Wednesday, January 30, 2008

WalkAway.Com

A new trend to keep an eye on: businesses based on the premise that growing numbers of people will rather choose to ditch their devalued houses rather than pay their inflated mortgages, which it turns out, were huge bets that such leveraged "investments" would reap mind boggling dividends. Absent this expected if unjustified return on investment, the houses are just now so much worthless detritus to be thrown in oversized trashbins.

One can hardly be surprised at the vulture economy that will spring up as the carcasses begin to putrefy. However, what is most arresting for me in this posting is the growing evidence of shamelessness among our middling debtor class, a vice that can be itself directly traceable to the elites of our society, in particular those quasi-aristocrats who were the trustees and caretakers of our society and its norms. These people of visibility and distinction in settled communities - established businessmen and storekeepers, attorneys and doctors, clergy and civic figures - have reneged their status as responsible keepers of their community and as conveyors and exemplars of its norms, and now ironically are reaping the harvest that they have sown.

Here is an exchange between Steve Croft of Sixty Minutes and a real estate agent who has been witnessing these "walk aways":

Kroft observes to real estate agent Kevin Moran. "There was a time, I think, when people felt really bad about not paying off a debt."

"Yeah, I think in those days, loans were made by your local banker or building and loan associations or savings and loan," Moran replies. "They were guys you saw in the grocery store. They were on the little league team with you, the PTA, the school. And I think as mortgages became securitized and Wall Street became involved, they became very transactional and there was no relationship built with the borrower and the lender. And I think that makes it easier for someone to see it as an anonymous party at the other end of the transaction and just walk away from it."

"Just a business decision," Kroft says.

Implicit in this segment is that families are not entitled to make "business decisions." But you know who is entitled? Why, businesses of course. When businesses laid off 1.5 million workers in 2007, it was purely a "business decision." When Wall Street banks "wrote down" more than $100 billion in losses in 2007, it was purely a "business decision."

Look for families to become more comfortable making "business decisions" of their own in 2008.


As the Greeks well knew, the vital ingredient for shame - and, correspondingly, honor - to function in society was immediacy and care for the people in one's polis, their views and opinions, the esteem they bestowed or withheld. Elites were honored in our society to the extent that they were themselves exemplars of the virtues that they both preached and expected of others in turn. The current widespread hostility to all these elites - Wall Street, lawyers, doctors, politicians - reflects the breakdown of a covenant of respect and honor. As our economy has become more abstract and distant, as our "communities" are compared to bedrooms (or perhaps, more aptly, hotel rooms), as our sense of continuity between past and future has been undermined by rampant mobility, impermanence and instability, there can be little wonder that "shamelessness" has spread like a contagion through our society. Such lack of shame and disregard of honor began at the top and now ripples downward through the feeding chain of class and status. Indeed, the idea that one would walk away from a house requires just such a perspective - it's just a house, made of cheap 2x4 studs (that aren't even 2x4 anymore, but a bit smaller) and drywall. We live not in homes, a vital part of a neighborhood, a town, a community - but in cheap structures without inherent worth. Just as our economy has shown us no sense of obligation and concern, so too in return are ordinary people shucking off the social norms or covenants that bound us in communion and fidelity. There is a great unraveling taking place, and at times I do truly fear for the future of this great nation.

Ancients vs. Moderns, Redux

As ever, the Greeks win...

See the agon here...

Tuesday, January 29, 2008

Better Than the Book

Eric Miller, a smart author of a dissertation, articles and a forthcoming biography on the social critic and historian Christopher Lasch (and, for more on Lasch, see this and this), has written an extremely generous and, dare I say, insightful review of my book "Democratic Faith." The review appears on one of my favorite online sites, "Books and Culture," and indeed has been selected as its "Book of the Week" (who said I'll just be a flash in the pan...?). What's most gratifying about the review is the confidence it engenders that what I wrote was properly and correctly communicated. I don't mind disagreements with the argument - and there have been not a few - but what one hopes for above all is that the argument is understood. Eric's review provides comfort that I was able to convey what I'd hoped. It's as good a review as one could hope for, and I'm grateful for the serious and sustained read. The book is a slog, I'll admit, but Eric's summary is as good a substitute as I could hope for. Read it!

Also, due out any day is the newest issue of the fine journal "Perspectives on Political Science" - edited by our friend Peter Lawler - which will feature a symposium devoted to the book. Commentators included Joe Knippenberg of "No Left Turns" fame, Susan McWilliams of Pomona College, Rafe Major and Daniel Cullen of Rhodes College, and Mike Andrews of the Jack Miller Center. Yours truly provided the final brief essay entitled "Reply to My Admirable Critics." I'll post it here eventually, but only after the publisher has had a chance to sell lots of copies.

Many thanks for such serious readers. And, to the readers of this "blawg," which this month surpassed 5,000 monthly readers. Not bad for a kid from Windsor, Connecticut!

Monday, January 28, 2008

The Grown Up Wing

John Edwards has been touting himself as the sole representative of "the Grown Up Wing of the Democratic Party." This from the man who has taken every opportunity to lambaste "the Corporations" as the evildoers of our age, and assumes that we, the "consumers," have had nothing whatsoever to do with their growing profits. As long as we continue to demand "everyday low prices" instead of seeing other things of value that go beyond the cheapest produced goods - such as local ownership, healthy commercial and residential downtowns, and profits that are reinvested in the communities where they are earned - we have little right to blame it all on the corporations. Edwards is among the worst at indulging our adolescent belief in our utter blamelessness.

Huckabee, once again, is proving himself to be the most grown-up (if still deeply flawed) among the current crop of candidates. While far from perfect - his Confederate flag comments were a pathetic effort to court the Secessionist vote - at least when it comes to some of the more real and pressing issues facing our nation, he's the only candidate who is willing to chasten our childishness. Particularly worthy of praise is an exchange summarized here (you can search the Bloomberg site for a video of the entire interview - unfortunately I'm not able to get the link to work) in which Huckabee disagrees with the near-unanimous orthodoxy that the nation should print checks for every working American in order to "stimulate" the economy. Huckabee notes that we will be borrowing this $150 billion from the Chinese in order to buy imported plastic goods made by the Chinese. He explicitly questions whose economy we're supposed to be helping, and it's a valid question in an age when our own economy rests on our ability to continue to borrow money from the Chinese so that we can afford to buy plastic imports from Chinese factories and oil from Saudi tyrants. We will pay any price, bear any burden, to continue our profligacy and burden our children with the debt we accumulate today.

Still, anyone who runs for President and seeks to gain votes from a pampered public can't afford to tell the whole truth. And Huckabee - while admirably questioning the current stimulus package - in turn fumbles when he proposes that the this $150 billion (which we will still be borrowing from the Chinese - a fact he somehow neglects to revisit) should instead be invested in improving American "infrastructure." This is a fine idea - particularly the stress upon creating American jobs and improving our own industries - except the only infrastructure he mentions is the building of new roads. He therefore proposes to continue the Great American Build-out which has led to our current housing and financial crisis. Our effort to continually increase American home-ownership with a background assumption that housing will substitute for savings, our cheap money policy that has supported that aim, and the build-out of the American suburbs ever farther away from places of work, commerce and worship has led us to a point at which our banks will make any loan to sell more houses, our housebuilders will pave over any farmland regardless of the fecundity of its topsoil, and our commuters will drive any distance and pay any price for petroleum purchased from autocratic regimes. So, the proposal is to borrow more money to finance an unsustainable future. No matter how you package it, we're stuck with the fact we're breathing the last oil fumes of a Ponzi scheme.

My own modest proposal suggests why I won't be moving into the White House anytime soon. I propose that we tighten our belts quite a bit - that we impose on ourselves a hefty gas tax and stop driving so much and overheating and overcooling our huge houses. We might use this revenue to afford tax breaks for energy efficient heating, appliances, and automobiles. Further, we take some of these funds and indeed invest in our infrastructure - particularly light rail, public transportation and "in-fill" construction in our current suburban and commercial areas. This will require changes in our zoning laws to allow mixed-use neighborhoods, combining residential, commercial, civic and religious buildings. Such an investment will have enormous pay-offs in job creation (in keeping with Governor Huckabee's proposal) and the long-term decline of energy consumption. It will also foster neighborhoods with increased interactions beyond "reality TV" that might increase the possibility that more people will be encouraged to grow up and stop living the illusion that their decisions have no effects beyond how much money they spend for goods. This would be the best investment for the future of our nation, for our children and the prospects for constitutional democracy.

Our current course continues to be to put off until tomorrow what would be less costly - but, admittedly, quite dear - today. Among our economists, one of the very few who recognizes the contemporary pathology of growth at any price is James Grant, whose writing I've commended before, and who this weekend authored a smart op-ed in the New York Times about the Fed's current inflationary policies. Grant notes that our current obsession with undergirding various bubbles has the effect of inflating the next bubble, and in particular dissuades "investors" from avoiding otherwise unconscionable levels of risk. I am reminded of a conversation that I had this summer with a smart 20 year old from an honors program at another school who lectured me that we've gotten so smart that we've eliminated economic downturns. He also regaled me with a loving description of his stock portfolio, one that might not be the source of such braggadocio in recent weeks.

If we do not grow up - and quickly - we are likely to know the definitive result of Benjamin Franklin's response to a question that was posed to him at the conclusion of the Constitutional Convention - "What form of government have you created, Sir?"

"A Republic, if you can keep it," was his answer. To this day, the verdict is still out.

Monday, January 21, 2008

Diversity Training

The one article of faith that cannot be contested on today's college campuses is the sacredness of diversity. What diversity actually means is anyone's guess, since, while it's heretical to question any aspect of anyone's particular identity - whether biological or cultural - it's also apostasy to suggest that such identities are inescapable. We are at once to believe that identities are given and that they are chosen, that they are unquestioningly good yet also subject to "questioning" in our pursuit of "critical thinking." It just depends.

I'm not the first to point out that, while our diversity is not even skin deep, it stops well short of being tolerated in the realm of politics and ideas. As reported in today's edition of the "Daily Princetonian," the Princeton faculty has without exception donated to the campaigns of Democratic candidates thus far in this Presidential campaign. Only one Republican has received any donations at all from non-faculty - directed to Ron Paul, about as heterodox a choice imaginable. Yet we are told that this doesn't mean anything, that no one speaks of politics on campus and it has no impact on the tenor of the campus. I taught at Princeton for eight years, and I can attest, it's reflected in the everyday assumption that there can be no intelligent criticism of the reigning Democratic orthodoxies - mainly because the faculty makes sure that there is no one present to make such criticisms. The use of the pronoun "we" is positively chilling - as during a dinnertime conversation at the faculty club when one faculty member declared, "Now that John Rawls has shown us what justice is, why can't we just enforce it?" It's much easier to unselfconsciously use the word "we" when you can be certain that you know no one will object.

The absence of intellectual diversity reflected in the donation patterns at our leading universities is a deeper reflection of the absence of truly alternative views on our campuses. The two donations to Ron Paul are a case in point: the gamut runs from very liberal to very libertarianm - either that humans can institute perfect justice with government or in the absence of government. In both cases, what is wholly absent is a position that challenges our deepest modern orthodoxies - such as, that economic growth is an unquestioned good or that the earth was created for our personal comfort and exploitation. Our Rawlsians are indistinguishable from our Reaganites when it comes to the base reliance upon a growth economy as the basis for a good society (whether welfare or individualist), just as our "environmentalists" are as much techno-optimists as our free market libertarians. The future can only be bigger and better because that's the way it's been for the past century. Past performance is a perfect guarantee of future performance, isn't it? (perhaps not reflected in tomorrow's opening of the stock market, I fear...). The idea that there's diversity on our campuses is nearly as funny as the canard that we academics are creating "original research!"

Sunday, January 20, 2008

Everything Must Go...

An article in today's New York Times, echoed by a more-sensible than normal column by Maureen Dowd, calls attention to the firesale on American assets, now being snapped up at bargain prices by the countries that increasingly own us, China and nations in the Middle East. We can expect our politicians to begin denouncing these encroachments on American sovereignty - without noting for a moment that our sovereignty had already been compromised over thirty years ago. Our future is sure to prove that demagogues are not limited by party affiliation.

The sale on our nation began in 1971 when oil production peaked in the continental United States, and the nation went from being a net exporter of oil to a net importer. From that day forward we began selling overseas everything of value that we had built up over the preceding hundred years or so. Here's why: the extraordinary energy bonanza of the oil age made possible the massive expansion of our economy during the century that oil production rose annually. The massive energy infusion of our domestic oil reserves effectively allowed us to ignore any concomitant and at times steep costs of that economic system given the increasing levels of oil production from 1865 until 1971. Costs like the creation of an enormous interstate highway system, the build-out of America's suburbs and the resulting massive alteration of our patterns of living, the built-from-nothing cities in deserts and swamps with their massive air-conditioning costs and irrigation demands, the expansion of a continental system of commerce with its energy intensive forms of production and transportation - all these and more were easily borne during a period of increasing domestic energy supplies. It was the oil reserves in Pennsylvania, Texas, California and Alaska that provided us the illusion that it was our ingenuity and Protestant work ethic, and not this one-time geologic blow-out, that made possible such achievements that would have been inconceivable to previous ages.

In 1971 the nation no longer had the domestic supplies to allow us to sustain what we had already built, much less continue our now economically- and politically-essential growth. In spite of experiencing the dependency upon Arab tyrants that our oil addiction necessitated, we refused to heed the obvious loss of self-governance that continuation on our course now entailed. Rather than living within our means, we began selling the surplus value we had not created, but exploited, in our century-long fossil fuel burn-up. First we began selling our debt, the promise of any future growth of our national economy increasingly to foreign owners of our treasuries. Then we began selling our jobs, the outsourcing of work that allowed us to avoid paying the actual cost of products by exploiting human labor abroad. We began selling our military to regimes that proved cooperative or necessary, most recently a sweetheart weaponry deal for the Saudis (bought largely with petrodollars that we had been giving them in fistloads over the decades). Our economy seemed to hum along, the "market" growing every year as we continued to import vital and growing supplies of oil even as we increasingly sold everything of value overseas lest we have to face the reality that we had no domestic ability to sustain our growth addiction. We had to start selling off parts of the nation to keep what we still had afloat.

All along it was clear where the collapse would begin: the money economy, built upon the "miracle" of compound interest, would one day become decoupled from the matter-energy economy which allowed for no actual miracles. The laws of thermodynamics couldn't be suspended by all our inventiveness or by any amount of oil: energy cannot be created, only converted to another form, a result of which is the dissipation of energy in the process of conversion - or, "entropy." Our money economy is built on the possibility of endless growth by means of which money becomes more valuable as a result of increased economic (energy) activity in the future. Absent the guarantee of future growth, no banking system could function in anticipation of less valuable future currency used to pay past loans.

In addition to correctly pegging the year 1971 as the point of U.S. peak oil, M. King Hubbert also understood well its implications for our economy. He noted the stresses that the money economy would ultimately experience as a result of limits in the matter-energy realm:

The world's present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin.

The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essential for its continuance. The second, an inheritance from the prescientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is superimposed.

Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growth for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and, according to one of its most fundamental rules, it must continue to grow by compound interest" ("Two Intellectual Systems," 1981).


Our money system was able to function for the past century not because of our investing acumen, but because of our ability to utilize our potent but ultimately limited oil reservoirs. Growth would cease as a result of geological limits, but our money economy would continue to attempt to find ways to increase the growth of money in the form of loans. Eventually it would seek to make loans even to borrowers patently unable to repay those loans except under the assumption that the laws of physics could be suspended. Given the current price of oil, there is every reason to believe that our financial crisis is not necessarily or merely a credit crisis, but a crisis of the attempt to circumvent the second law of thermodynamics. Money cannot grow in the absence of surplus energy; what America avoided in 1971 by selling its valuables abroad is now being realized with the worldwide encounter with peak oil. The pain of these limits will only be keener given how much more entropy we have thrown off in the intervening 35 years.

It has been suggested that I am a "protectionist." I refuse the label - "protectionism" was a label used to describe those who sought to protect domestic markets from the challenge of foreign markets. A wholly different label would be needed to describe what our times demand: the preservation of those abilities and crafts we still possess, and the fostering of those talents we have given up or forgotten, in anticipation of the time when we will not be able to rely on foreigners to subsidize our profligacy. For the moment foreign powers buy whatever we still have left of value, and will continue to do so for the foreseeable future. Ultimately those institutions will not retain their value (especially the banks that are now being bought by our "owners," merely formalizing an existing arrangement), as the money economy will unravel just as surely for them as it will for us. We need rather to foster local economies where they persist and create them where they are absent. We need to begin to live within our means, a task we can do without government dictates but which might be aided by creative and thoughtful policies that begin to reverse the thoughtless and costly ones that have brought us to this moment. I am not confident that we will willingly embrace self-governance and the acceptance of limits: very little in our past, and particularly our recent past of self-indulgent demands for everything from tax cuts to "the Whopper" suggest a culture of deep and warped entitlement. This does not mean that we will avoid the imperative to accept those limits - only that it will be even more painful when those limits are no longer avoidable, which becomes daily more evident.

In many respects, our nation is currently experiencing massive amounts of entropy - the loss of energy that naturally occurs in the conversion of fuel from one form to another. The effort to keep at bay the chaos of induced by constantly dissipating energy requires work, i.e., energy. As long as there are sufficient quantities of energy available, it is possible to maintain a high energy way of life without noting the growing levels of entropy. At the point at which energy becomes more constrained - that is, it begins to be difficult to avoid noticing and "paying" for the energy lost in the conversion from one form to another - our ability to control the resulting chaos will decrease and the consequences of entropy will become ever more evident. We have built an awesome society, but precisely because of our intensive energy lives we are approaching a reckoning in which all around us is the evidence of increasing levels of entropy. From our housing collapse to our banking crises, from military commitments to food prices, from strains on household budgets to divorce rates, from rising levels of crime to rising levels of type II childhood diabetes, from the rampant steroid use in sports to pornography everywhere - and one could keep going - entropy encroaches upon us in every direction. A relatively small and ecologically complex system (in contrast to our current forms of "efficiency" that increase entropy) can thwart entropy with relatively small exertions of energy (cleaning a house is easier than restoring a city), whereas high-energy environments will throw off massive amounts of entropy that require massive energy investments to resist. As we enter an age of reduced energy, we can expect levels of entropy to increase even as our ability to contend with entropy decreases. Our politicians will promise to restore hope and to bring "change," but until they brush up on their elementary physics, they'll be blowing smoke out their rears, a dense fog into which we'll gladly ensconce ourselves, better not to have to see what's really happening.

Thursday, January 17, 2008

Pop!

A report on NPR's "Marketplace" that aired on last Tuesday cites a "senior economist" who states, "More and more people are starting to say, well, do we have a stagflation problem? We're certainly closer than we have been in a long time."

The problem: an economic slowdown, probably induced by the housing bust and the crisis in the financial industry, combined with historically high commodity prices and above all the high price of oil. A.K.A., "stagflation."

What is to be done? The politicians and the Fed alike agree that we are going to have to print money and "stimulate" the economy to avoid the worst effects of a likely recession. However, the problem with "stagflation" is that a solution for one half of the problem exacerbates the other half of the problem - in this case, by trying to pump up the economy, you risk further exacerbating the price of commodities and further sinking the dollar, even potentially setting the table for a more severe recession at a future point in time.

What's interesting is that there seems to be no debate whatsoever whether the better course is to promote economic stimulus and live with the resulting inflation, or to accept economic slowing and retard the declining value of money. There is really no debate - all parties agree, from the Dems to the Reps, from Bush to Bernanke, that the only possible route is to stimulate the economy and avoid what used to be regarded as "the natural cycle" of the economy. Everyone loves a free market except when they don't.

This current assumed solution is in stark contrast with the Fed's policy in the 1970s, when Fed Chairman Paul Volker fiercely fought inflation, even raising the interest rates to astronomic levels that are today almost unimaginable - as high as 20% in early 1980.

Why is it now a point unworthy of debate whether we should be more dedicated to fighting inflation or recession? I'm not an economist, but one suspicion I have is that something fundamental happened in this nation during the past 25 years - that we moved from being a solvent to a debtor nation, both collectively and individually. As this chart attests (previously posted here), in the very years that the Fed was raising rates to all time highs, our national savings rate was around a whopping 12%.
Since that time we have witnessed a steady decline of our personal savings, to the point now that we have a negative savings rate. Our profligacy is manifested both in our individual indebtedness through credit cards and other debts, as it is in our massive national debt to nations that fundamentally now own us - China and oil exporting nations in the Middle East in particular. It's their dollars, and no longer our own, that we are now proposing to effectively devalue to prevent us from feeling a modicum of the economic pain that we experienced in the late 1970s. And, since so few of us have any actual wealth that's not either theoretically found in our houses or that appears on our quarterly retirement statements from one investment firm or another, very few of us have any incentive to argue against the continued inflation of our "wealth." Debtors love inflation, since you get to pay for yesterday's loan with today's cheaper dollars. You prefer to fight inflation when you have something of value to preserve; you prefer to fight recession when "growth" is the only thing of value that's left - i.e., something you don't actually have. The fact that every major agent of our society agrees that "stimulus" is what is needed is a remarkable concession that we're broke. It's only a matter of time before our lenders stop financing our shenanigans - and I'm not talking about our banks, which are cookie-jar raiders numero uno.

The irony here is that our decision to fight inflation during our first encounter with stagflation was directed at a temporary and artificially induced condition of resource scarcity due to an oil embargo in the Middle East. Our willingness now to promote rampant inflation comes at a quite different moment, a time when the evidence grows daily that the world's resources are being strained by worldwide demand and that there is little spare capacity amid our insatiable appetite for non-renewable materials. While we might have erred on the side of combating inflation in the 1970s despite the knowledge that there were sufficient resources to bring down prices eventually, we are now proposing to stoke inflation at a time when we are facing the real prospect of worldwide resource depletion. If our policy then was for the benefit of the many Americans who saved, our proposed path now is for the benefit of a profligate and self-indulgent nation that is unwilling to begin to face the hard reality that we must do with less. Rather than allowing the "free market" to send us the signals that might cause us to heed this sovereign demand - as painful as those "signals" would doubtless be - we are collectively determined to wring the last drops of wine from the tablecloth, to scrounge in the ashtray for the last cigarette butt, to suck on a whitened bone for a bit of marrow, before we are forced to acknowledge that the party's over. By that time, the hangover will be immense - but we're too drunk to care at this point.

Still, it will be an unpleasant morning when we wake up and find there's nothing left in the pantry.

Wednesday, January 16, 2008

Radically Conventional

A recent trend in "pop" economics is a slew of books that challenge conventional wisdom by offering counterintuitive solutions to seemingly intractable problems. One successful book in this genre is Freakonomics by Steven Levitt. Among its chapters was the suggestion that crime rates declined in the 1980s not because of more or better policing, but because of higher levels of abortion during the 1970s among a population whose children that would be statistically more likely to commit crimes. It was to this argument that William Bennett inadvisably referred during his radio show in the context of properly criticizing a pro-life argument on the basis of lost revenue from aborted babies.

A more recent book in this genre is More Sex is Safer Sex: An Economic Case for Promiscuity by Stephen Landsburg. According to Landsburg, HIV could be more effectively combated not by abstaining from promiscuity, but rather by increasing the promiscuity of the more sexually conservative. The stupidity of this argument isn't worth exploring at length, but we should note that its apparent radicalism (most obviously intended to sell books than persuade anyone) masks its utter contemporary conventionality, namely the assumption that more is better than less, that submitting to appetites is superior to self-governance, that the only metric for happiness is hedonic.

The utter conventionality of this genre - reflecting the deepest unquestioned orthodoxies of modern economics, the one discipline of the "human sciences" which seems to brook no exploration of first principles - is seen with utter clarity in an op-ed by Landsburg in today's New York Times. Questioning the wisdom of the promises by candidates like Romney to combat the outsourcing of jobs, Landsburg seeks to argue that such a course is unthinkable, even immoral. First, he raises the issue of "goose/gander": those who benefit from free markets are not in a position to criticize them when they experience economic hardship:

"All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney?

"Um, no. Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?"

Note that it is unquestioned that what constitutes "winning" is cheap prices and more cheaply produced stuff, not the dignity that comes from work and production or the contributions we might make to our own communities, even at greater cost. Also, the only economic options are either "subsistence" or excess. Not exactly an easy choice, to be honest, but more importantly, not really the only choice.

Unsurprisingly, Landsburg finds it incomprehensible to imagine any reason why one would prefer to make what one can more easily buy:

"I doubt there’s a human being on earth who hasn’t benefited from the opportunity to trade freely with his neighbors. Imagine what your life would be like if you had to grow your own food, make your own clothes and rely on your grandmother’s home remedies for health care....

(Here he also mistakes that trading with one's neighbors is essentially the same as trading with anyone at the expense of your neighbors. There is no medium, only complete self-reliance or globalization. Huh?)

But things get really annoying when he invokes "morality" as the basis for always and everywhere preferring cheaper prices to the exclusion of every other consideration. He writes:

"One way to think about that is to ask what your moral instincts tell you in analogous situations. Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web.... When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy should not be designed to advance moral instincts that we all reject every day of our lives."

This argument is disingenuous beyond reckoning. First, how can one assume that "what is done" constitutes "moral instincts" and not, in fact, their absence or neglect - or, indeed, that our instincts may rarely if ever actually be moral? What's inherently moral about buying items that are more cheaply produced - manufactured often by taking shortcuts that rest on what we might regard as the immoral abuse of our natural world or the immoral neglect of the burdens we are placing on unborn generations?

Even more galling is the claim that we ought not to advance a "public policy" that we "all reject every day," (i.e., seeking to defend productive jobs vs. pursuing as unquestioned bounty cheaper prices) as if those decisions take place in a public policy vacuum and are enacted in a wholly neutral and hence "moral" realm. As if current policy doesn't in fact favor decisions that advantage cheap prices at the expense of communities, that do not force producers of cheap products to pay many of the externalities that are easier to hide from a distance (e.g., waste and pollution and other forms of environmental degradation we wouldn't be willing to brook closer to home)? And what of calculating into those prices those more intangible benefits of the local pharmacist or the local diner - the familiarity, the memory, the care for place and people, the space designed for gathering and not merely the gorging with mass-produced food? Yes, in many instances - lamentably - we have, as a culture, made decisions in favor of CVS and against Mr. Gower's pharmacy, and for McDonald's and against Alice's Diner, but let's not pretend that these decisions by default reflect "moral intuitions" - at least not until we entertain the possibility that these choices are more aptly attributable to the sins of avarice and sloth, "intutions" certainly that come natural to us but against which culture, education and public policy might rightly seek to govern, correct, and combat.

I'm guessing that this possibility is not about to be debated in Prof. Landsburg's Econ 101 class tomorrow. Such a scandalous idea would be truly unorthodox, the last thing permissible inside an economics classroom.

Monday, January 14, 2008

Let the Good Times Mold

I come from a long weekend in New Orleans, the site of this year's Southern Political Science Conference. While much of the attention of the nation on New Orleans centers on whether its levees can be built to withstand Category 5 hurricanes and whether the awful destruction still evident in places like the ninth ward can ever be reversed, I was struck rather by the overall increase of seediness of Bourbon Street - with its now countless strip clubs - and the wildness of the revelry that was indistinguishable from night to night, with deafening music (most certainly not fine blues or jazz) pulsating from every locale and endless supplies of frozen drinks in every hand. Each evening was a crazed and almost desperate frenzy of celebration, though for no reason that was evident other than what was expected during a visit to Bourbon Street.

I was reminded of several passages from Charles Taylor's book A Secular Age in which he strikingly describes the "necessity of antistructure" as an intrinsic component of a society organized to recognize the existence of a structured - that is, divinely ordered - universe. Taylor describes the ritual of "Carnival," that period of "structured" uninhibition, the annual loosening of morals and wild, oft anonymous celebration and revelry in the days preceding Lent and its rites of self-denial and anticipation of the death of Christ and our own. "Carnival" - or, as we have come to call it, "Mardi Gras" - is a ritualized festival by which we "break out of coded roles..., sets free our spontaneity and creativity..., and allows free reign to the imagination."

Taylor's analysis points in particular to the central vitality that "anti-structure" drew from the constant emphasis upon "structure" (a feature that one has some sense of when experiencing Fasching in otherwise tightly-wound Southern Germany): "Seen in this perspective, the power of anti-structure comes also from the sense that all codes limit us, shut us out from something important, prevent us from seeing and feeling things of great moment.... All codes need to be countervailed, sometimes even swamped in their negation, on pain of rigidity, enervation, the atrophy of social cohesion, blindness, perhaps ultimately self-destruction" (A Secular Age, 50).

How then, can we understand the continuous and unbroken, wholly de-ritualized and almost desperate revelry that takes place (so far as I can tell) every night on Bourbon Street? Ironically, the nightly celebration is itself a strange homage to Mardi Gras and the ritualized tradition of carnival: New Orleans is, for most people, a place that we associate with people who know how to party, know how to "cut loose" in the most apparently outlandish and uninhibited manner. But, the very cause of that association is deeply bound to the older, medieval Christian tradition in which "anti-structure" is bound closely to "structure," in which the culmination of the ritualized unleashing of revelry (Mardi Gras, or "fat Tuesday") is immediately followed by the solemn putting on of ashes with the lament, "from ashes you come, to ashes you shall return." Shorn of that close relationship, "anti-structure" in fact loses its structure and becomes aimless and unserious celebration of nothing and to no end or purpose. Observing the people seeking accelerated intoxication and wandering in herds looking this way and that hoping to see actual outbreaks of ecstasy, I couldn't help but be struck by the forlornness of the appearance of revelry, the desperation that underlie the efforts to appear joyous, the unexceptionalness of the now-unremarkable female ululations and the wholly predictable male whoops. The celebration seemed more a set of expected and dutiful going through motions, all actual meaning of the original purpose of the celebration lost to the unbroken hedonism of our culture and, more importantly, the overarching disbelief in any actual "structure" that could sustain genuine outbreaks of "anti-structure." A mockery instead of a celebration, a self-consciously mimiced charade rather than an outbreak of overturned or reversed roles, in a concentrated form my encounter with Bourbon Street over the weekend helped me to understand better my dissatisfaction for much of what passes for apparent celebration in our culture.

Thursday, January 10, 2008

Reality TV

"Big Brother" meets "Sex in the City": A brothel in Prague peddles its wares for free - with one hitch: gentlemen seeking its services must agree to having a recording of their fun posted online. Men are flocking to the locale, one explaining, "'It's a different concept,' Nick says later, as he leaves his details so the brothel can mail him complimentary DVDs of his performance. 'It's what the people want, to see normal people.'" It's the new normal!

Coming soon to HBO? I guess it would all depend on the ratings potential...

Sunday, January 6, 2008

Studies Show...

...that living in the suburbs can be bad for your health. If so, our recent set of debates that frame the question of suburbia in moral terms is beside the point - if the burbs turn out to be bad for our health, we can surely expect that the government will ban them soon enough.

Many people claim to be libertarian because they oppose such paternalistic laws that ban unhealthy practices like smoking or eating fatty foods. That may be so, but I suspect the quick move to embrace the libertarian label misses a deeper dynamic. I am inclined to distrust such laws - whether banning smoking sections in bars, requiring motorcycle helmets, or forbidding us from eating trans-fats - NOT because they are paternalistic (I'm kind of partial to paternalism, at least in my own household), but because they deprive us of the possibility of actual moral self-governance. Reducing government regulation increasingly to the sphere of prolonging life is, in many instances, based on a deeper set of liberal commitments that the only value of living is longevity itself. Such laws aren't propounded to govern our appetites: they are enacted so that we come to embrace the ultimate Hobbesian appetite, the overriding secular commitment to the belief that life of the body overrides all other considerations. The only "moral" laws that are permissible are those that have to do with extending our lifespans; the only "sin" you can commit is purposefully compromising your own longevity.

Such paternalism is, ironically enough, a consequence of a certain kind of libertarianism. One of the heroes of libertarianism is John Stuart Mill, whom libertarians adore because of some passages in his book On Liberty (they can valorize Mill only by ignoring many of the other passages in this and other works, including various passages in which he approves of the enlightened ability of elites to practice communism and others in which he commends enslaving "barbarian" peoples in order to make them productive members of the global economy). The passages that they especially like establish the "the harm principle": governments are not to forbid any activity unless it results in actual harm of individuals. While Mill hems and haws about what constitutes "harm," he appears to set a fairly high bar that harm would have to be discernible to a widespread group of people. In the wake of the materialist philosophies of Hobbes and Locke, "harm" increasingly can only be understood to be physical in nature, and in most instances when some action you commit results in the physical harm of some other person. When we discuss Mill in my classes, this is automatically what 99.9% of my students assume harm to mean. Legislation that prevents "harm" comes to be defined exclusively in terms that are "measurable," and the only way to measure any such harm comes to be solely in corporeal terms.

Living long lives becomes the sine qua non of modern liberal polities. "Morals" legislation becomes impermissible in favor of legislation that prevents actions that would shorten our lives. While initially a ban on harm committed by some against the physical well being of others, the logic of self-preservation and the avoidance of physical harm ultimately extends to preventing the ignorant from harming themselves. Paternalistic laws forcing people to be healthy are a logical outcome of a certain life-obsessed libertarianism.

Those who apparently reject the imperative of long life - initially and most obviously those fighting in religious wars, people who evince some commitment to soul over the health of their bodies - are to be regarded with abiding mistrust. The very imperative that led to the wholesale ambition to limit religion exclusively to the private realm ironically comes to motivate our contemporary health fanatics who would now ban activities that would result in perceived forms of self-inflicted harm. People who apparently disdain the health of their bodies pose a serious threat to the logic of liberalism: if they don't value self-preservation above all, then the entire social contract is under threat of dissolution.

But here is the ultimate irony: what appear to be laws regulating our moral behavior are actually motivated by a deeper impetus to reduce morality to non-existence. Our character, ethos, soul, is literally immaterial, and hence inadmissible before the public bar: the kind of person we are - husband, wife, father, mother, citizen, clergy, worshiper, neighbor, teacher, student, friend - is irrelevant so long as it does not involve personal health. A good example of this is seen on our college campuses: our administrators don't dare to say a word about what would constitute a moral education for our students, but they don't hesitate to intervene in the students' lives when it comes to matters that touch upon their health. We had a "Student Affairs" (ahem) administrator visit a class I was teaching this past semester to address "morals" issues on today's campuses. When speaking about excessive drinking he was able to speak about it exclusively in terms of physical health, and when I raised the question of "the hook up" culture, he framed the issue in terms of mental health! The very institutions once charged with helping to shape character no longer recognize the legitimacy or even existence of such a responsibility: they are in the business of making you into good consumptive liberals who will someday obsess about your cholesterol levels but heaven forbid a word should be said about what might constitute a good marriage.

What matters above all is that we crave life, that the physical status of our bodies overrides every other consideration. Only then will it be possible to build the universal and homogenous State of satiated and peaceful last men.

This doesn't mean that I don't continue to be critical of the suburbs. I merely want the terms of the debate to be about the state of our souls, and not reduced - as is increasingly the case - the health of our bodies.

Friday, January 4, 2008

Conserving Liberalism?

Remarkable goings on in American politics as of yesterday. Much has been said everywhere, so I will add relatively little. Of note, firstly, is that the victors are the two best speakers among all the candidates. In our age of the soundbite, rhetoric and speech still matter, and can still stir the soul (how BAD was Hillary! in her concession speech?). Secondly, worth noticing is that neither of the candidates who won Iowa yesterday ran on an internationalist/terrorism platform; both were, broadly speaking, domestically-oriented with a populist/religious flavor and a distinct tenor that a) things are going badly in our nation, and b) we need to buckle down to change things. All the talk seems to be about the candidates, but most remarkable is what this says about the (admittedly limited) electorate: we need to put our own house in order. Maybe this is the proper way of combating terrorism, even.

I was struck by one exchange over at NRO this morning, which I visited mostly to enjoy their conniptions over Huckabee's victory. Here's an exchange in response to a posting by Jonah Goldberg (almost certain to write a second edition of the yet-unreleased book Liberal Fascism with a special postscript on the liberal fascism of Mike Huckabee):

"Republicans Must Change Or Die" [Jonah Goldberg]

From a reader:

Dear Mr Goldberg,

Thank you for reading my email.

Whether or not Huckabee wins the nomination, the Republican Party - particularly on "fiscal as moral" issues - must change. The Reagan "mantle" - God bless it when he was here - is the past.

As David Brooks says about Huckabee in his NYTimes column tomorrow:

“Most importantly, he (Huckabee) sensed that conservatives do not believe their own movement is well led. He took on Rush Limbaugh, the Club for Growth and even President Bush. The old guard threw everything they had at him, and their diminished power is now exposed.



“A conservatism that recognizes stable families as the foundation of economic growth is not hard to imagine. A conservatism that loves capitalism but distrusts capitalists is not hard to imagine either. Adam Smith felt this way. A conservatism that pays attention to people making less than $50,000 a year is the only conservatism worth defending.



"So the race will move on to New Hampshire. Mitt Romney is now grievously wounded. Romney represents what’s left of Republicanism 1.0. Huckabee and McCain represent half-formed iterations of Republicanism 2.0. My guess is Republicans will now swing behind McCain in order to stop Mike.

"Huckabee probably won’t be the nominee, but starting last night in Iowa, an evangelical began the Republican Reformation."



Peggy Noonan is also beginning to realize that conservatives must change. She writes of Huckabee's supporters in her Column in tomorrow's Wall Street Journal:



”. . . the thing really pushing his supporters, is that they believe that what ails America and threatens its continued existence is not economic collapse or jihad, it is our culture.


“They have been bruised and offended by the rigid, almost militant secularism and multiculturalism of the public schools; they reject those schools' squalor, in all senses of the word. They believe in God and family and America. They are populist: They don't admire billionaire CEOs, they admire husbands with two jobs who hold the family together for the sake of the kids; they don't need to see the triumph of supply-side thinking, they want to see that suffering woman down the street get the help she needs.


Republicans must wake up, or say hello to bad Supreme Court appointments and Democrat taxes for years to come.



Your move.

Me: I get a lot of this sort of thing lately and one can only predict more is on the way given the Huckster's victory last night. This is one of these moments — when all of the energy is either for rapid change or for the appearance of rapid change, when everyone either is a reformer or wishes to seem like he is — that real, small-c, temperamental conservatism is both most valuable and least in supply. There may well be a huge outbreak of me-tooism out there in the political system. Plenty of important "new ideas" will be thrown around and, perhaps, even some new ideas that don't need quotation marks around them. Old hacks, stalwarts and stand-patters may suddenly get the message and pull some shiny new reformer's work clothes over their fat cat bellies. In this environment the very best thinkers in the party and movement will be asked for their advice and it will be thrown on the same pile with the wares from the worst charlatans, spinners and frauds around. The problem is that the pols won't be able to tell the difference and, worse, the oily pitchmen's ideas will be crafted to be appealing and easy, while the substance will seem hard and too longterm.

And, my basic position will be: Don't just do something, stand there. Better to do nothing and be mostly right, than do everything and be almost entirely wrong. To be sure, reforms are needed. New ideas are on our wish list. But, it is not a moment of "change or die." Change or die is a radical position. It emphasizes change, while paying no heed to direction. It values the pile of broken dishes from a rapidly pulled tablecloth over a time consuming, but well-planned, new arrangement. It is at precisely the moment when everyone is saying "change or die" that the Burkean conservative Brooks so often touts says, "change only what is necessary and nothing else." I say it would be better to reject 1 brilliant idea if it means not letting 10 idiotic ones go free upon the land.

Relax.


I can't remember a more deceptive piece of agitprop in recent American politics. Goldberg is a free-marketeer, small government (i.e., let the market do as it will), big national defense (i.e., U.S. should run the world in our best interest), secular-minded "conservative": i.e., there's not an actual conservative bone in his body. In "Old Europe" he would more accurately be called a liberal. What galls in this exchange is Goldberg's apparent Burkeanism which is a thin mask on his deeper commitment to the instabilities fostered by "free" markets and the preeminence that contemporary Republicans place on individual choice and thoroughgoing mobililty. The call to "just stand there" is a "conservative" defense of liberalism (i.e., "just stand there" means "let us be as free and mobile and individualistic as ever"); the call for "change" in several cases (Huckabee in particular) points in the direction of being a "revolutionary" defense of conservatism. This is the paradox and conundrum of contemporary American politics: the true conservative appears to be the revolutionary whereas the "conservative" is a liberal in wolf's clothing. I agree that the call for "change" is an empty cipher: what matters is whether that change would actually result in more stable families and communities; whether the invocation of religious belief is a call for self-governance under God's law; whether the critique of "corporations" (such as Edwards) understands that they are providing us with things that we don't have the good sense to avoid and eschew (Edwards's version of anti-corporatism lets us all off WAY too easily); whether the call to "make the oil of Saudi Arabia as worthless as their sand" is accompanied by calls for self-sacrifice and a reduction in our mobility and wealth; whether the call for smaller government is accompanied by an understanding that the government has already fostered a world in which such reduction would only redound to the assertion of ever more private power.

It's clear that Goldberg and the mainstream of the Republican party were content all along to encourage the support of social conservatives so long as their votes, and not their views, were all that mattered. Now that social conservatism and economic libertarianism have begun to uncouple (an inevitable development in the aftermath of the fall of communism, which is all that kept this ungainly couple in the same political bed; the worst loser last night was not Hillary!, but the Republicans who hoped she would win and would replace communism as the glue that kept them together), the mainstream Republicans are desperate to ditch that part of the coalition and pick up whatever they can, including their desperate hope that a pro-choice candidate become the eventual nominee of the party. It turns out that Thomas Frank was at least half right: the social conservatives were being used throughout the Reagan and Bush eras (bought off by the promise of conservative judges, as if that is all it would take to change the culture), and now that their support is no longer so tractable, they're desperate to cut them loose. Change is in the air - let's hope it continues to smoke out the faux conservatives.

Let the realignment begin!

Thursday, January 3, 2008

Consumption

Yesterday the stock market fell over a percent and a half - briefly falling below 12,000 on the Dow - while oil briefly passed the $100 bbl. mark before settling at $99 and change, while gold jumped about $20 an ounce to $860 and the dollar fell about a percent against the Euro to $1.47. Indeed, if you add up these factors, you discover that the U.S. market was worth 1.5% less, the dollar 1% less and oil became 3% more expensive. While it's not possible exactly to total all this up, still that's a pretty big hit in the pocketbook on one day alone - something on the order of 5% decline of U.S. wealth (as experienced by much of the mainstream) in one day.

What was particularly striking about this one day's trade is that it pointed, in a microcosm, to the deep systemic problems that will remain with us for a long time to come. While the initial drop was precipitated by a report that showed a drop in manufacturing - thus signaling a likely recession in the U.S. - another report showed declining oil inventories and thus a spike of over $3 in the price of crude. "Normally" signs of an economic slowdown would result in lower energy prices, as reduced economic activity would translate into greater overall energy supplies. However, the combination of declining energy reserves worldwide and greater use in the "developing world" (especially China and India) means that the U.S. is quite likely to experience an economic slowdown, or stagnation, in combination with rising resource prices, or inflation. This was a condition that we experienced in the 1970s now known as "stagflation," although it was artificially created by OPEC's oil embargo and was relieved when that embargo was lifted. Our current experience with stagflation will not be the result of artificial manipulation of the market, but actual declines in energy production and reduced economic growth. If our first encounter with stagflation was any indication, we can expect some unpleasant times in the offing, albeit without the easy possibility of another "morning in America."

Meanwhile we continue blithely to live in excess and tread ever closer to a precipice largely of our own making. Two essays in yesterday's papers made this point (eerily on a day when markets fell as a consequence of our very excesses, either due to our foolish use of debt or wasteful consumption of fossil energy). Robert Samuelson wrote yesterday about our wasteful and ill-advised housing choices, particularly the building of excessively large homes that are nothing more than drywall and pasteboard temples to our egos. "'We're not selling shelter,' says the president of Toll Brothers, a builder of upscale homes. 'We're selling extreme-ego, look-at-me types of homes.' In 2000, Toll Brothers' most popular home was 3,200 square feet; by 2005, it had grown 50 percent, to 4,800 square feet." All this, along with the rolling out of ever more subdivisions on arable land, subsidized to the tune of 89 billion by our federal government. On the same day in the New York Times, Jared Diamond discussed the radical disparity between consumption rates in the developed West and the developing or undeveloped rest of the world. U.S. consumption, he points out, outstrips that of (for example) Kenya by a factor of 32 times. It is now the aim of the leaders of these nations as well as good liberals in the West to encourage development of these less developed nations to a comparable level to that of the West. The idea that the planet could sustain such levels of consumption is idiotic, as Diamond points out: "If India as well as China were to catch up [to U.S. rates of consumption], world consumption rates would triple. If the whole developing world were suddenly to catch up, world rates would increase elevenfold. It would be as if the world population ballooned to 72 billion people (retaining present consumption rates)." The logical conclusion in the face of this lunacy is for the developing world, led the by the U.S., to cut back its rate of consumption. Yet, such a suggestion is regarded by most Americans as tantamount to treason or heresy or both. Nevertheless, we will be cutting back, whether we want to or not. How painful that experience will be is really the only choice we now retain - evidence that a pro-choice position remains available...

Tonight Iowans gather to select a nominee, and the caucauses of this small and unrepresentative state may eliminate a significant number of the current crop of candidates. When the voting is done, it's likely that only three or even two candidates from each party will be seen as viable, and one or more of the current frontrunners may effectively be eliminated. I remain interested in Huckabee, McCain and Obama and repulsed by Clinton, Romney and Giuliani, although none of these candidates is much better than any of the others on the fundamental questions we face as a nation. Indeed, I have a prediction that goes beyond the horse race guesses to which we are typically subjected quadrennially at this time: the next President will be forced to preside over the rapid decline of the United States as an economic power, and thus as well over the decline of the influence of the U.S. over world affairs. This prospect presents the world with a jarring alteration of its current order, and doubtlessly will lead to potentially wrenching forms of worldwide unrest and anxiety. Yet, even this prospect is less worrying to me than the likely reaction of the citizenry of this nation to the reality of economic hardship. Given our current levels of national and household indebtedness, that 2/3rds of our economic "engine" takes the form of "consumer spending," that we have shipped our manufacturing base overseas and have opted to become a "service economy" that largely sells stuff made in China for McMansions, and given the unsustainability of our current rate of consumption particularly in an era of increasingly constricted resources, I harbor distinct fears about how ugly our collective reaction to a contraction of our economic future and enforced austerity might become. How will we deal with further declines in the worth of our drywall and wood stud houses? How will we cope with rising fuel and food prices along with rising unemployment rates? And what of the prospect of spot gasoline (or diesel) shortages, a distinct possibility as we see simultaneously a rapid decline of oil production in Mexico, our second largest supplier, and the simultaneous rise of energy nationalism in other nations who increasingly will seek to assuage their own discontented populations by supplying them with remaining energy production? If the example of the 1970s was any indication, things could get ugly. Do we have a candidate among this bunch that will rally Americans to face potentially very difficult times, or even - heaven forfend - call on us to make some sacrifices now to avoid this prospect or its worst case? I'm dubious.

I am, on the one hand, grateful that things have not yet gotten so bad that this election is not likely to elicit in the selection of a demagogue; however, I am concerned that none of the current candidates yet strikes me as having the depth to understand our current situation or the fortitude, prudence and statesmanship necessary to lead the nation in what could be some of its most deeply troubled times. While we argue over whether Huckabee is a scab for appearing on the Tonight Show or whether Hillary! is laughing too much at nothing, clouds continue to gather on a horizon that is becoming all too visible yet remains largely ignored.