100 Treatises

The One, True God?

I recently came across a very iconoclastic new religion. Maybe I’ve been using search engines too much…

“Breaking” the Banks

The FT runs an interesting piece today advocating a three-way split for financial institutions. Rather than the simpler two-way division between investment and commercial banking that many, including the Bank of England’s Mervyn King, have proposed, a three-way division would allow for the separation not just of the “casino” (investment banks, market makers) from the “utility” (commercial/ retail banks), but also from the “customers of the casino” (asset management).

By spinning off the asset management and proprietary trading component, the thinking goes, the investment banking sector would be subject to less risk (which means, ultimately, less risk for taxpayers) and would eliminate the potential for conflicts of interest that arise when a financial entity both makes a market and trades in that market. The asset management companies could then be cut loose to compete more directly and transparently with other firms of a similar type, like hedge funds and mutual funds.

Now, aside from the obvious fact that none of these constructive solutions seem to have a prayer of being seriously entertained by policymakers—either in the US or the UK or even in the European continent—it does raise the important question of just how much breaking up is too much? Should we then go a step further and separate trading desks that trade in equity markets from those that trade in bond markets? And then those trading investment-grade bonds from those trading junk bonds? How about separating banks that take deposits from firms from those that take deposits from individual people?

I’m not saying that any of these things is necessarily the logical extension of the three-way split proposed, but I am raising the question: what is the basic, fundamental standard that tells us when two activities should be separated and when they should not?

I absolutely think that at least a two-way split between depository institutions and riskier financial institutions is necessary. But beyond that, what is the proper operative standard? I don’t necessarily have all the answers. But unless we think critically and proactively at a philosophical or theoretical level, rather than respond reactively to the current circumstances, we can be guaranteed that in 10 or 20 years when new types of business practices have arisen and new types of financial instruments have been developed, we will be staring crisis in the face once again.

Obama’s Chance at Afghan Infamy

Obama risks escalating an unwinnable war

If Obama sends more troops to Afghanistan, it will be the worst mistake of his presidency. The reason for this is quite simple: the United States is on a suicide mission in Afghanistan. Since, as I have said, the American leadership does not adequately understand the nature or character of Afghan society (such as it is), “winning” is not just extremely difficult—it is a logical impossibility. By “winning” I mean the US ensuring that Afghanistan is stable and prosperous to the point that it cannot be a safe haven for Al Qaeda and similar Islamic terrorist groups. This, I say, is a logical impossibility as long as the American approach is, as it is now, grounded in considerations of troop levels, tactical strikes and counterterrorism and counterinsurgency operations, rather than considerations of culture, social order, identity and sovereignty.

The Nation has several pieces recently that begin to chip away at issues such as ethnic divisions and the myth of an Al-Qaeda safe haven. On the ethnic issue, for example, Selig Harrison says

One factor of special sensitivity and importance that receives almost no attention either in the public debate about Afghanistan or in the internal policy battles of the Obama administration may well be the most important of all: the domination of the Afghan armed forces, police, secret police and intelligence agencies by leaders of the Tajik ethnic minority, who use their US-backed power in Kabul to lord it over their historic Pashtun rivals.

Aside from the fact that most in the American leadership structure probably think “Pashtun” is an ice cream flavor, it is obvious that there is a whole realm of questions and considerations that policymakers haven’t even contemplated, and aren’t showing signs of doing so any time soon.

Finally, let’s consider the extraordinarily pathetic and woodenheaded preoccupation with whether the “sacrifices of our dead troops have been in vain.” It is understandable to be concerned about that issue from a moral or cultural point of view. But those who use the question of whether they died in vain as a starting point—or any point—in an argument to support more escalations and surges and putting more soldiers at risk adopt such an intellectually abominable and ludicrous way of thinking as to prove they are entirely bereft of any rationality on this issue, much less credibility. I don’t give a damn about someone’s preconceived notions of “honor” or “victory.” I give a damn about human beings.

The dead troops are dead. The living troops aren’t yet. We can’t do anything about the dead troops, from a policy perspective, but we can see to it that more brave soldiers aren’t needlessly put in harm’s way, simply because corrupt and morally rudderless politicians who have made certain statements need to cover their asses. And I haven’t even begun to talk about Pakistan.

Financial Regulation: New Battery, Same Car

Well, as if on cue, just as I finished writing my previous post on the lack of effective action or reflection on the part of our political “leaders” vis-à-vis the economic crisis, the New York Times reports that Obama and the Democrats are considering legislation to rein in institutions that are “too big to fail”. These are certainly positive developments. If the state is more capable of seizing or taking control of large institutions (or their assets and liabilities) that pose a systemic risk before they fail and wreak havoc, this can only help the stability of financial markets and the real economy.

However, given the government’s track record when it comes to effective regulation and conflicts of interest, it would be foolish to think that we have turned a meaningful corner, if for no other reason that no one is seriously considering re-imposing the division between commercial banking and investment banking. And if the Democrats aren’t considering it (corrupted as they are by Wall Street), then the Republicans sure won’t.

While the Democrats are busy blindly defending the Obama administration at every opportunity—regardless of its actual economic policies, or lack thereof—the Republicans are quickly descending into a conflict between a corporate welfare, antiunion establishment elite and a blindly laissez-faire antiunion popular movement. To put it mildly, neither holds out much hope of critically reexamining the assumptions of perfect free markets that have ruled for the last 30 years in the US. And so we wait to see how bad future economic policy will be: bad, really bad, or really, really bad.

The Supply and Demand for Idiots

Maybe "idiots" is too harsh...well, maybe not

When it comes to the current economic crisis, conservatives and Republicans argue (stupidly) that it resulted from excessive state intervention in the economy, with the government forcing banks to lend to people who couldn’t afford it. Meanwhile, liberals and Democrats argue (stupidly) that it resulted from the “Bush economic policies” whatever that means. Listening to this back-and-forth, one would think that the issue is whether (1) a few percentage points off the top marginal income tax rate, or (2) some bad loans to poor people are responsible for a worldwide meltdown that saw the Dow Jones lose half its value in a matter of months, millions of people lose their jobs, and hundreds of billions of dollars of global wealth evaporate. As usual, the Republicans and Democrats give us a fascinating and inspiring debate.

Most of the Republicans and Democrats couldn’t explain what GDP means if their life depended on it (GDP? Is that a lobbying organization I should be aware of??), much less the concepts of marginal utility, equilibrium price or opportunity cost—all of which are fundamental ideas in economics. But they sure could give you a lecture on why “socialism” is so evil that it is the economic system that runs the fourth circle of hell. (Never mind the fact that we’ve been successfully using it in the US for decades.) Or that we need urgently to start a new government program to hand out money to some obscure segment of society—even if it means bankrupting the treasury!

Normally, a recession of this magnitude would prompt some serious soul searching on all sides of the economic policy debate. We would see real questioning of deeply-held assumptions on the part of economists and the field of economics in general. We would see both left and right take a good, hard look at the kinds of policies they stand for, and the real-world consequences those policies have wrought.

Instead, we see the same old, same old. It’s politics as usual—socialist healthcare this, Fox News that—and continued economic know-nothingness all around. The UDA (unmitigated debt agenda) liberals are losing support, and the Republicans are starting to gain ground. Great. I can’t wait to trade one philosophically bankrupt party for another.

A Secular Society Benefits Everybody

Secular society even benefits these people

Great post recently critical of traditional evangelicalism and supportive of a secular/ religiously neutral public square. It is not just secular people who can appreciate the virtues of a secular society and state. I like this quote:

Take politics for example. So many believers foam at the mouth when it comes to government intrusion into the church walls and church schools and families lives YET those same people rant and rave when it comes the government NOT making laws against abortion or gay marriage which are also personal issues. These people want to ban this, boycott that, and try and infuse Christian ideology into a clearly secular culture. They will lie and exaggerate the truth to try and get a “Christian” law passed, and then cry that they are being persecuted when someone slaps their hand and says no.

So here is a newsflash…..America IS NOT a Christian nation…

Amen. No pun intended.

Trouble in Rightist Paradise

A "sign" of things to come?

Some prominent Republicans like Dick Armey, Sarah Palin and Rick Santorum have decided to endorse the Conservative Party candidate instead of the Republican candidate in a New York congressional race. Whether this is a precursor to a larger and broader trend of fracturing within the conservative movement remains to be seen, of course.

But one thing that is certain is that the Republican party is rapidly approaching a crossroads, with three possible alternatives: (1) it can continue to go down the route of big-government and big-money politics, maintaining its status as one side of the coin, with the Democrats occupying the other, (2) it can regroup and reorganize into a truly authentic opposition party, taking real stands on real issues rather than making endless meaningless platitudes, (3) most unlikely, it may just split into two new political parties—a moderate, compromise-oriented center-right party and a narrower, more rigid (but more passionate) far-right one.

Now history says the most likely outcome is that the Republican party will remain intact, and either temporarily (for 5 or 10 years) turn more conservative and authentic (i.e. truly different from the Democrats), or withstand this short term assault from the right flank and, by this time next year, wind up back to where it was under Bush—back to traditional power politics. I consider the more conservative lurch to be quite plausible simply because of the unprecedented and almost pathological expansion of debt and government spending under the current Democrats in power (to say nothing of their actual policy program, which is polarizing in and of itself), whereas in normal times the smart money would unequivocally be on the establishment party powerbrokers and the status quo.

All of this said, we should not forget a crucial part of the equation—Obama and the national Democratic leadership. They are (so far) terrible leaders, but they are not stupid. They might—emphasis on might—see the rising tide of the “right-wing fanatics” begin to enter the corridors of power, and decide to shift to a more moderate, compromising and inclusive course with the purpose of maintaining their hold on power. Of course, if Republicans gain any significant inroads in next year’s elections, this will happen automatically as the White House, like under Clinton, will need to compromise to get anything done.

Assuming the Democrats don’t take such a moderate course, it’s all eyes on the right next year. 2010 has the potential to be a major year for Republican politics. Then again, it might just be the year that never was. In that case, it’s back to business as usual.

Here She Comes…Miss Hypocrisy

Boobs and Bibles can make strange bedfellows

It recently re-entered the public consciousness that Carrie Prejean, the former Miss California, has had her breasts enhanced. She has also cited her strong Christian faith as a main factor informing her opposition to gay marriage. Does anyone sense a contradiction here? Now, regardless of one’s position on the issue of gay marriage, Prejean brings to light the abject hypocrisy that festers deep within modern American Christian conservatism. This is not to say that modern American secular liberalism is a paragon of forthrightness and sincerity—but that’s another topic.

The issue is far larger than Miss Carrie Prejean, for she is a relatively insignificant example of this broader and deeper phenomenon. The essential problem is this: modern Christian conservatives live in a free, politically secular, post-Enlightenment, post-Scientific Revolution sociopolitical system, and have and continue to benefit from all the progress and wonders that kind of system provides—and yet at the same time they seek to maintain and expand and even impose the beliefs and values of a religious system that is almost fully incompatible with that kind of system.

Whereas a truly free and open sociopolitical system is by definition secular—it must be, so as to not preference one segment of society over another—these people seek to merge church and state closer.

Whereas public policy in such a system is derived primarily from a rational consideration of real-world evidence of what will or will not benefit people, the Christian conservatives seek to set policy according to what their faith demands, regardless of evidence. (This assumes, of course, that thousands of years of debate and discord on the meaning of various religious concepts has been settled.)

Whereas a truly free and open sociopolitical system grants a wide variety of lifestyles and behavior patterns full legal protection and recognition and freedom, the Christian conservatives seek instead to give special status to certain specific lifestyles while restricting the freedom of others. I could go on.

So much for what they believe, which is bad enough. But now here comes the twist: the religious conservatives act in a way that frequently clashes with their religion—clashing either with the ideals and values they actually espouse, or with other aspects of their faith. The ever-present potential for contradiction stems from the fact that these people do not live in a sociopolitical order that conforms to their deeply-held beliefs—that would be a medieval one (as such, if they lived in Saudi Arabia, for example, they would be all set). And as long as they live in a society that is, at a fundamental level, secular and free there will be constant temptations to engage in: (1) lust, (2) gluttony, (3) wrath, (4) sloth, (5) envy, (6) pride and (7) greed. And many or most of them do engage in one or more of these things.

So, how does all this relate to little Carrie Prejean? Simple: true Christians don’t get breast implants. Furthermore, true Christians would not even entertain the idea of participating in a beauty pageant. (Bikini-clad babes parading their goods for the world to see…lust anyone?) I will have a screed on the pure nonsense of beauty pageants themselves in a future post.

Now, I have no doubt that Carrie Prejean truly believes that she is a good Christian woman. The same can be said for countless other Christian conservatives. They evidently base this belief principally on their positions on various political and social issues, such as abortion, gay marriage/ gay rights, pornography, or religious symbols in public places. These are interesting little litmus tests for one’s beliefs, but they are often more narrow indicators of a political or ideological way of thinking, not so much the foundations of a spiritual or religious life.

The question is, do they actually live their lives in accordance with the dictates of their religion, even accounting for the ambiguity and debatable components? Do they basically live according to the major principles of the faith? The answer is, at best, uncertain, and therefore we can say with confidence that modern Christian conservatism is infected with the hypocrisy bug. Far too many high-horse, holier-than-thou moralists in our society presume to tell others how to live their lives, even going so far as to impose their backward beliefs on others, and yet, when push comes to shove, they must inevitably be seen as imperfect humans, just like the rest of us.

If someone wants to get breast implants—that’s fine. If someone wants to live a life according to a particular established religion, that’s fine too. If someone claims to believe in a particular established religion, but lives in a way that contradicts it, that is hypocrisy. When they presume to dictate how others should live their lives, claiming legitimacy because of that established religion, that is dangerous and wrong, plain and simple.

How Many Politicians Does it Take to Fix an Economy?

"Banks": I like this one more than the ones we bailed out

Paul Krugman today reminds us that the big banks and financial institutions that played a key role in the current economic crisis have been getting back to their old tricks of unwise risk-taking, anti-regulation lobbyism, and accounting hocus-pocus for months now. What is extraordinary about the current crisis is that it has produced massive (negative) change in economic wellbeing for millions of people, but real (not superficial) regulatory and policy changes have been few and far between.

Has Obama talked openly about restructuring the economic system at a fundamental level? No. Instead he and the Democratic dunderheads in Congress have pursued an Unmitigated Debt Agenda (UDA) by lavishing billions on pet projects and K Street cronies through a so-called “stimulus” bill. Supposedly there are some tax cuts in it—big deal. I’m sure putting an extra $50 per year in some nurse’s bank account shall do wonders for the economy. Meanwhile, they’re about to one-up themselves by passing a healthcare bill that will waste hundreds of billions more without even covering all of the uninsured.

The real, longer-term danger, though, is in the realm of philosophy: by wasting such incomprehensible amounts of public money on such unhelpful projects, the fiscally challenged UDA liberals in the government are giving ALL government intervention in the economy a bad name, including sane financial regulation. Thus, the natural reaction of most people in the middle will be “the government ‘intervened’ in the economy in 2008 and 2009, and look what a disaster it was—the true answer must be to limit such government intervention.” That would be a dangerous and unfortunate outcome.

Shadows of Vietnam

An opinion piece in the New York Times today tries to draw lessons about the interface of military strategic and political decisions applying to the US campaign in Afghanistan, based on the experience of Vietnam. There are some interesting observations.

However, it is fascinating how important the American military men (and politicians and analysts) always think they are in the wellbeing of poor, developing societies. There is no question that the military plays a crucial role in achieving and maintaining the peace in a society (assuming they do it right), but its importance is of a much narrower type than they typically think.

The US has displayed a tendency to think that if we send troops over to another part of the world, they will quell whatever situation there is, establish peace, and put that society on a path to prosperity and stability.

Never mind about the underlying character of the people, the kind of values or lifestyle they have, the quality of their leadership, their historical experience (or lack thereof) with democracy, etc, etc. All that is needed is for the generals and the president to “get the strategy right.”

When will they understand that if a society and a people are not understood and adequately reckoned with, the best “military strategy” on earth will not be worth a damn? Probably when there’s no more money to pay for the troops in-country, much less send new ones, thereby rendering the whole debate moot.