Saturday, January 24, 2009

Montesquieu on Infrastructure Improvement

"The public revenues are a portion that each subject gives of his property, in order to secure or enjoy the remainder.

"To fix these revenues in a proper manner, regard should be had both to the necessities of the state and to those of the subject. The real wants of the people ought never to give way to the imaginary wants of the state.

"Imaginary wants are those which flow from the passions and the weakness of the governors, from the vain conceit of some extraordinary project, from the inordinate desire of glory, and from a certain impotence of mind incapable of withstanding the impulse of fancy. Often have ministers of a restless disposition imagined that the want of their own mean and ignoble souls were those of the state.

"Nothing requires more wisdom and prudence that the regulation of that portion of which the subject is deprived, and that which he is suffered to retain.

"The public revenues should not be measured by the people's ability to give, but by what they ought to give; and if they are measured by their abilities to give, it should be considered what they are able to give for a constancy."

--Charles de Secondat, Baron de Montesquieu, Spirit of Laws, Book XIII, "Of the Relation Which the Levying of Taxes and the Greatness of the Public Revenues Bear to Liberty".

Friday, January 23, 2009

The Banking System Has Caused Economic Slowdown

The consensus argument (which is often wrong) is that the banking system has caused the current economic malaise. In general, recessions and depressions are monetary. The Great Depression was a monetary phenomenon. This time, the Fed has ballooned money supply yet the slowdown continues. Of course, it is likely that there is a lag, and in a month, two or three there will be a turnaround. The stock market, however, continues to fall. This may have to do with continued media publicity. If the lag or media publicity arguments do not turn out to hold, the culprit is the banking system itself, which is what I keep hearing.

Not that money supply is independent of the banking system. Much of the money supply is created by the banks. But if the money supply is the reason for depressions and recessions, there is an argument to maintain the current banking system--the Fed can counter panics and so fractional reserve banking's chief problem (the threat of runs) can be countered. But not if the banking system itself is faulty. Then the argument for the current fractional reserve system is attenuated. Then, fractional reserve banking is in part responsible for misallocation and slowdowns, and money supply (itself a product of fractional reserve banking) is only partly to blame. In that case, a clear thinking public (sans the New York Times, pro-bank "liberals" and the like) ought to ask why the the banking is perpetuated given its dismal performance.

Fractional reserve banking is a form of fraud and need not be legal. Bankers lend out more money than they have on reserve. For every one dollar deposit, banks lend out up to six additional dollars. These dollars are covered by incoming new deposits. The system is not far from a Ponzi scheme. New investment covers old loans. It works if borrowers come and go with regularity. The problem until the days of the New Deal was that they frequently did not. There would be "runs", banks would falter and depressions would result.

Without fractional reserve banking there would be more savings and less economic activity. The economic activity that occurred would be more rational than it is with fractional reserve banking. Over time, better projects would be built and there would be more innovation because investors would be more focused on rational investments. This would stabilize economic outcomes over time, as more good ideas were implemented as were fewer bad ones. There would be less reckless depredation of the environment as unnecessary housing and manufacturing would be cut back. Higher unemployment levels over the intermediate and perhaps long term could be subsidized through relief, just as it is now. Interest rates would be higher and more people would save. There would be less or no inflation (and perhaps deflation) so people planning for retirement would not need to rely on the stock market. Savings would generate adequate returns for retirement. Better investment would be made, so that statistical economic growth might be slower but substantive economic growth would be much faster. The difference to which I'm alluding, satistical versus substantive economic growth, is that statistical growth includes garbage investment like sub-prime housing and public schools that do not produce value. Substantive economic growth would include private schools that do produce value and housing that people really want.

Banks need not be permitted to lend more money than they have. The argument for doing so is economic growth. But the argument against it is the rape of America's retirees; and the stifling of innovation caused by the misallocation of credit and irrational turns in the economy due to banking panics--on the part of bankers themselves.

A Taxing Question--New Yorkers ARE INSANE

How much do you pay in taxes? And what's the payback? I recently spoke with someone at the gym. In my neighborhood leftists reign supreme, and this guy was no exception. He told me that the school in Phoenicia, New York is terrible, so he sends his two kids to a private school in Stone Ridge, New York for $8,000 apiece. When I said to him, "It's terrible that we pay all these school taxes and you can't send your kids to public school," he replied, "I believe in taxes."

This individual was somewhat status conscious and self-conscious of his own status-consciousness. It is not a bad thing to "keep up with the Joneses" but enforced "liberalism" is different. He told me that he was brought up in a large house in Scarsdale and that he could afford an apartment in Manhattan as well as private school and a house here. It did not occur to him that while paying several thousand dollars in school taxes did not prevent him from sending his own children to private school, taxes likely prevent many local residents from being able to afford private schools. So, unlike my rich "liberal" friend who loves taxes and sends his children to private school, others whose children's education the taxes harm are not so rich or so lucky.

The question is: what does someone in New York pay in taxes? First off, there's Social Security. The rate in 2008 was 6.2% for employees and 6.2% for employers. Most economists agree that the employer's portion is largely a deduction from wages, so let's say the total is 10%. Medicare is another 1.45% for employee and employer, so let's call that 2.0%. In 2005, the mean household earnings for a 45-54 year old was $74,446, according to a Boston College study, so let's say the individual earns $80,000. The New York State income tax would be $4,686, or 5.8%. The federal income taxes are about $12,000, or 15%, including deductions. As well, the sales tax around here is about 8%. Also, there are premium and similar kinds of consumption taxes. Let's say 2% of income goes into sales tax. As well, property taxes are easily $4,000 for local property tax (5%) and $2,000 for school tax (2.5%) I'm not counting higher prices due to corporate taxes (corporate taxes are passed on to consumers), capital gains, license and DMV fees, tolls. So if we add up the tax bill for the average household: 10% (Social Security) + 2% (Medicare) + 5.8% (State income) + 15% (Federal income) + 2% (sales) + 5% (property) + 2.5% (sales) = 42.3%.

New Yorkers are INSANE! For 42.3% of their income they get:

Terrible schools + badly paved roads + ?

The only good thing is the snow plowing, I'll give them that. But if I spent 42.3% of my income on something and got back snow plowing, I would sue for fraud. But New Yorkers keep electing the same politicians, over and over, who keep trying to raise taxes even more.

They are INSANE!

My Blog at Republican Liberty Caucus

The Republican Liberty Caucus has set me up to blog on their site, and I will be blogging there a few times a week as well as here. My first RLC blog appeared a day or two ago.

My wife Freda and I had lunch this afternoon with Lee Currie, excecutive director of the Foundation for Economic Education in Irvington on Hudson, New York. I heartily recommend this organization for anyone concerned about the economy. FEE has played a historic role in furthering economic ideas. Milton Friedman, William F. Buckley and Ralph Nader (yes, you read right) published early articles in their journal, the Freeman, and FEE was the means by which Ludwig von Mises was able to make a living after fleeing the Nazis in the late 1930s.

Where is America going? Things have not been going well for libertarians and conservatives. Our problem HAS NOT been the election of President Obama. As Shakespeare put it in Julius Ceaser, "the fault, dear Brutus, lies not in our stars, but in ourselves if we are underlings". I don't like to think of myself as an "underling" but if the sandal fits, I'll wear it.

The public is unhappy with the bailout, but what have libertarians done to push the issue? We need a new Andrew Jackson who is going to run against Nicholas Biddle Bernanke and John Quincy Obama. Now is the time.

My old friend, Professor Chuck Gengler of Baruch College in New York forwarded this clip from the old movie Network. Let's not take it any more. It is time to start overthrowing the old guard in the Republican Party. We need to get revved up.

Thursday, January 22, 2009

Managerial versus Statist Ideology

In Work and Authority in Industry the sociologist Reinhard Bendix traces the evolution of managerial ideology in England, the US, Russia and East Germany (the book was published in 1956). Bendix dissects the ideologies of managerial power in each nation. In the case of the nations that turned out to be economically successful, the United States and the UK, there was an evolution of ideology. Bendix traces the pattern whereby Calvinism gave way to an emphasis on virtue, as in the case of Benjamin Franklin's writings on success. In turn, the virtue ethic morphed into social Darwinism and social Darwinism into the New Thought ideas that positive thinking leads to success. In turn, the success-conscious ideology was replaced by scientific management. Bendix implies that the scientific management and human relations school ideas that were prevalent in the 1950s were themselves ideological rather than empirically based. That was not the case. Scientific management had an efficiency rationalization that 19th century managerial ideologies, based on justification to aristocrats in England and to the public, lacked. However, scientific management in fact increased productivity. To the extent that the human relations school tempered scientific management and reduced labor problems while maintaining constant or increasing levels of productivity, it too could be validated. However, the chief advances in the second half of the twentieth century in management, lean manufacturing, computer integrated manufacturing and total quality management, had even greater effects on productivity.

Political ideologies have not advanced in the same manner as managerial ideologies. THe ideology of the 19th century, laissez faire, was associated with rapid industrial advance. Its competitor, mercantilism, had been associated with economic progress in the 17th and 18th centuries, but paled in comparison to the progress that laissez faire generated in the 19th. This was true in Britain and the US. Marxism, various strands of socialism and in the late 19th century progressivism evolved as critiques of some of the social ramifications of laissez faire. These ideologies, though, once implemented, were unable to evolve, unlike the managerial ideologies. Marxism today does not posit an economic model much different from Marxism in the 19th century. Oskar Lange was unable to overcome the arguments of Ludwig von Mises, and in any case socialism in practice was unable to efficiently implement Lange's idea. Similarly, the ideas of Progressivism intensified into the New Deal, but have not evolved since the early twentieth century. Progressives today still rely on scale economies rather than innovative management practice as a source of value. But scale is no longer a critical source of economic value. Correspondence of output to customer needs, reduction of loss through stabilization of the production funciton and taut management of production processes (along with evolution of organization structure to flatten hierarchy and increase employee responsiveness) have not been viewed as possible within the public sector. Much as processes have failed to improve, so program conceptualization, strategy and flexibility in the public sector remain rooted in early twentieth century bureaucratic forms. The evolution of centralizing tendencies in public sector management goes back to the 17th century and reflects the ideas of Lord Shaftesbury and other mercantilists. The debate between Federalists and anti-Federalists, Whigs and Jacksonian Democrats and Progressives and advocates of laissez faire revolved around the question of the relative merits of centralization and decentralization, of price versus central plan, of economies of scale versus dynamism of innovation. However, unlike the ideology of decentralization and laissez faire, which considerably evolved in the twentieth century, the ideology of Progressivism and planning stagnated.

Wednesday, January 21, 2009

A Resolution Declaring Independence of National Television News

WHEREAS: National television news has failed to tell the truth or perform the function of providing truthful and valid information to the American public;

WHEREAS: National television news has failed to inform the American public about vital facts concerning the presidential election and the candidacy of President Barack Hussein Obama;

WHEREAS: National television has failed to inform the American public about vital public policy and political questions, specifically, the activities of the Federal Reserve Bank; monetary inflation; national economic policy; and subsidies to corporations and banks;

WHEREAS: National television has lied to the American public about the Iraqi War:

I hereby urge all Americans to discontinue viewing network or national cable television or any television station that carries nationally distributed news and to hereby join me in declaring:

"I desist from watching or turning on any television station that carries or broadcasts network- or cable- based news in any form."

The Internet and Group Directedness

Riesmann identifies a transition from tradition to inner to other directedness. The transitions relate to technology and religion. Tradition-directedness exists in most societies. The Protestant reformation led to an emphasis on conscience and individual responsibility that previously had not been known in most societies. Most important in the transition to inner directedness was the invention of the printing press that facilitated publication of the Bible in the vernacular. This led to a new emphasis on conscience and faith. The printed word was thus associated with the development of inner directedness. Inner directedness was potent in developing major breakthroughs in science, business and technology. The United States was transformed from a small agricultural frontier nation to the leading manufacturing nation in the era of inner directedness. Naturally, technological advance led to transformation of communication from the telegraph to the telephone to radio and television. With respect to transportation, inner-directedness progressed from sea, foot and animal-based power to canals and railroads, then trucks, automobiles and air travel. As these developments occurred, inner-directedness gave way to other directedness. In the book The Achieving Society David McClelland identifies success not only with focus on achievement or achievement motive, but also other-directedness. Yet McClelland's classic study was done after inner directed society had made major technological advances. In the period since McClelland wrote The Achieving Society, the era of other directedness, there has been considerably less achievement and technological innovation than there was in the nineteenth century. Nevertheless, there has been one critical invention: the computer and its attendant telecommunications and Internet capacities that have revolutionized communication and mass media.

Much as David Riesmann argued that mass media played a pivotal role in the transformation from inner-directedness to other-directedness, so it must be that the new communication methods, the Internet, computer, cellular phone and related, emerging technologies (my students are ahead of me on that) are likely to revise modes of personality.

Other-directedness involved a focus on the opinions and needs of others. But the Internet focuses people not on all others but on peer-group others. Interpersonal skills are minimized because much communication occurs on the Internet. Therefore, while interpersonal skills remain crucial for success in the other-directed world, much as a number of inner-directed traits do as well, group directedness is replacing other-directedness in many contexts. Group directedness calls for different skills from other directedness. It is hinged on narrower segmentation than was other directedness. Tastes are increasingly fragmented, and segmented preferences can now be tailored to so that pleasing the crowd becomes less important. Much as today's students may be gay or straight, they may prefer different lifestyles and need not feel obliged to fit in in the way that students did in the 1950s.

Tuesday, January 20, 2009

Contrairimairi Responds to White-Hooded Blogger

A pro-Obama blog calls me names ("trembling hellcat") for posting Contrairimairi's e-mails, and, like a white sheeted Klansman scurrying in the shadows of cyberspace, relies on anonymity. Methinks the lad must be a "progressive"! Perhaps when the inflation rate hits 12% our name-calling Klansman will not be so enthusiastic about the "change" that Mr. Obama and his backers have in mind.

Contrairimairi just forwarded this e-mail that responds to the name-caller's posts concerning her e-mails:

>Whoever the poor obamabot is posting at a website questioning posts regarding Obama's family, and references to the Ford Foundation, should really get a grip.

>First, many, many kudos to Mitchell Langbert who lists who he really is at this site. He also has a host of websites that are of like opinion, and who work in concert to get to the truth in the news. I will not even mention who the other blogger is, because I would hate to direct any poor soul to his blog. He is unidentified, and has a whopping total of FOUR, yes, you read that correctly FOUR back-up blogs. What a pathetic obamabot he is. Hope the O is paying him well for his derelict services.

>He had a major problem with the transferring of Oyama Mabandla to a possible Mayandla ( nickname Maya?) Obama. He also doesn't seem to realize that very often in American culture, last names list first. (Actually he appears ignorant enough to never have attended school where so often last names are used first.) He hasn't a clue how many times we have found the family names juxtaposed just enough to give a hint it might actually BE someone other than a family member. Like Soetoro being changed to "Sutoro". Unfortunately for this person, we are wise to the game. He should read posts at the many sites who back up Mitchell. He might finally be "educated".

>I noticed he made no reference to what the "actual" Mayama Obandla was up to. Guess what.....the man linked to the same address as big O's mama has joined a group of land speculators in Africa. I'll bet they are busily getting their hands on every piece of property they are able to. Funny, because Oyama worked for just one year at an African airlines that had FINALLY turned a profit just before he took the reigns. A year later, and I believe a tidy sum of money later as well, the airlines did go belly up, and Oyama was gone to buy up properties. AMAZING!

>Of course, the obot never makes mention of why anyone would suspect that the name change seems more than fairly plausible due to the number of apparent aliases used by everyone in the SAD and O family. He also never takes the time to mention that the crux of the article was regarding the microfinancing that was going on, and most probably, not just in Indonesia. Loan a poor woman $70.00 to buy a sewing machine to hang all her family's hope on, and when or if she defaults, own the very ground on which she lives. If he had even bothered to check further, he would have found out all the properties found so far, (I am sure many are still missing from the public eye, but I trust that with the number of people still working on this, more will be found) that seem to end up in the hands of the SAD family under whatever name they are using at that moment in time.

>I know the little obot is worried about the suggestion of organ trafficking, but "sad" (no pun intended) to say, it is a means for people in third world countries to make money, and one has to just think that the numbers of doctors whose names are connected to SAD's "hints" (it was only a suggestion, not a full-fledged accusation) of what so many of us, who have seen how disgusting so much of this truly is, need to worry about. Let's just say.......we wouldn't be surprised.

>Poor little obot. If you had been able to DISprove anything, I might have had enough respect for you to post on your blog. However, after visiting your site, I was overcome with laughter. Those of us who KNOW how you bots act, are far too intelligent to fall for your idiocy. Honestly......FOUR "back-up blogs". My suggestion.... Get a REAL life!

Ashokan Farewell III

Here are some more photographs I took on January 14. It was 14 degrees F when I took them.

Ashokan Farewell II

At the beginning of the twentieth century, five villages were uprooted and submerged in a massive eminent domain project that employed tens of thousands of workers to build the Ashokan Reservoir, New York City's largest reservoir.

Jay and Molly Ungar live in the Town of Olive, not far from the Ashokan Reservoir. They wrote a famous theme to the Ken Burns Civil War series, "Ashokan Farewell". It is one of the saddest meoldies ever written, but like the Catskills its nostalgia is beautiful. The Ashokan Reservoir is nostalgic and beautiful, like the song and the Catskills themselves. There is a tragic history to the Ashokan, though, and perhaps this tragedy relates to the Civil War. Local historians note that Revolutionary and Civil War veterans' graves were disinterred and moved (some to a cemetary in West Shokan) when the City built the reservoir in the early 1900s. I noticed a video interview of Jay Ungar:

75% 2009 Stock Market Rally?

I noticed the following article by Jeff Kearns on Bloomberg. The article suggests that today's 300+ point drop in the Dow Jones Industrial Average is a buying opportunity. It is difficult to be optimistic in a stock market that has resisted rebounds. However, it is important to keep in mind that the Fed has created reserves in banks. Real interest rates are below zero. Wall Street pushes for even more stimulus. This could cause duplication of the 1933 experience.

>Jan. 20 (Bloomberg) -- The Dow Jones Industrial Average fell 14 percent between Barack Obama’s election and Inauguration Day, the biggest decline ever. The second-biggest drop gave way to a 75 percent rally in 1933.

The CHART OF THE DAY compares the Dow’s retreat since Nov. 4 with the 13 percent slide between Franklin D. Roosevelt’s election and his inauguration on March 4, 1933. The red line goes on to show the Dow’s surge during FDR’s first 100 days. No other new president since the beginning of the last century produced gains or losses of 10 percent or more in the analogous periods.

Glamour and Barack Obama in David Riesmann's Lonely Crowd

Riesmann (e.g., p. 188) emphasizes the role of the media in creating other-directedness. The inner-directed carry production-related values into politics, the other-directed carry consumption-related values into politics. For the other-directed:

"Politics is to be appraised in terms of consumer preferences. Politicians are people--and the more glamorous the better. Moreover, in imitation of the marketplace, politics becomes a sphere in which the manner and mood of doing things is quite as important as what is done...The mass media of communication are perhaps the most important channels between the other-directed actors on the stage of politics and their audience. The media criticize the actors and the show generally, and both directly and indirectly train the audience in techniques of political consumership."

Riesmann describes what we now call "mainstream media" (I call it pissant propaganda) as "training" its other-directed audience:

"they include the whole range of contemporary popular culture from comic books to television. They dominate the use of leisure in all American classes except at the very top and perhaps also at the very bottom; and their influence is very great in creating the styles of response compatible with other-direction."

Riesmann notes that first,

1. "Popular culture is a tutor in consumption, it teaches the other-directed man to consume politics and to regard politics and political information and attitudes as consumer goods."

and second,

2. "The media have a stake in tolerance...This attitude of the audience leads to an emphasis not on what the media say in terms of content but on the sincerity of the presentation."

Thus, Riesmann argues, politics becomes an artifact of consumption. "The mass media act as a kind of barker for the political show. These have discovered one sovereign remedy, glamour, to combat the danger of indifference and apathy...glamour in politics, whether as charisma--packaging of the leader--or as the hopped-up treatment of events by the mass media, substitutes for the types of self-interest that governed the inner-directed. In general: wherever we see glamour in the object of attention, we must suspect a basic apathy in the spectator...the wider the electorate...the more glamour tends to displace issues or old fashioned considerations of patronage."

Riesmann argues that because of mass media's need for stable demand for their product (p. 191) they have to appeal to an other-directed audience. The reason is that the indignant (inner-directed) audience is too inflexible and likely to resist moral or intellectual shifts. He interprets this as "intolerance". However, it is also likely that sponsors may object to tendentious political positions on which inner-directed audiences might insist. The market-driven characteristic of advertisers lends itself to an other-directed audience. Hence, inner directeds are systematically excluded from the mainstream media's audience.

The mass media puts more emphasis on news and politics than market demand justifies. Part of the reason is that the other-directed "looks to the mass media for guidance in his design for living and hierarchy of values. He is led to assume that other people must rate politics as the mass media themselves do...The media...could be viewed as a conspiracy to disguise the extent of political indifference."

The mass media do not cater to inner directeds outside of the news (p. 201):

"This gnawing deficit of acceptable mass media would perhaps be less troublesome to the moralizer if the world in which he lived still appeared to be inner directed, to be governed by an invisible hand. But his own experience of life is often disappointing; he is deprived of a feeling of competence and place. Neither his character nor his work is rewarded. In that situation he tends to turn on both--for he is vulnerable to lack of worldly comprehension even more perhaps than to lack of worldly success . In a last desperate effort to turn the country back on its inner-directed course in order to make it habitable for him, he is ready to join a political movement whose basic drive is indignation. A world that refuses him a place--a world that bombards him with messages that make him feel inadequate--may not appear to him worth saving, though his destructiveness may be rationalized by various ideologies."

Riesmann adds:

"The moralizers and inside-dopesters taken together are probably a majority among the better-educated, but surely a minority of the whole population. However, the inside-dopester has little to offer to the indifferents in the way of psychic dividends: his very knowledge leads him to be aware of how little can be accomplished in politics and how fantastic it is to hope to 'get rid of politics'."

The coverage of Barack Obama combined moralizing with glamour. The media aimed to appeal to the indifferents, bringing tradition-directed as well as inner-directed indifferents to Obama through moralizing as well as glamour.

The Republicans since 1980 succeeded through moralizing. Riesmann states that this is a likely outcome. The reason is that other-directeds enjoy moralizing because it amounts to sublimation. They cannot express indignation themselves, so they often enjoy it when they see others do it. A candidate who combines glamour with sincerity is the very candidate that Riesmann would argue is likely to succeed. The media gave this gift to Obama, the appearance of sincerity coupled with glamorous appeal. Note that John McCain was sincere but lacked glamour, a point which many announcers such as CNN's Jack Cafferty hammered home.

The media did not conform to Riesmann's hypothesis of "tolerance" in the recent election. They completely jettisoned the conserative indignation in favor of a "progressive" indignation concerning George Bush conservatism. This failure of tolerance would seem to have been self-destructive for the mass media. Their audience of inner directed conservatives is likely to wilt in the next few years.

One reason might be the advent of the Internet. The power of the mass media is on the wane. Riesmann argues that they did not have much influence anyway. Televsion exacerbated the trends that Riesmann identified, which is probably why the book became so popular in the 1950s.

The centralization of media that occurred with radio and television has been in steady reversal, first because of cable television and now because of the Internet. The mass media may be in the process of losing its broad tolerance because of competition from the Internet. Fox, CNN and MSNBC are little more than glorified blogs. Hence, they more openly take sides than in prior decades because they need to stake out a market segment. They are no longer so important as sources of opinion and news. The New York Times's decline is similarly symptomatic of decentralization in media. This decentralization has important implications for public opinion. The nation is likely to become more fragmented because the large population and size need to be reconciled with increasingly fragmented opinion. In a society where the largest television station does not command five percent of the audience and there is little reason for the liberal ideological uniformity that has characterized the mass media in recent years, it would seem that America may have trouble continuing to function as a single nation.

Political Styles in Riesmann's Lonely Crowd, Acorn and the Obama Campaign

In the Lonely Crowed Riesmann (1950) discusses how his famous typology of tradition-, inner- and other-directedness interacts with political styles. Riesmann claims that political mood shifts from inner-directed moralizing to other-directed "inside-dopesterism" that emphasizes inside information and relationships rather than moral issues in political dialogue. He also claims that this shift is related to "power dispersal among many marginally competing pressure groups" in modern society rather than dominance by a ruling class as was the case in the 19th century. He asserts that there are three political types: indifferents, moralizers and inside-dopesters.

Indifferents can be tradition-directed and from marginal or oppressed groups. In 1950, when he wrote the book, Riesmann asserted that "the number of such tradition-directed indifferents remains small." Indifferents may have external locus of control and believe that (p. 167) "politics is someone else's job". In addition to tradition-directed indifferents there is also a larger number of people who are inner-directed or possibly other-directed who are also indifferent. He writes (p. 168):

"It is to a large degree the indifference of people who know enough about politics to reject it, enough about political information to refuse it, enough about their political responsibilities as citizens to evade them. Some of these new-style indifferents we may classify as inner-directed or other-directed people who happen not to have adopted a political style more characteristic for their type."

Old and new style indifferents may account for the majority of Americans (p. 170). Some of the new style indifferents reside in rural or slum communities. Riesmann speculates that some indifferent people may be in transition from tradition to inner directedness and that "Indifferents do not believe that, by virtue of anything they do, know or believe, they can buy a political package that will substantially improve their lives." But:

"Since these new-style indifferents have some education and organizational competence and since they are neither morally committed to political principles nor emotionally related to political events, they are rather easily welded into cadres for political action--much as they are capable of being welded into a modern mechanized and specialized army...The new-style indifferents are attached neither to their privacy, which would make politics intrusive, nor to their class groupings, which would make politics limited: rather...they are socialized, passive and cooperative--not only in politics, of course. Their loyalty is at large, ready to be captured by any movement that can undercut their frequent cynicism or exploit it..."

To what degree does ACORN exploit this hypothesis in its organizing efforts?

Riesmann also does a good job of capturing the inner-directed, moralizing pattern and the inside-dopester pattern of other-directedness. My questions there are as follows:

1. To what degree did the differences between the Red States and the Blue States in 2000, 50 years after the Lonely Crowd was published, reflect persistent differences in inner and other directedness?

2. To what degree has other-directedness been supplanted by a pattern that Riesmann notes in the book, namely indignation or moralizing by radical other-directeds? In other words, other-directedness suggests a concern for the feelings of others. Today, in political discourse, the special interest groups that Riesmann observed in 1950 seem to have transformed that pattern. Other-directedness now applies within the group whereas indignation and morlizing applies to those outside the group. Thus, social democracy has replaced inner-directedness with group-directedness, a fixation on a group's moral compass that has elements of a reformulated tradition direction but also elements of other-directedness.

For example, in universities much emphasis has been placed on "collegiality". This would be the equivalent of "interpersonal skills" emphasized in corporations. But collegiality is limited to those who share the political views of the privileged class of academics. Those who deviate are excluded and shunned. So while academics are primarily other-directed (arguably, the entire transition from inner to other directedness reflects the influence of universities, imbued with peer review and conformity pressure) their fixation on political ideology leads them to group directedness. Anyone who questions the goals of "social change", "social justice" and the like is viewed as "lacking collegiality" because they threaten the group-directedness.

In contrast to the indifferents, "because the inner-directed man is work driven and work oriented his profoundest feelings wrapped up in work and the competence with which work is done, when he turns to politics he sees it as a field of work." But because the inner directed person is wound tight, he has trouble adjusting to the fluidity of political realities. "He does not see it as a game to be watched for its human interest" (p. 173). Inner-directeds participate in politics because of because of a sense of responsibility (p. 175).

Riesmann does not believe that the inner-directed personality suits modern politics. Mass media invades privacy, and blurs individual interests. Inner directeds get involved in politics to further a specific goal, so they do not feel comfortable if politics invades their privacy. Politics in the modern world does not, in Riesmann's opinion, lend itself to clear analysis.

Riesmann adds:

"The incomprehensibility of politics gains momentum not only from the increase in its objective complexity but from what is, in some respects a drop in the general level of skills relevant to understanding what goes on in politics. While formal education has increased, the education provided by the effort to run a farm, an independent business, or a shop, has decreased along with the increase in the number of employees; and while there may be little or no decline in the number of independent entrepreneurs, a larger proportion of the factors leading to success or failure is no longer in the hands of those remaining as entrepreneurs. No longer can one judge the work and competence of the political or government administrator from the confident, often overconfident, base line of one's own work and competence."

Moreover, "the inner-directed indignants can easily feel helpless and invaded when things do not go well with them. As we saw in Chapter V, the inner-directed man becomes vulnerable to himself when he fails to achieve his internalized goals...the gap between other-directed city dwellers and inner-directed rural folk has increased and that the well-meant efforts to bridge the gap have frequently served only to make the latter feel still more envious and unsure...Envy and feeling of displacement--sources of a political style of curdled indignation--are of course also to be found among those rural immigrants to town who are city dwellers in name only. As long as such peole, urban or rural, have political power, their malaise vis-a-vis the other-directed elements in American life may be muted; they can shape their world and force it to make sense to them. But when even this avenue toward understanding is cut off, the curdled indignant lashes out in helpless rage or subsidies into...passive, frustrated resistance..." (Sounds to me like talk radio.)

In contrast to the indignant inner-directed and tradition-directed, the minority of Americans who have all the power but are other-directed are inside-dopesters who view politics as consumption (Riesmann doesn't seem to notice an incongruity there, that he is saying that a majority are indifferents who are largely in transition between tradition and inner or other directedness, and all the rural people are inner directed, so it is only the university-educated city dwellers who are other-directed. What puzzles me is why the majority continues to put up with it.)

This emphasis on politics as consumption fascinates me because I teach business. If politics is consumption, why hasn't the focus been on better meeting consumer needs rather than regulation? Why isn't there a politics of consumption? I believe that there is a huge opportunity for conservatives here. The underlying impulse is consumption. Progressives package a government based on moral obligation (social justice, for instance) which suggests a conscience-based obligation rather than a relationship-based focus on consumption.

What Reagan understood is that politics is consumption, and therefore needs to be packaged. This has ramifications that have never been explored. For instance, political units can be re-divided in terms of market segmentation rather than primitive geographic units. There is much to do here as this has not been discussed. All political paradigms are rooted in power relationships rather than consumption, but the trend in the world has been toward consumption, not power. A new politics based on choice could transcend the conflict between other-directed progressivism and inner-directed moralism.

In Riesmann's view, the archetypal other directed is an inside dopester. This reflects a limited view of politics. Why not a consumer of political services, or of the self-image of moralizing. Might not the contributions of George Soros or the activism of Michael Bloomberg be viewed in consumption terms? These super-consumers of American politics may provide a model--that there are different kinds of consumption that different Americans prefer, and different political approaches via the states or groups of states might be preferable to the groups, resulting in more optimal arrangements.

Politics in the age of inner-direction focused on individual rights and liberty. Corporate power was viewed as a threat to individual rights. Politics in the age of other-direction focused on group rights and corporate power. Corporate power was viewed as a source of consumption and a powerful actor that dominates the lives of workers and consumers. Corporate power in the age of choice is itself a consumption variable. Consumers can choose created environments in which corporations have one or another degree of power. Progressives can choose a highly centralized, corporatist society. Conservatives an individualist one. The mode of production need not be restrained by scale or relationship to the state. Quality management can make small firms more efficient and large ones equally so.

Inner dopesters, in Riesmann's definition are people who enjoy politics for being able to show off what they know to their peer-group. It is important to the inside-dopester to look like an informed insider. Other-directeds often aspire to (but are not really) this type of person. "Politics indeed serves the inside-dopester chiefly as a means for group conformity. He must have acceptable opinions, and where he engages in politics he must do so in acceptable ways. In the upper class, as among radical groups, the influence of the moralizing style is still strong, and many people who set the cultural patterns carry on with an ideology of political responsibility; they act as if politics were a meaningful sphere for them...These inside-dopesters of the upper middle class should be contrasted with those found in small towns and rural areas who are in easy contact with their local and even state officials...there are striking similarities between the tradition-directed and the other-directed. Both groups feel helpless vis-a-vis politics, and both have resorted to varieties of fatalism which the inner-directed moralizer would sternly reject. However, there are important differences. The inside-dopester, unlike the indifferent, is subordinate to a peer group in which politics is an important consumable and in which the correct--that is, the unemotional--attitude toward one's consumption is equally important."

Thus, (p. 188) "The inner-directed moralizer brings to policies an attitude derived from the sphere of production. The other-directed inside-dopester brings to politics an attitude derived from the sphere of consumption. Politics is to be appraised in terms of consumer preferences. Politicians are people--and the more galmorous the better.

This leads into a discussion of glamour and politics, which relates directly to Barack Obama.

Monday, January 19, 2009

American Association of Unprincipled Progressives

Irene Alter forwarded an excellent Mike Adams blog on Town Mike and I chatted a few times at the recent National Association of Scholars meeting that he describes. Over the years I have participated in a few tussles with the American Association of University Professors(AAUP), especially the former general secretary, Roger Bowen. Adams's points about the AAUP are accurate. They are full of double talk and have lied about helping conservatives for years. Cary Nelson, who participated in the NAS conference as an AAUP representative, continued the long standing policy of pretense.

Adams describes his own ordeal:

"That conclusion is based on years of bad experiences with the AAUP’s members – beginning with my first major free speech controversy after 911. Some readers may remember that the controversy began when a student charged me with libel for simply implying that her mass email blaming 911 on America was 'bigoted,' 'unintelligent,' and 'immature.'

"When the university announced that it would be necessary to read my private emails in search of evidence for this bogus libel charge I turned to the FIRE for help. No member of the AAUP contacted me about the case until one year after the incident. Curiously, when the AAUP member did finally comment on the case he claimed falsely (in an email to the entire faculty) that the university did not read my private email correspondence as I had claimed. He specifically accused the FIRE of circulating a false press release."

After giving several other examples of AAUP indifference to suppression of conservatives' speech, Adams concludes:

"The point here is not that every member of the AAUP is an unhinged bigot engaging in psychological projection. The point is that literally every time a member of the AAUP gets involved in a free speech case, the motivation is one of politics not principle. The debate always dwindles after the first AAUP 'contribution.'"

A few years ago Professor Rothman published an article showing that Democrats outnumber Republicans five to one in colleges. This was somewhat greater than other studies that found three to one. Bowen's response, as AAUP general secretary, was to slander Rothman's work. With a sample size in the thousands, Rothman's sample was better than most other social science research. But Bowen publicly and repeatedly stated that Rothman's study was flawed becase of the sample size.

Adams is courageous to stand up to university bias.

JR Dieckmann Resigns from the Republican Party

Larwyn has forwarded JR Dieckmann's recent post about his resignation from the Republican Party on his Great American Journal blog. Dieckmann outlines the GOP's failure to bring the birth certificate question to the fore; ineffectual campaign strategies in the recent election; failure to stand up to the Democrats and to me, most significantly, the Republicans' "move to the left". Dieckmann writes to Mike Duncan, national chair of the RNC:

"I hold you equally responsible along with the liberal media for the results of this 2008 election and the carnage that is sure to follow. The Republican party is devoid of credible leadership and conservative principles. Much of the blame belongs to George W. Bush for his lack of conservative fiscal, small government, and domestic policies. His first four years were spectacular, especially on the foreign policy and national defense issues. Then after reelection, he became a Democrat-lite, along with the entire Republican led congress, which seemed to have adopted the Democrat agenda.

"Conservative" is not just a word you can throw out there to try to hold onto core Republicans, it is an ideology and a conviction that seems to have escaped you and the Republican 'party leaders' - if you can call them that. You should have listened to George Allen, Tom Delay, Newt Gingrich, Fred Thompson, Rick Santorum, Mike Pence, Tom Colburn, Duncan Hunter, and others who have tried to get the conservative message out, instead of allowing them to be thrown under the bus.It is for all of the reasons stated above that I feel the Republican party no longer represents my views and beliefs in the political arena."

Dieckmann raises two sets of issues: strategic and ideological. The strategic problems amount to a failure of practical reason and are probably easy to remedy. Whether or not to emphasize the birth certificate is a war tactic on which reasonable generals can disagree; and failure in one election can lead to success in the next. However, the difference in ideologies does not strike me as so easy to remedy.

It is a puzzle to me how and why the Republicans were not able to perpetuate the "Reagan revolution". Ronald Reagan was a symbol. He accomplished a few small things. He continued the shift in monetary policy that had begun under Carter and allowed Paul Volcker to stabilize the price increases. This took courage. Volcker's policies likely cost Carter reelection and caused a significant economic slowdown. In contrast, when the tech bubble burst at the beginning of George W. Bush's career, Greenspan's response was a new round of inflation, which has led to the current situation. The "bailout" and second round of re-inflation under Bush-Bernanke (and supported by Obama) will lead to serious problems in the current period. The first Bush and Clinton perpetuated the Reagan revolution to a moderate degree. Relative to the George W. Bush administration, budgets were not excessive during the George H. and Clinton administrations (although they were of course excessive compared to pre-1950 America). The Republicans hated Clinton but their replacement, George W. Bush, has turned out to be a joke. Yet, incomprehensibly, many Republicans keep talking about how great George W. Bush was. Someone who uses tax money to subsidize banks, insurance companies and automobile companies is not a conservative. He is far to the left of Clinton. Can we not blame the stupidity of conservatives for what has occurred in the GOP? Forgetting the ugly character issues, Clinton actually was better than George W. Bush. Inflation and monetary games that have became serious under Bush had disappeared under Clinton, and by 2000 I forgot about the 1970s. Bush, Greenspan and Bernanke have reinvented the 1970s--and they have reinvented them in a stupid, incompetent way. The only thing worse are the conservatives who have cheered massive increases in government spending, monetary expansion and regulatory bloat. They haven't taken the time to listen to complaints about education policy, monetary policy and a host of other policies. As George Bush has de-limited government, spent endlessly, destroyed the spirit of entrepreneurship in favor of stupidly managed firms like Citigroup, General Motors and others, may we conclude that conservatives have gotten the leadership they deserve?

The Republicans under Bush became the party of big government and inflation. Sadly, however, not to be outdone, the Democrats also elected an anti-Reagan candidate. Perhaps I realized that there had been a shift when the Economist crowed that American politicians were no longer "ideological". That was about four years ago. At that point I stopped subscribing to the Economist and became interested in monetary issues for the first time since 1983.

Of the two parties the Republicans are the more freedom-oriented one despite the leadership vacuum at the top. I take issue with Mr. Dieckmann's position that the Republican leadership is to blame for the follies of the 2008 election. John McCain won the primary votes. It was not a top down decision. I was unaware of how bad McCain was because I was not politically active until 2004 or so (I had been in the 1970s and until 1982 or so, but not between 1984 and 2004). Seeing McCain campaigning was an education in itself. He should have been the leader of the Socialist Party. I appreciate his war record, incredible bravery and also suspect he has leadership ability, but his ideas are ridiculous.

Because the Republicans are the more susceptible to the pro-freedom argument at the rank-and-file level, I have chosen to remain a Republican. I follow Ayn Rand in that regard, who did not belong to the Libertarian Party. I do, though. In New York the LP is not a Party, so I am a dues-paying LP member but a registered Republican, and I contributed to a fine Republican Congressional candidate in the 22nd New York Congressional district, George Phillips, as well as McCain.

I would urge Mr. Dieckmann to reconsider his decision and to join the Republican Liberty Caucus, a group of free market Republicans within the Republican Party. The last new party was the Republican Party, which was reformulation of the Whig Party. Leading Whigs like Abraham Lincoln, who was allied closely with Henry Clay, transferred to a newly formed party.

America has always had two parties except for the "era of good feelings" after 1800 and before 1820 or so. The two parties have always been pro centralization versus pro decentralization. In the 19th Century the Democrats were pro-decentralization and the Republicans were pro centralization. This continued until 1932 (although there were exceptions, like Woodrow Wilson). After 1932 the Democrats between the party of the "union" and the Republicans became more closely aligned with states' rights and freedom. Unfortunately, between the election of Dwight Eisenhower in 1952 and the election of Ronald Reagan in 1980, the Republicans lost their way, retaining the Progressive orientation that they had created in the early twentieth century but failing to emphasize the liberal or libertarian impulse that some Republicans still emphasized. In 1964 Barry Goldwater attempted to renew this impulse, but he fought an uphill battle following the JFK assassination in 1963. Ronald Reagan fulfilled the Goldwater insurgency in 1980.

Since 1980, there has not been a Republican leadership that has been committed to freedom. This failure of vision comes from two sources:

-bad education in American elite colleges
-failure of Republican activists to demand better vision from the leadership

The bad education in American elite colleges has been discussed by David Horowitz and many others. I returned from a meeting of the National Association of Scholars that was held on January 9-11 in Washington. This is an organization that all Republicans should be supporting, but I have not heard of many Republican activists taking an interest in higher education. Indeed, the Bush White House appointed a host of left wing extremists to the Department of Education.

The failure of the Republican activists to demand better vision can be seen in the McCain nomination. It can be seen in the failure to demand abolition of the Departments of Education, Energy and Labor. It can be seen in the appointment of left wing ideologues to numerous DOE posts. It can be seen in the complacency with which Republicans have allowed their leaders to demand ever higher tax rates at the local level with hardly a peep.

Remedying these challenges needs to be done from within the Republican Party. The choice between Democrats and Republicans is a dismal one, but we have to start from somewhere, and the ashes of the Reagan revolution are the most likely place.

HBO's Taking Chance

Nancy Razik sent me this url for the trailer to HBO's upcoming movie Taking Chance starring Kevin Bacon. It will air on Feb. 21. HBO's movies and series are often first rate--need I mention John Adams, the Sopranos and so many others (John from Cincinnati was an unfortunate exception)?

I think you'll agree after watching the trailer and interviews that this one is not to be missed.

Sunday, January 18, 2009

Where Montesquieu Was Wrong

Montesquieu's Spirit of Laws is remarkable. He outlines the basic principles of federalism: the three branches of government; the upper and lower house of the legislature; the independent judiciary. He discusses why federations of states work better than single states in establishing a republic. He contrasts the main forms of government: republics, monarchies, tyrannies and aristocracies with respect to the kinds of laws that are appropriate to each. Then, in a massive historical tour de force, he traces how various social, climatic, cultural, religious and other variables interacted with laws in a wide range of countries to make them effective or ineffective. He covers moral and religious law as well as monetary policy. The Spirit of Laws was written in the 1740s. The Founding Fathers relied on it heavily in writing the Federalist Papers and conceptualizing the Constitution and the earlier Articles of Confederation. Montesquieu is not the economist that Adam Smith was, but his political insight and the strength of his historical analysis, which spans ancient law and culture, to include law and culture of the ancient Egyptians, Greeks, Romans, Chinese, Japanese and the Barbarians, including a fascinating analysis of the Law of Salique, which he quotes at length and the customs of the Franks, Lombards, Visigoths, Ostrogoths, Burgundians and other Barbarian tribes in the times of Rome through Charlemagne are breathtaking. His expansive analysis of Rome could have constituted a book in itself. One of the things I found interesting is that as a Frenchman, Charles de Secondat Baron de Montesquieu, Montesquieu still conceptualized himself as a Frank and a German. When he mentions his "ancestors" he is thinking of a German tribe, the Franks, not Roman or Gaul ancestry. Also, he mentions that German tribal law was still dominant in the time of Charlemagne.

Here is his discussion of Roman depreciation of the currency, which he argues began when Rome was still a Republic during the Punic War. He does not believe that republics can inflate secretly, or that inflation is impossible in the modern world without it being evident:

"In the changes made in the specie during the time of the republic, they proceeded by diminishing it: in its wants, the state intrusted the knowledge to the people, and did not pretend to deceive them. Under the emperors, they proceeded by way of alloy. These princes, reduced to despair even by their liberalities, found themselves obliged to degrade the specie; an indirect method which diminished the evil without seeming to touch it. They withheld a part of the gift and yet concealed the hand that did it; and without speaking of the diminution of the pay, or of the gratuity, it was found diminished.

"We even still see in cabinets a kind of medals which are called plated, and are only pieces of copper covered with a thin plate of silver. This money is mentioned in a fragment of the 77th book of Dio.

"Didius Julian first began to debase it. We find that the coin of Caracella had an alloy of more than half; that of Alexander Severus of two-thirds; the debasing still increased, till in the time of Gallienus nothing was to be seen but copper silvered over.

"It is evident that such violent proceedings could not take place in the current age; a prince might deceive himself but he could deceive nobody else. The exchange has taught the banker to draw a comparison between all the money in the world, and to establish its just value. The standard of money can no longer be a secret. Were the prince to begin to alloy his silver, everybody else would continue it, and do it for him...If, like the Roman Emperors he debased the silver without debasing the gold, the gold would suddenly disappear, and he would be reduced to his bad silver..."

I guess Montesquieu never heard of Alan Greenspan, Ben Bernanke, and the Federal Reserve Bank!