This fall's Presidential election is the most critical in a generation, maybe two. Some obvious parallels exist with the 1960 contest between John F. Kennedy and Richard Nixon. But, from a governance perspective, a better precedent would be the 1932 election between Franklyn D. Roosevelt and Herbert Hoover.
Then, like now, a crisis in the role of government in the lives of its people is a central, if poorly understood, issue. The economy is lurching, and we are living through a time of extended international tension.
Of course, we are at a different point in history. Wise leaders now must comprehend globalization and the transformation wrought by digital technology in all of their complexities. The old foreign policy paradigms -- us (good) against them (evil) -- no longer suffices. I'm not saying there are not bad guys -- there are extremely bad guys out there. I'm saying that the line between "us" and "them" has eroded substantially
The reason the Bush administration gave for issuing a guarantee to save the faltering Fannie Mae and Freddie Mac last week is that they are "too big to fail." No kidding. They also have so much foreign investment behind them that to allow them to fail would trigger a global financial panic -- not an option anyone likes to contemplate.
"We" are no longer who we were in 1932, or even in 1960. Look around, and see the rich integration of every ethnic, racial, religious, and cultural group of the human species, all living in peace here in America. Our diversity is our greatest weapon against the forces of hate, fear, and unchecked nationalism.
The unchecked nationalists of the '30s were, of course, Hitler's Nazis, one of the most evil regimes in modern history. But, as many people as the Nazis exterminated, they were neophytes compared to the brutal version of Communism practiced by Josef Stalin, and its stepchild, the genocidal evil that swept through southeast Asia in Vietnam, Cambodia, and Laos in the '70s.
When I was still in school, I considered U.S. involvement in that area "imperialism" -- and in retrospect there was tangible evidence in support of that position -- but my comprehension of the larger picture fell short, analytically. What the conflict was really about was geopolitical posturing between "great powers" -- the U.S., China, and Russia.
In the end, none of these great powers prevailed. Instead, the people of Southeast Asia took back control of their own fate, which -- in a pre-globalization sense -- is exactly what should have happened. Thus, the U.S. did not "lose" the Vietnam War; the Vietnamese people regained control over their own land and their own destiny.
Thanks to this "victory," these days, they are attempting to become close trading partners and allies with the United States, a society the Vietnamese admire deeply. Such is the cycle of history.
Domestically, Americans are suffering through the equivalent of an acid reflex discomfort as our overheated housing industry, fueled by greed and debt, collapses under its own bloated and corrupt weight.
I do not want to sound heartless, but as one who has bought and sold five houses, three in the Bay Area, over the past 20 years, I did learn to read the fine print on all of those documents I was signing. And, despite the winks and the nods from real estate "agents," (i.e., hustlers), I never lied about my income or debts or any other financial factor just to get a loan. In fact, I always understated my assets, holding some in reserve so that the most important party to the deal -- me -- could be assured that the loan would truly be affordable.
From my perspective, getting the home was not the point -- being confident that I would be able to pay for was what mattered. As it turned out, I always could until I made my fatal financial mistake the 5th time around, buying a house at an inflated price in order to be able to relocate my family back to San Francisco after a failed attempt to relocate to the Washington, D.C., area.
It wasn't a failure on a personal or professional level for me. I quickly grew to like it back east, as any political news junkie understands. The best part, professionally, is I was a short flight or train ride away from the great center of the media/publishing industry -- New York.
My love affair with New York goes back decades. Had I lived a different life, without family obligations; or, if I had succeeded at a greater level on the West Coast, I could have afforded to move to New York.
But I didn't and I didn't. Any hopes of becoming an East-Coaster dissolved when my second family's D.C. experiment did not work out to my second wife's expectations, so I secured a job back out in Silicon Valley, and made a hasty decision to purchase an expensive house in Noe Valley.
In our family, we call this the "pink house," since its exterior was painted pink at the time.
It was summer of the year 2000 and my new job, though it involved a commute down to Redwood City, was at a company that -- from the outside -- looked likely to generate enough wealth via stock options for me to retire by age 56, at that point just three years hence.
It didn't turn out that way. For once I hadn't studied the fine print.
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The next President, whoever that is, faces the need to transform the relationship between government and the U.S. economy in ways every much as profound as was necessary in 1932. The power of free markets and free trade are beyond debate. The inability of centralized governments to efficiently run economies or provide for their citizens is a matter of record.
Those points settled, what is the proper role for government?
To me, the most troubling aspect of the Fannie & Freddie intervention is that these institutions are purportedly "private" companies. But that all goes back to the wink and the nod that got so many home-buyers in trouble. The government never said it would step in to save these giant financial units, but everyone assumed that it would.
Last week, it turned out that everyone was right. So, what is the meaning of the word "everyone." In this case, it means investors, stockholders, speculators, foreign governments -- everyone except the American citizen who is working hard and trying to buy a house.
We are not part of the winning crowd. When our government guarantees to underwrite a failing company, we pay the bill through our taxes. And, mind you, this is not the old "tax and spend" liberal crowd who's propping up failure; this is the "compassionate conservative" wing of the Republican Party.
Turns out the compassionate part isn't directed toward us, but toward speculators, naked short-sellers, and flip traders. As far as I'm concerned, these greedy bastards should all rot in hell.
The next President has to sort through all of this mess and establish some new regulatory parameters for the role of government in helping guide an economy that no longer resides mainly at home. It's an economy that is dominated by companies earning much more money overseas than here -- to them, the failing dollar is a good thing.
It's you and me, my friends, who need an advocate who grasps the implications of what I am describing here. We need a new social compact. We need a new regulatory philosophy. We must eliminate the power of big money in politics, because it is the big money spent by Fannie & Freddie's lobbyists that created the blind eye in Congress and the White House that allowed them Mac twins to acquire a massive portfolio of bad loans.
For a long time, I liked McCain because of his attempt to reform the influence of money in politics. Under the pressure of running for President, he appears to be backing away from that commitment. I like Obama for lots of reasons, but I've not yet heard what I need to hear about his economic regulatory vision.
In fact, neither McCain nor Obama has yet articulated an economic regulation regime of the sort I am waiting for. If one of them does, that will be the candidate who gets my vote come November.
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1 comment:
Your insight is most impressive.
Looking for a president to lead? Think Bobby Jindl.
Personally, I'm hoping that Obama can somehow manage a significant lead in the polls (say 8 points or so) as the Republican National Convention opens. It might offer a ripe moment for rebellion among their delegates. I fear Obama won't though. His painted public image is already withering under the strain; the primary “handlers” behind him have much less than patriotic values and their hand prints are showing large. The Barak story to date has reminded me very much of Millie Vanilli. When it comes time for him to sing, we find he has no voice of his own.
As a conservative, I share the concerns of millions of Americans when it comes to John McCain. We find his senate record, in conservative terms, very troubling. When the fog of the campaign lifts on the morning of election day, we will trudge down to our polling places and cast our votes for McCain grudgingly. It will be a referendum against Obama, not for McCain. And it will be far less about race or ethnicity than conservatism.
For more than 40 years America has been moving down the road of socialism at an ever accelerating rate. Reverend Wright was not all wrong about our chickens coming home to roost. He was just talking about the wrong chickens.
Fanny and Freddy are government tampering in full bloom, as is the entire sorry story of our credit industry today. You may recall that congressional legislation compelled our largest lenders to loan money to those not likely to repay, in areas no lender would otherwise fund. Thomas Sowell puts it much more eloquently:
“Markets often get blamed for conveying a reality that was not created by the market.
For example, the fact that 'the poor pay more' for what they buy in stores in low-income neighborhoods is often blamed on those who run these stores, rather than on those who create extra costs through crime, vandalism and riots.
If the store owners were making big profits, the big chain stores would be rushing in to share in the bonanza, instead of avoiding low-income neighborhoods like the plague.
Markets were also blamed for the Great Depression of the 1930s and New Deal politicians were credited with getting us out of it. But increasing numbers of economists and historians have concluded that it was government intervention which prolonged the Great Depression beyond that of other depressions where the government did nothing.
The stock market crash of 1987 was at least as big as the stock market crash in 1929. But, instead of being followed by a Great Depression, the 1987 crash was followed by 20 years of economic growth, with low inflation and low unemployment. The Reagan administration did nothing in 1987, despite outrage in the media at the government's failure to live up to its responsibility, as seen in liberal quarters. But nothing was apparently what needed to be done, so that markets could adjust. The last thing politicians can do in an election year is nothing. So we can look for all sorts of 'solutions' by politicians of both parties. Like most political solutions, these are likely to make matters worse.”
My dream candidate for president is Bobby Jindl. He has demonstrated personal convictions tough as leather. Unlike Obama, Jindl has actually, personally accomplished much in his young career. Unlike McCain, what he has accomplished has not failed.
My ears are aching for politicians who will call for less government interference in our economic systems, and much, much smaller government overall. It was not so much that our government was blind to excesses in Freddy and Fanny, it was that government created them in the first place.
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