"It may be argued that there are really two Powers which are different in kind; that one is the Power of a small number of men over the mass, as in a monarchy or aristocracy, and that Power of this kind maintains itself by force alone; and that the other is the Power of the mass over itself, and that Power of this kind maintains itself by partnership alone.
"If that were so, we should expect to find that in monarchical and aristocratic regimes the apparatus of coercion was at its zenith, because there was no other driving power, and that in modern democracies it was at its nadir, because the demands made by them on their citizens are all the decisions of the citizens themselves. Whereas what we in fact find is the very opposite, and that there goes with the movement away from monarchy to democracy an amazing development of the apparatus of coercion. No absolute monarch ever had at his disposal a police force comparable to those of modern democracies. It is, therefore, a gross mistake to speak of two Powers differing in kind, each of which receives obedience through the play of one feeling only. Logical analyses of this kind misconceive the complexity of the problem."
---Bertrand de Jouvenal
On Power: The Natural History of Its Growth, p. 23
Sunday, May 31, 2009
Tuesday, May 26, 2009
Comments from Students
I have been busy winding up the semester for the past month or so and have not been blogging. After grades were in I received several e-mails from Brooklyn College undergrad and NYU MBA students:
"I just wanted to take this opportunity to thank you for the course. This has truly been the most enjoyable and eye opening experience at BC. The literature you provided for the class was very interesting and intriguing- really made us analyze certain philosophies and how they apply to current day. You made us think creatively and let us express ourselves freely, you gave us a voice and cared to hear our opinions. You truly are a wonderful professor and BC is lucky to have you as any student would be fortunate to learn and gain knowledge from you and your course. Thank you again for a great and fun learning experience."
---Diana
"Thanks for everything !! Hope you have a great Summer."
---Sherene
"Thanks Professor Langbert. This was a great experience, and you are wonderful. Keep up the good work. Have a great summer. I completed my evaluation before the end of the course."
---Josephine
"Professor Langbert,
"I want to thank you from the bottom of my heart for your assistance in this class. Keeping afloat was not easy due to my circumstance. You are a professor with vast knowledge in which you have taken the time to impart some of this to many of your students.
"Thanks a million. Have a wonderful summer, and I recall you mentioning taking a Sabbatical, if so enjoy that as well."
---Michelle
"Thank you for a great semester and enjoy your sabbatical."
---Frankelroy
"Thank you so much professor and bless you"
---Marryam
"I enjoyed your class this semester. Good luck writing your book."
---Graig
"Now that the grades are posted and there isn't any potential conflict of interest looming out there -- I was wondering if you would still be interested in meeting up for lunch. I had a pleasure talking with you about film and television on Saturday afternoon, and I hope we can explore that topic further or venture into other areas of mutual interest."
---Peter
"I just wanted to take this opportunity to thank you for the course. This has truly been the most enjoyable and eye opening experience at BC. The literature you provided for the class was very interesting and intriguing- really made us analyze certain philosophies and how they apply to current day. You made us think creatively and let us express ourselves freely, you gave us a voice and cared to hear our opinions. You truly are a wonderful professor and BC is lucky to have you as any student would be fortunate to learn and gain knowledge from you and your course. Thank you again for a great and fun learning experience."
---Diana
"Thanks for everything !! Hope you have a great Summer."
---Sherene
"Thanks Professor Langbert. This was a great experience, and you are wonderful. Keep up the good work. Have a great summer. I completed my evaluation before the end of the course."
---Josephine
"Professor Langbert,
"I want to thank you from the bottom of my heart for your assistance in this class. Keeping afloat was not easy due to my circumstance. You are a professor with vast knowledge in which you have taken the time to impart some of this to many of your students.
"Thanks a million. Have a wonderful summer, and I recall you mentioning taking a Sabbatical, if so enjoy that as well."
---Michelle
"Thank you for a great semester and enjoy your sabbatical."
---Frankelroy
"Thank you so much professor and bless you"
---Marryam
"I enjoyed your class this semester. Good luck writing your book."
---Graig
"Now that the grades are posted and there isn't any potential conflict of interest looming out there -- I was wondering if you would still be interested in meeting up for lunch. I had a pleasure talking with you about film and television on Saturday afternoon, and I hope we can explore that topic further or venture into other areas of mutual interest."
---Peter
Wednesday, May 20, 2009
Failure of Liberalism
In 1960 sociologist Daniel Bell claimed that ideology had ended. It did not. Ideology is but a set of integrated assumptions, hypotheses or theories about the world. Without integration social order would disintegrate, and without assumptions action would be pointless. In the decades following 1960 universities were imbued with a more aggressive ideological tone than that which had preceded 1960. More importantly, the dominant ideology of the post-war period, state-activist liberalism, faltered. Yet its proponents in both major political parties became increasingly shrill about their respective ideological versions. What faltered most was state-liberalism's claim of pragmatism and economic rationality. In failing to consider the outcomes of its own decisions, state-liberalism failed its chief premise of pragmatism. State-liberalism faltered because business was not efficient, rational or pragmatic, but rather was coddled (Lindblom) and benefited from the activist liberal state that acted not in the public interest but rather in firms' private interests. Coddling connotes inefficiency, and inefficiency leads to the failure of state-activist liberalism's chief premise that it can produce economic growth and that the state can ameliorate inefficiencies, the business cycle and the anxieties characteristic of laissez-faire capitalism. Although economic growth in the immediate post-war period was ample and well distributed, by 1970 the liberal-Progressive system had failed to deliver what Herbert Croly called "the promise of American life". Real wages sputtered and income inequality grew in the wake of stock market growth and plant relocations. In the following decades, the decline has been mitigated by borrowing and the increasingly widespread distribution of credit, but little more. In other words, the American economy has been living on borrowed time. A few technological breakthroughs have masked a widespread failure of innovation. As executives have seen plant relocation as the sole avenue for increasing efficiency, they transferred America's rusting infrastructure to the third world. But the activist state displaced the innovation that ought to have replaced the now-globally based manufacturing infrastructure. The result is ever-slower economic and technological progress if not outright permanent declines.
Oswald Spengler argued that the west would decline because of natural historical cycles. The decline of American liberalism is not due to an inevitable cycle but rather to the choices that the American public has made in response to the failure of the progressive ideologies and institutions that came to dominate American politics beginning in the late 19th century and have increasingly dominated liberalism--those of the activist state. The proponents of the activist state claim that it serves the poor and argue for the establishment of large edifices to do so. But they have not solved the poor's problems, and in many cases have intensified them. State activist liberals, on behalf of their altruistic claims, establish a centralized monetary system whose chief result is not just the reduction of unemployment in ever-less productive jobs, but the distribution of credit hence wealth into the hands of large corporations, their stock holders, their executives, their service firms and Wall Street. State-activist liberalism calls itself "progressive" but progress in terms of real wage growth and innovation has fizzled. Hence, while the proponents of state activist liberalism claim to have improved things, much of what they have accomplished has been destructive of the ends that they proclaim. Following more than a century of state activist liberalism, Americans are less economically secure than they were under laissez-faire because job creation has slowed and has been funneled into the kinds of jobs in the kinds of firms to which entrenched economic interests have chosen. These are not the firms and jobs that best serve the public and do not produce sustainable growth. Alternatives have been staunched by the centralized approach to credit allocation that progressivism, backed by banking and corporate interests, has favored.
State activist liberalism has faltered because it has not fulfilled the promise of pragmatism that post-war liberals proclaimed. America's large corporations have not performed, and instead have relied on the public support that efficient private organizations ought to obviate. This is not because the public cannot afford seeing large companies fall or because industry is necessarily inefficient, but because the firms' control of the media is sufficient to forestall intelligent debate about policy options.
The state-activist liberal stance was always present in American history. In the late 18th century it was called Federalism and in the early 19th century it was represented by the Whig Party. The Republicans briefly rejected the state liberal philosophy in favor of social Darwinism in the late 19th century for two or three decades, which had the effect of preempting working class Jacksonian democracy, and then reasserted it in the form of Progressivism. The Democrats under Woodrow Wilson followed. Under Franklin Roosevelt the Democrats made one major change: painting the image that their Whig philosophy was in the interest of the poor and that the redistribution of wealth that Hamilton and the Whigs had advocated was a matter of social justice. At the same time, Roosevelt intensified the power of the Fed to transfer wealth to politically connected investment banks and their client corporations.
Although both political parties are genealogically descended from Jefferson, both advocate the ideology of Hamilton. But management theory has advanced since Hamilton's death. Today's state activist liberalism fails to integrate advances in management theory, and in effect is a relic-ideology that has slowed economic growth and has increasingly crippled the American economy.
It is time to consider alternatives. The current path is one of impoverishment and the failure of the American economic system.
Oswald Spengler argued that the west would decline because of natural historical cycles. The decline of American liberalism is not due to an inevitable cycle but rather to the choices that the American public has made in response to the failure of the progressive ideologies and institutions that came to dominate American politics beginning in the late 19th century and have increasingly dominated liberalism--those of the activist state. The proponents of the activist state claim that it serves the poor and argue for the establishment of large edifices to do so. But they have not solved the poor's problems, and in many cases have intensified them. State activist liberals, on behalf of their altruistic claims, establish a centralized monetary system whose chief result is not just the reduction of unemployment in ever-less productive jobs, but the distribution of credit hence wealth into the hands of large corporations, their stock holders, their executives, their service firms and Wall Street. State-activist liberalism calls itself "progressive" but progress in terms of real wage growth and innovation has fizzled. Hence, while the proponents of state activist liberalism claim to have improved things, much of what they have accomplished has been destructive of the ends that they proclaim. Following more than a century of state activist liberalism, Americans are less economically secure than they were under laissez-faire because job creation has slowed and has been funneled into the kinds of jobs in the kinds of firms to which entrenched economic interests have chosen. These are not the firms and jobs that best serve the public and do not produce sustainable growth. Alternatives have been staunched by the centralized approach to credit allocation that progressivism, backed by banking and corporate interests, has favored.
State activist liberalism has faltered because it has not fulfilled the promise of pragmatism that post-war liberals proclaimed. America's large corporations have not performed, and instead have relied on the public support that efficient private organizations ought to obviate. This is not because the public cannot afford seeing large companies fall or because industry is necessarily inefficient, but because the firms' control of the media is sufficient to forestall intelligent debate about policy options.
The state-activist liberal stance was always present in American history. In the late 18th century it was called Federalism and in the early 19th century it was represented by the Whig Party. The Republicans briefly rejected the state liberal philosophy in favor of social Darwinism in the late 19th century for two or three decades, which had the effect of preempting working class Jacksonian democracy, and then reasserted it in the form of Progressivism. The Democrats under Woodrow Wilson followed. Under Franklin Roosevelt the Democrats made one major change: painting the image that their Whig philosophy was in the interest of the poor and that the redistribution of wealth that Hamilton and the Whigs had advocated was a matter of social justice. At the same time, Roosevelt intensified the power of the Fed to transfer wealth to politically connected investment banks and their client corporations.
Although both political parties are genealogically descended from Jefferson, both advocate the ideology of Hamilton. But management theory has advanced since Hamilton's death. Today's state activist liberalism fails to integrate advances in management theory, and in effect is a relic-ideology that has slowed economic growth and has increasingly crippled the American economy.
It is time to consider alternatives. The current path is one of impoverishment and the failure of the American economic system.
Monday, May 4, 2009
Howard S. Katz on Floyd Norris
Howard S. Katz is back on Kitco and he has written an interesting piece in response to New York Times columnist Floyd Norris entitled "Response to Floyd Norris":
Dear Mr. Norris:
I approach the subject of economics from a slightly different point of view than the writers for the Times, and I wanted to take issue with your comments in Saturday’s paper about the “recession.”
First, there was an event that happened at the very beginning of the New Deal which sets the tone for the economic controversies of the past 80 years. F.D.R’s Brain Trust., freshly in office, came up with a plan to get the country out of the depression by means of killing pigs and plowing under crops. The plan, however, ran into one difficulty. (I owe this story to my good friend Warren Roberts.) The jackasses who pulled the plows had been carefully taught to walk between the rows. Now that they were being ordered to walk on the rows they rebelled. The reason for this is that the jackasses had more brains than the Brain Trust.
Supporters of the New Deal had an effective way to deal with this. They all carry a mental eraser in their heads, and when something embarrassing occurs, they simply erase it from their minds. To claim that you are going to save the country from depression by destroying wealth is akin to the math student who enters the class with the theory that 2 + 2 = 27. There is really no point in debating him. One is dealing with a nut case, and to attempt an intellectual discussion to show him the error of his ways is itself a mistake.
Further evidence of the Times’ incompetence in economics can be seen from their failed predictions over the past 30 years.
In 1982, with the DJI at 800, the Times kept telling the country that Henry Kaufman was the nation’s top economist. Dr. Kaufman was then known by the nickname “Dr. Doom” because he was predicting higher interest rates and lower stock prices. Millions of people took your advice and sold their stocks, just months before the greatest stock bull market in American history.
In 1985, with the DJI at 1350, the Times’ Op Ed page developed the theory that the chart pattern of the DJI bore an uncanny resemblance to late 1928 and early 1929. This implication was that stocks were on the verge of a massive decline which would cause them to lose 90% of their value. All over the country people were thrown into a panic and sold their stocks, knocking the DJI down below 1300. From there it turned and, over the next 2 years, rose to 2700. It never got below 1300 again.
In 1987, a gentleman named Ravi Batra wrote a book entitled The Great Depression of 1990. The Times, and the remainder of the nation’s media, became very excited over this prediction. Lester Thurow went ga-ga over the book. Leonard Silk, Christopher Lehmann Haupt and Thomas Hayes gave him high praise. The pessimism generated by the book may have contributed to the crash of October 1987. But when 1990 rolled around, the worst that happened was a 1.3% (2 quarter) decline in GDP. J. Scott Armstrong called this the seer-sucker theory: for every seer there is a sucker.
In 1999, the Times turned bullish and published Dow 36,000 by Glassman and Hassett, predicting that the DJI would rise to that number between 2002-04. By 2002, the DJI had declined to a low of 7,200, and its 2004 high was still below 11,000. Carried away by its own irrational exuberance the Times invested $2.7 billion in its own stock (then trading around 40). At present, one share of Times stock sells for about the same price as a Sunday paper, and the loss on those turn-of the century investments is about $2.3 billion. This has forced the Times to mortgage its new headquarters and to take a loan from Mexican billionaire Carlos Slim.
In short, this record of prediction is pretty much what one would expect if the student who believed the 2 + 2 = 27 theory were to take over the math class and start investing the school’s money.
Read the whole thing here.
Dear Mr. Norris:
I approach the subject of economics from a slightly different point of view than the writers for the Times, and I wanted to take issue with your comments in Saturday’s paper about the “recession.”
First, there was an event that happened at the very beginning of the New Deal which sets the tone for the economic controversies of the past 80 years. F.D.R’s Brain Trust., freshly in office, came up with a plan to get the country out of the depression by means of killing pigs and plowing under crops. The plan, however, ran into one difficulty. (I owe this story to my good friend Warren Roberts.) The jackasses who pulled the plows had been carefully taught to walk between the rows. Now that they were being ordered to walk on the rows they rebelled. The reason for this is that the jackasses had more brains than the Brain Trust.
Supporters of the New Deal had an effective way to deal with this. They all carry a mental eraser in their heads, and when something embarrassing occurs, they simply erase it from their minds. To claim that you are going to save the country from depression by destroying wealth is akin to the math student who enters the class with the theory that 2 + 2 = 27. There is really no point in debating him. One is dealing with a nut case, and to attempt an intellectual discussion to show him the error of his ways is itself a mistake.
Further evidence of the Times’ incompetence in economics can be seen from their failed predictions over the past 30 years.
In 1982, with the DJI at 800, the Times kept telling the country that Henry Kaufman was the nation’s top economist. Dr. Kaufman was then known by the nickname “Dr. Doom” because he was predicting higher interest rates and lower stock prices. Millions of people took your advice and sold their stocks, just months before the greatest stock bull market in American history.
In 1985, with the DJI at 1350, the Times’ Op Ed page developed the theory that the chart pattern of the DJI bore an uncanny resemblance to late 1928 and early 1929. This implication was that stocks were on the verge of a massive decline which would cause them to lose 90% of their value. All over the country people were thrown into a panic and sold their stocks, knocking the DJI down below 1300. From there it turned and, over the next 2 years, rose to 2700. It never got below 1300 again.
In 1987, a gentleman named Ravi Batra wrote a book entitled The Great Depression of 1990. The Times, and the remainder of the nation’s media, became very excited over this prediction. Lester Thurow went ga-ga over the book. Leonard Silk, Christopher Lehmann Haupt and Thomas Hayes gave him high praise. The pessimism generated by the book may have contributed to the crash of October 1987. But when 1990 rolled around, the worst that happened was a 1.3% (2 quarter) decline in GDP. J. Scott Armstrong called this the seer-sucker theory: for every seer there is a sucker.
In 1999, the Times turned bullish and published Dow 36,000 by Glassman and Hassett, predicting that the DJI would rise to that number between 2002-04. By 2002, the DJI had declined to a low of 7,200, and its 2004 high was still below 11,000. Carried away by its own irrational exuberance the Times invested $2.7 billion in its own stock (then trading around 40). At present, one share of Times stock sells for about the same price as a Sunday paper, and the loss on those turn-of the century investments is about $2.3 billion. This has forced the Times to mortgage its new headquarters and to take a loan from Mexican billionaire Carlos Slim.
In short, this record of prediction is pretty much what one would expect if the student who believed the 2 + 2 = 27 theory were to take over the math class and start investing the school’s money.
Read the whole thing here.
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