six are reliably blue, and Florida, the biggest state in population we've run into so far, is very close. The nine percenters are perhaps the weirdest list of all, beginning with Mississippi and New York, tied at 9.1%, and continuing through Georgia, North and South Carolina, and New Jersey. New York, with one of the largest state governments in the country, has the same unemployment as Mississippi, with one of the smallest. Significantly, New York, New Jersey, and Connecticut, the homes of the 1% from the financial industry, still have some of the highest unemployment rates in the country, and Chris Christie's much-touted budget cuts--including his rejection of a new Hudson River tunnel--do not seem to have done any good. Then, trailing the field, are California (10.7%), Rhode Island (10.8%), and Nevada (12.0%)--three states that on the surface appear to have very little in common.

If some one were to use this table to start a spreadsheet and add columns for per capita income, spending on education, per cent of population in prison, minority population, illegal immigrant population, state taxes as a percent of income, percentage of houses in foreclosure, and state employees per capita, I suspect that some striking patterns would emerge, and we might get some practical ideas about exactly what needs to be fixed in our economy. The table very obviously fails to support Republican campaign rhetoric: small-government, low tax states do NOT at the moment have higher employment, but neither, as a group, do the blue states on the two coasts. But I am most depressed, in an odd way, by the lack of correlation, except in a few key cases like Ohio, between unemployment and how people are going to vote. Cultural and, yes, racial factors and clearly more important determinants of presidential voting than the state of the local economy. States at every point in the table will divide fairly evenly in the coming election. I do think a Republican victory would do more harm to the economy than a Democratic one, but if you really want to know who has a clue about how to fix the economy, the answer, clearly, is: no one.