Saturday, May 8, 2010

In Obama We Trust

Glenn Greenwald comments on the prevailing democratic liberal stance as we near Obama's nomination to replace John Paul Stevens on the Supreme Court: "Obama's choice [is] a good one by virtue of the fact that it's Obama choice."

This is a perfect summation of what remains the prevailing attitude regarding Obama. It was also the attitude toward Bill Clinton, welcomed by Party Liberals after Reagan and Bush 1. (I was excoriated by liberal friends for criticizing Clinton in the 90s. Friends were often enraged that I dare charge Clinton with doing some of the very things Bush and Reagan had.)

Glenn Greenwald points out, first, the obvious absurdity in this, second, the double standard of Democrats, and, third, the lack of thought, which is what should concern us the most — the sheer unwillingness to think that characterizes mainstream and conservative ideology in the US today.

That mainstream and right-wing (and plenty of the left) are devoured by a Cult of Personality shouldn't surprise us. The United States is today an Oligarchy with Cults of Personality at the core of a Religion of Obedience. Americans idolize actors, sports stars and select billionaires (currently a little out of favor with the Wall Street debacle). The growth in actors (Franken, Reagan, Schwarzenegger), sports stars (less common, but Bunning comes to mind), and billionaires (Bloomberg, Frist, Whitman, Fiorina) is a symptom of the relation between power, money and fame.

ll of this obliterates the need of voters, the public, to examine, reflect, think — which is precisely what is desired by those in power. We are expected to obey, and more than any other industrial democracy, we Americans do.

This is further reflected in so-called institutions of higher learning, most notably Harvard, where we are expected to accept so and so's diktats for absolutely no other reason than the fact that he or she is at Harvard or Yale or Stanford. Conservatives are not upset so much by the mindless obedience to academic authority as they are to what they perceive (mistakenly) as the liberal leaning of that authority.

Edward Said captured this all beautifully with his essay on the countervailing role of the true intellectual (Chomsky, Baldwin, de Beauvoir, Galbraith, Malcolm X and, I will add, Greenwald) — Representations of the Intellectual.

Why is the problem so severe in the US (and to a lesser extent Britain)? The US is in an essentially defensive posture today. It has seen its peak, its best of times. Those benefiting from the best of times now seek primarily to defend against decline. It's an old story.

Tuesday, May 4, 2010

Economics by Analogy

Simon Johnson of MIT and The Baseline Scenario draws attention to recent claptrap from Larry Summers (who seems capable of little more):

“Most Observers” Do Not Agree With Larry Summers On Banking

By Simon Johnson

What is the basis for major policy decisions in the United States? Is it years of careful study, using the concentration of knowledge and expertise for which this country is known and respected around the world? Or is it some unfounded assertions, backed by no data at all?

At least in terms of the White House policy towards megabanks, it is currently “no discussion of data or facts, please”.

Speaking on the Lehrer NewsHour last week, Larry Summers said, with regard to the Brown-Kaufman SAFE banking act – which would restrict the size of our largest banks (putting them back to where they were a decade or so ago):

“Most observers who study this believe that to try to break banks up into a lot of little pieces would hurt our ability to serve large companies, and hurt the competitiveness of the United States.”

“But that’s not the important issue, they believe that it would actually make us less stable. Because the individual banks would be less diversified, and therefore at greater risk of failing because they wouldn’t have profits in one area to turn to when a different area got in trouble.

“And most observers believe that dealing with the simultaneous failure of many small institutions would actually generate more need for bailouts and reliance on taxpayers than the current economic environment.”

I’ve looked into these claims carefully and really cannot find any hard evidence supporting Summers’s position – and therefore US policy. To be sure, there have been assertions made along these lines by a few people.

My thoughts:

“…they believe that it would actually make us less stable. Because the individual banks would be less diversified….”

Summers statements like these make it painfully clear that he is making stuff up as he goes along to serve his pre-determined conclusion. It is trivially false that mere size provides a stabilizing buffer. For example, so and so can have one million shares in one company or one million shares in one million companies. Mere size has nothing to do with it.

I would guess that Summers, like many economists, is fond of analogies, since the mathematics of economics is actually quite weak. (First, real economic systems, as should by now be all too clear, are radically non-linear, which is why major players like Goldman Sachs jealously guard their masters of computational methods. Second, the simplifications economists routinely champion are, in the real world, gross over-simplifications, throwing the baby out with the bath water.)

The analogy Summers tacitly relies upon is that with greater size, there is greater inertia. But then the analogy is a little too apt. Greater size results in less innovation, less agility, less flexibility to respond to change or the unexpected.

(How’s that paragraph for mixing metaphors?!)

The thing is, Summers (and Geithner, Bernanke, Paulson, Congress and Obama) like big banks. Big Is Beautiful! Having big financial institutions in the economic world is like having big guns, big bombs, big ships in the military. We can make others cower. Never mind that, again pursuing an analogy, there are a great many examples from history of the smaller, more agile foe, outdoing the bigger. Of course, Summers & Co. are hoping for an economic blitzkrieg — large and lightning fast.

Sunday, May 2, 2010

Oligarchs and the New Feudalism

With the notion that taking on the big banks is taking on the 'heartland' (does that include the northeast and California ... or Nebraska?), Dodd and Corker have gone from "What's good for General Motors is good for America" to "Wall Street is America." Whether they believe that or not, they and many other members of Congress certainly know that Wall Street campaign dollars are good for them.

This fits with my own view that the US is not just becoming an all-but-constitutionally-enshrined oligarchy, but is in fact moving toward a new Feudalism. How many members of Congress 'inherited' seats from family — the number is growing. They serve Wall Street and a handful of other massive corporate interests (health insurers, big pharma, agrichem — industries that do, comparatively, remain markedly American, as opposed to, say, auto manufacturers).

The only group that has little or no say is that constitutionally given a say — the People.

The Oligarchs are further served by institutions of opinion and thought manipulation — chiefly the 'news' organizations and universities.

We the People lose what little grip we had on a decent standard of living under the constant aegis of a new security state emboldened by laws ostensibly designed for terrorism but largely used for purely domestic purposes.

Far-fetched? Watch and wonder.