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Purple Politics
Joel Kotkin
Is California moving to the center?
You don't have to be a genius, or a conservative, to recognize that California's experiment with ultra-progressive politics has gone terribly wrong. Although much of the country has suffered during the recession, California's decline has been particularly precipitous--and may have important political consequences.
Outside Michigan, California now suffers the highest rate of unemployment of all the major states, with a post-World War II record of 12.2%. This statistic does not really touch the depth of the pain being felt, particularly among the middle and working classes, many of whom have become discouraged and are no longer counted in the job market.
Even worse, there seems little prospect of an immediate recovery. The most recent projections by California Lutheran University suggest that next year the state's economy will lag well behind the nation's. Unemployment may peak at close to 14% by late 2010. Retail sales, housing and commercial building permits are not expected to rise until the following year.
This decline seems likely to slow--or even reverse--the state's decade-long leftward lurch. Let's be clear: This is not a red resurgence, just a shift toward a more purplish stance, a hue that is all the more appropriate given the economy's profound lack of oxygen.
There is growing disenchantment with the status quo. The percentage of Californians who consider the state "one of the best places" to live, according to a recent Field poll, has plummeted to 40%, from 76% two decades ago. Pessimism about the state's economy has risen to the highest levels since Field started polling back in 1961.
Inevitably, this angst has affected political attitudes. Though still lionized by the national media, Gov. Schwarzenegger's approval ratings have fallen from the mid-50s two years ago into the low 30s. The 12% approval rate for the state legislature, according to a Public Policy Institute of California survey in May, stands at half the pathetic levels recorded by Congress.
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The enviro fringe has blocked major new power plant construction in CA for several decades. No problem, we import power from coal burning plants in the Four Corners area. We are an island where gas....
Moreover, voters now favor lower taxes and fewer services by a 49-to-42 margin--as opposed to higher taxes and more services. Support for ultra-green policies aimed to combat global warming has also begun to ebb. For the first time in years, a majority of Californians favors drilling off the coast. Californians might largely support aggressive environmental protections, but not to the extreme of losing their jobs in the process.
Remarkably, state government seems largely oblivious to these growing grassroots concerns. The legislature continues to pile on ever more intrusive regulations and higher taxes on a beleaguered business sector. Agriculture, industry and small business--the traditional linchpins of the economy--continue to be hammered from Sacramento.
Agriculture now suffers from massive cutbacks in water supplies, brought about in part by drought, but seriously worsened by the yammerings of powerful environmental interests. Large swaths of the fertile central valley are turning into a set for a 21st-century version of Steinbeck's Grapes of Wrath.
At the same time, the state's industrial base is rapidly losing its foundation. Toyota ( TM - news - people ) recently announced it was closing its joint venture plant in Fremont, the last auto assembly operation in the state, shifting production to Canada and Texas. Even the film business has been experiencing a secular decline; feature film production days have fallen by half over the decade, as movie-making exits for other states and Canada.
Most important, California may be undermining its greatest asset: its diverse, highly creative and adaptive small-business sector. A recent survey by the Small Business and Entrepreneurship Council ranked California's small-business climate 49th in the nation, behind even New York. Only New Jersey performed worse.
Regulation plays a critical role in discouraging small-business expansion, a new report from the Governor's Office of Small Business Advocate suggests. Prepared by researchers from California State University at Sacramento, the report estimates that regulations may be costing the state upward of 3.8 million jobs. California currently has about 14 million jobs, down 1 million since July 2007.
Ironically, the regulatory noose is now slated to tighten even further as a result of radical measures--from energy to land use--tied to reducing greenhouse gases. Another study, authored by California State University researchers, estimates these new laws could cost an additional million jobs.
Many in the state's top policy circles, as well as academics and much of the media, dismiss the notion that regulations could be deepening the recessionary pain. Some of this stems from the delusion--always an important factor in this amazing state--that ultra-green policies will actually solidify California's 21st-century leadership. Few seem to realize that other states, witnessing the Golden State's economic meltdown, might not rush to emulate California's policy agenda.
Internally, discontent with the current agenda seems particularly strong in the blue-collar, interior regions of the state. Brookings demographer Bill Frey and I have described this area as the "Third California." In the first part of the decade, this region expanded roughly three times as rapidly as Southern California, while the Bay Area's population remained stagnant.
Today the Third California represents roughly 30% of the state's population, compared with barely 18% for the ultra-blue Bay Area. The most conservative part of the state has skewed somewhat more Democratic in recent elections, largely due to migration from coastal California and an expanding Latino population.
But the intense economic distress now afflicting the interior counties--where unemployment rates are approaching 20%--may now reverse this process. The ultra-green politics embraced by the Democrats' two prospective gubernatorial nominees-Attorney General Jerry Brown and San Francisco Mayor Gavin Newsom--may not appeal much to a workforce heavily dependent on greenhouse-gas-emitting industries like farming, manufacturing and construction.
Eventually, the Democrats may rue their failure to run a pro-business, pro-growth candidate, particularly one with roots in the interior region. This oversight could cost them votes among, say, Latinos, who have been far harder hit by the recession than the more affluent (and overwhelmingly white) coastal progressives epitomized by Brown and Newsom. Along with independents, roughly one-fifth of the electorate, Latinos could prove the critical element in the state's purplization.
This, of course, depends on the Republicans developing an attractive pro-growth alternative. In recent years, the party's emphasis on conservative cultural issues and xenophobic anti-immigrant agitation has hurt the GOP in the increasingly socially liberal and ethnically diverse California.
Although he has proved a poor chief executive, Gov. Schwarzenegger did at least show such a political approach could work. The recent emergence of three attractive Silicon Valley-based candidates, including former eBay ( EBAY - news - people ) CEO Meg Whitman and State Insurance Commissioner Steve Poizner, as well as the likable libertarian-leaning former congressman Tom Campbell, could score well at the polls.
This political course-correction should be welcomed not only by Republicans but by California's moderate Democrats and Independents. However blessed by nature and its entrepreneurial legacy, California needs to move back to the pro-growth center if it hopes to revive both its economy and the aspirations of its people.
Joel Kotkin is a distinguished presidential fellow in urban futures at Chapman University. He is executive editor of newgeography.com and writes the weekly New Geographer column for Forbes. He is working on a study on upward mobility in global cities for the London-based Legatum Institute. His next book, The Next Hundred Million: America in 2050, will be published by Penguin early next year.
A Pragmatic Look at Obama's Pragmatism
By Jonah Goldberg‘When John McCain said we could just ‘muddle through' in Afghanistan, I argued for more resources and more troops to finish the fight against the terrorists who actually attacked us on 9/11, and made clear that we must take out Osama bin Laden and his lieutenants if we have them in our sights," Barack Obama thundered as he accepted the Democratic nomination for president in Denver last year. "John McCain likes to say that he'll follow bin Laden to the gates of Hell. But he won't even go to the cave where he lives."
It was a shabby bit of rhetoric, even for a campaign. Insinuating that McCain, of all people, didn't have the intestinal fortitude to take the fight to bin Laden was not only absurd on its face, it smacked of overcompensation coming from the former community organizer whose greatest foreign-policy passion prior to his presidential bid had been nuclear disarmament.
But the line did what it needed to do: communicate that Obama had the sort of true grit required to fight the good, i.e. popular, war in Afghanistan. That war may or may not be good anymore, but it is most certainly not popular. And so what was for Obama a "war of necessity" has become a de facto war of choice. At least that's the sense one gets as the president is suddenly searching for a politically palatable strategy other than the one he announced months ago.
Now, I think it would amount to both breathtaking cynicism and, far worse, bad policy for Obama to abandon Afghanistan to the Taliban and al-Qaeda. That goes for the "Biden plan," which would amount to little better than a public-relations effort whereby we would score regular symbolic victories while steadily losing the war.
But if it's sincere, I welcome Obama's willingness to rethink his position on an issue in which he invested so much political capital and machismo.
Obama came into office swearing he was a pragmatist who would support any approach that worked. He liked to invoke Franklin Roosevelt as his lodestar, for Roosevelt championed "bold, persistent experimentation." Discussing the economy, Obama told 60 Minutes: "What you see in FDR that I hope my team can emulate is not always getting it right but projecting a sense of confidence and a willingness to try things and experiment in order to get people working again."
That spirit has been woefully lacking in Obama's presidency so far. During the campaign, Obama's top domestic priorities were reform of health care, education, and energy. When an economic crisis that is - according to Obama, at least - second only to the Depression exploded in front of him, Obama the alleged pragmatist concluded that, mirabile dictu, his year-old agenda was the perfect solution.
Obama insisted that as president of both "red" and "blue" America, he was open to ideas from both sides of the aisle. But his stimulus bill was as partisan and one-sided as Democrats claimed George W. Bush's tax cuts were. At least Bush's tax cuts actually cut taxes. It remains to be seen whether Obama's stimulus stimulated anything at all.
After ending the war in Iraq and taking the fight to bin Laden's cave, direct engagement with the Iranian regime was candidate Obama's greatest foreign-policy priority. Partly this stemmed from the fact that he accidentally suggested in a debate that he would meet with Iranian president Mahmoud Ahmadinejad without preconditions. Rather than admit he was wrong, Obama stuck to his idée fixe throughout the campaign.
Since being elected, it seems that his off-the-cuff slipup wasn't that off the cuff. Despite an ever-increasing number of lies, subterfuges, and outrages on the part of the Iranians, the Obama administration has seemed convinced that they can be talked into compliance with the so-called international community.
But the optimist can look at Obama's newfound open-mindedness on Afghanistan and his potential orchestration of international sanctions against Iran as proof that reality is prying him from his ideological cocoon.
Alas, there's another way of reading recent events. Critics always claimed that Obama was a very left-wing fellow who was never the centrist he claimed to be. The pessimist might suspect that Obama's newfound pragmatism only manifests itself when it permits him to abandon the centrist positions that may have helped him get elected but are of no use to him politically anymore. What seemed like principled centrism in 2008 might simply be exposed as left-wing expediency in 2009.
Here's hoping the optimists are right.
Repeating history
Mad men of 1939, 2009
Nineteen thirty-nine was not a good year. World War II started, and much of the world was still in the Depression. The leaders of too many countries were either despots or naive and weak.
And 2009 has not been a good year, considering the global recession. Seventy years later, as in 1939, the leaders of too many countries are either despots or naive and weak. Just look at the performance of the world's leaders at the United Nations and at the Group of 20 summit of major economic powers in Pittsburgh last week.
Crackpots such as Libya's Col. Moammar Gadhafi ranted on while leaders of major countries, including the United States, engaged in meaningless babble about how "we" (i.e. they) will do better this year. The final communique from the G-20 was a long, embarrassing, self-congratulatory statement of how, if it had not been for the wonderful attendees at the meeting, the world economy would be in even worse shape - conveniently overlooking the fact that it largely had been this group of people who had made the mess in the first place. The summit's final, and very predictable, conclusion was that the leaders were going to take away more of our financial freedom and more from our wallets. This is not a good omen for the future.
Too many of today's leaders all too closely resemble the leaders of 1939 and seem equally capable of starting the chain of events that destroyed much of mankind in the 1940s. Iran's Mahmoud Ahmadinejad is the wannabe Adolf Hitler, not only in his hatred of the Jews, but in his plan for eliminating many of them. Hitler had his cult of the master race, which was supposed to govern all of mankind, and Mr. Ahmadinejad has, as his cult, a particular variant of Islam to which all are supposed to submit.
Many considered Hitler a clown and a fool in 1939, much as Mr. Ahmadinejad is portrayed by much of the press today. Germany in 1939 had about the same population as Iran of today. Hitler had a better-trained military, but he did not have a nuclear bomb, which Mr. Ahmadinejad will have soon. Hitler was a master at detecting and exploiting weakness in his opponents, and Mr. Ahmadinejad seems to have much the same talent.
Another 1939 throwback is Hugo Chavez of Venezuela, who is the Benito Mussolini of today - both national socialists, i.e. fascists. Like Mussolini, Mr. Chavez is a despotic clown who can be affable and charming while repressing his citizens. Mussolini had bigger ambitions than Italy, which caused him to first topple the government in Albania and then invade East Africa. Mr. Chavez has not confined his mischief to Venezuela. He has plotted against and engaged in covert operations against several of the democratic countries in Latin America.
Even though there is no Josef Stalin type on the world stage at the moment, the brothers Castro probably would have been capable of the massive crimes of Stalin if only they had a larger country. Like Stalin, Fidel Castro is a hard-core, committed communist, more consumed with his own power than the well-being of his people. The brothers Castro, allied with the younger Mr. Chavez, may succeed in overthrowing governments in Latin America, particularly because they have reason to believe they have little to fear from the new U.S. administration.
Russia's Vladimir Putin seems cut out of the same mold as Japan's Hideki Tojo of 1939. Like Tojo, Mr. Putin has followed the fascist model of putting more emphasis on control of business than actually owning everything, unlike the traditional socialist.
Tojo invaded his neighbors when he thought it would serve his interest, assuming the big powers would tolerate it because they were bogged down with other problems. Mr. Putin has engaged in similar behavior in Georgia and may think he can get away with an invasion of Ukraine, in the same way Tojo correctly assumed that the United States and others would do nothing when he had his Japanese army invade China.
What is particularly disturbing is that President Obama seems to view the world as Britain's Neville Chamberlain did in the late 1930s. Chamberlain's name has become a synonym for the failure of appeasement.
Mr. Obama's dithering on making a decision about Afghanistan, his repeated use of words as a substitute for laying down firm markers in dealing with Iran, and the clumsy way he reneged on the missile-defense commitments to the Poles give the impression that he is made of no sterner stuff and is at least as naive as Chamberlain.
The world became safer when President Reagan and Prime Minister Margaret Thatcher were in power. The world's tyrants were, for good reason, afraid of Reagan and Mrs. Thatcher. As a result, the Cold War ended almost without a shot being fired, and many petty dictators lost power or stayed bottled up in their holes - and freedom blossomed around the world as never before.
Unfortunately, Reagan has died, and Mrs. Thatcher has passed from the world stage, and now the economic and foreign-policy failures of the 1930s seem to be repeated every day - as if no one in power or in the mainstream media remembers (if any of them ever learned) history.
Do we have any indication that Iran's Mr. Ahmadinejad, Venezuela's Mr. Chavez, Russia's Mr. Putin and North Korea's Kim Jong-il have any real fear of Mr. Obama, British Prime Minister Gordon Brown, French President Nicolas Sarkozy and German Chancellor Angela Merkel? Do we have any reason for real confidence that Mr. Obama and his European allies really know what they are doing with both economic and foreign policy?
Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.
The Real Reasons Behind Fed Secrecy
by Ron Paul
Recently by Ron Paul: We Can End the Fed
Last week I was very pleased that the Financial Services Committee held a hearing on the Federal Reserve Transparency Act, HR 1207. The bill has 295 cosponsors and there is also strong support for the companion bill in the Senate. This hearing was a major step forward in getting the bill passed.
I was pleased that the hearing was well-attended, especially considering that it was held on a Friday at nine o’clock in the morning! I have been talking about the immense, unchecked power of the Federal Reserve for many years, while the attention of Congress was always on other things. It was gratifying to see my colleagues asking probing questions and demonstrating genuine concern about this important issue as well.
The witness testifying in favor of HR 1207 made some very strong points, which was no surprise considering the bill is simply common sense. It was also no surprise that the witness testifying against the bill had no good arguments as to why a full audit should not be conducted promptly. He attempted to make the case that the Fed is already sufficiently accountable to Congress and that the current auditing policy is adequate. The fact is that the Fed comes to Congress and talks about only what it wants to talk about, and the GAO audits only what the current laws allow to be audited. The really important things however, are off limits. There are no convincing arguments that it is in the best interests of the American people for anything the Fed does to be off limits.
It has been argued that full disclosure of details of funding facilities like TALF and PDCF that enabled massive bailouts of Wall Street would damage the financial position of those firms and destabilize the economy. In other words, if the American people knew how rotten the books were at those banks and how terribly they messed up, they would never willingly invest in them, and they would fail. Failure is not an option for friends of the Fed. Therefore, the funds must be stolen from the people in the dark of night. This is not how a free country works. This is not how free markets work. That is crony corporatism and instead of being a force for economic stabilization, it totally undermines it.
If the Fed gave its actual arguments against a full audit, they would not have mentioned anything about political independence or economic stability. Instead they would admit they don’t want to be audited because they enjoy their current situation too much. Under the guise of currency control, they are able to help out powerful allies on Wall Street, in exchange for lucrative jobs or who-knows-what favors later on. An audit would expose the Fed as a massive fraud perpetrated on this country, enriching a privileged few bankers at the top of our economic food chain, and leaving the rest of us with massively devalued dollars which we are forced to use by law. An audit would make people realize that, while Bernie Madoff defrauded a lot of investors for a lot of money, the Fed has defrauded every one of us by destroying the value of our money. An honest and full accounting of how the money system really works in this country would mean there is not much of a chance the American people would stand for it anymore.
Congressional Petition To End The Giant Sucking Sound Known As TARP
Tim Geithner will have some explaining to do to his banker backers why Congress is not too happy with the ongoing Wall Street bailout known as TARP. Congressman (D-NH) Paul Hodes has sent a letter to Tim Geithner demanding an end to TARP at its properly scheduled end date of December 2009, instead of extending it well into 2010. The letter's message, which any rational human being would immediately endorse, especially now that even Bernanke has said that the economy is doing well, has the signatures of 28 members of Congress, both Republican and Democrat, including HR 1207 sponsor Ron Paul. Please notify your representatives and ask them to sign this letter.
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Is The FDIC Killing Short Sales?
As some of you already know, I blogged recently about being interviewed recently by our local NBC news affiliate. To read the blog, click here. Basically, IndyMac Bank (now OneWest Bank), is holding one of my clients hostage, demanding a $75k promissory note, or they will proceed to foreclosure. For the life of me, I couldn't figure out why they were doing this. The BPO came in at the contract price of $275k, with a net to IndyMac of $241k. What advantage could there possibly be for them to proceed to foreclosure?
Yesterday, I figured it out. You see, IndyMac was taken over by the FDIC and sold to OneWest Bank in March/2009. Guess who the investors are behind OneWest? George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).
Now, listen to the deal they got from the FDIC....
Basically, they purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts). They purchased all current HELOCS at 58% of Par Value!!!
Next, in order to "sweeten the pot", the FDIC stepped in and guaranteed the following: For any residential mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the loss. The loss is calculated using the ORIGINAL LOAN BALANCE, not the amount that OneWest paid for the loan. Let's use my clients situation as an example:
Loan Amount is $478,000, plus 6 months of missed payments, for a grand total of $485,200
OneWest pays $334,600 for the loan
We have an all cash offer of $241,000, net to OneWest.
So, let's do the math, shall we? The net loss, according to the FDIC formula is the ORIGINAL LOAN AMOUNT minus the amount of the offer. In this case, $485,200-$241,000, or $244,200. Next, the FDIC, according to their Loss Share Agreement, writes a check to OneWest for 80% of the so-called "net loss". So, in this case, OneWest gets a check from Uncle Sam for $195,360 (.80 X $244,200).
Add the $195,360 to the sales price of $241,000, and you get a grand total of $436,360. Remember, OneWest paid $334,600 for the loan. So, OneWest puts $101,760 in their pocket, thanks to the FDIC. Folks, that is over $100k of our hard-earned tax dollars!
So, you ask...Why does this program hurt short sales? Because, our brilliant government offers this SAME PROGRAM FOR FORECLOSURES! The only difference is, the government picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO's, upkeep, utilities/maintenance, legal fees, etc.)
So, If I'm OneWest, why would I want to waste my time negotiating through a Short Sale, when I can make the same amount of money (if not more) by just letting it go to foreclosure? And we wonder why nobody can get a Loan Modification? Why would OneWest approve a loan modification for this guy, when they can foreclose and make over $100k? And, to add injury to insult, they have held this loan for 6 months! Not a bad ROI, huh?
What infuriates me the most is that in my particular case mentioned above, they have the guts to hold my client hostage for a $75k promissory note, after they are already making more than $100k on the sale!!! This is his primary residence, 1st Position loan, and OneWest has NO RECOURSE! Imagine if they could make $100k, then get a deficiency judgement! Talk about making some big bucks!
Can you say "GREED"?
The scary thing is that over 50 banks have Shared Loss Agreements in place with the FDIC. Some of them include: Bank of America (go figure), CitiMortgage, Wells Fargo, etc.
This entire agreement between the FDIC and OneWest can be found here, on the FDIC website. It's all there, for the world to see! They have it all layed out. All of the formulas, worksheets, etc.
Now, it's up to us to bring it to the attention of our elected officials and the media. Enough is Enough!
UPDATE 9/18/09: I JUST READ AN AWESOME ARTICLE ON THIS, THAT GOES INTO WAY MORE DETAIL THAN MY BLOG ABOVE. TAKE THE TIME TO READ IT WHEN YOU GET A CHANCE! CLICK HERE TO READ IT.
Wait, it gets better...The FDIC just announced that it needs to start borrowing money from the U.S. Treasure in order to replenish it's deposit insurance fund (the same fund being used to pay all of these banks in the Loss Share Agreements). Go Figure! Click Here to read it.
Capitalism versus Statism
From the very first we run into grave problems with the term "capitalism." When we realize that the word was coined by capitalism's most famous enemy, Karl Marx, it is not surprising that a neutral or a pro-"capitalist" analyst might find the term lacking in precision. For capitalism tends to be a catchall, a portmanteau concept that Marxists apply to virtually every society on the face of the globe, with the exception of a few possible "feudalist" countries and the Communist nations (although, of course, the Chinese consider Yugoslavia and Russia "capitalist," while many Trotskyites would include China as well). Marxists, for example, consider India as a "capitalist" country, but India, hagridden by a vast and monstrous network of restrictions, castes, state regulations, and monopoly privileges is about as far from free-market capitalism as can be imagined.[1]
If we are to keep the term "capitalism" at all, then, we must distinguish between "free-market capitalism" on the one hand, and "state capitalism" on the other. The two are as different as day and night in their nature and consequences. Free-market capitalism is a network of free and voluntary exchanges in which producers work, produce, and exchange their products for the products of others through prices voluntarily arrived at. State capitalism consists of one or more groups making use of the coercive apparatus of the government — the State — to accumulate capital for themselves by expropriating the production of others by force and violence.
Throughout history, states have existed as instruments for organized predation and exploitation. It doesn't much matter which group of people happen to gain control of the State at any given time, whether it be oriental despots, kings, landlords, privileged merchants, army officers, or Communist parties. The result is everywhere and always the coercive mulcting of the mass of the producers — in most centuries, of course, largely the peasantry — by a ruling class of dominant rulers and their hired professional bureaucracy. Generally, the State has its inception in naked banditry and conquest, after which the conquerors settle down among the subject population to exact permanent and continuing tribute in the form of "taxation" and to parcel out the land of the peasants in huge tracts to the conquering warlords, who then proceed to extract "rent." A modern paradigm is the Spanish conquest of Latin America, when the military conquest of the native Indian peasantry led to the parceling out of Indian lands to the Spanish families, and the settling down of the Spaniards as a permanent ruling class over the native peasantry.
To make their rule permanent, the State rulers need to induce their subject masses to acquiesce in at least the legitimacy of their rule. For this purpose the State has always taken a corps of intellectuals to spin apologia for the wisdom and the necessity of the existing system. The apologia differ over the centuries; sometimes it is the priestcraft using mystery and ritual to tell the subjects that the king is divine and must be obeyed; sometimes it is Keynesian liberals using their own form of mystery to tell the public that government spending, however seemingly unproductive, helps everyone by raising the GNP and energizing the Keynesian "multiplier." But everywhere the purpose is the same — to justify the existing system of rule and exploitation to the subject population; and everywhere the means are the same — the State rulers sharing their rule and a portion of their booty with their intellectuals. In the nineteenth century the intellectuals, the "monarchical socialists" of the University of Berlin, proudly declared that their chief task was to serve as "the intellectual bodyguard of the House of Hohenzollern." This has always been the function of the court intellectuals, past and present — to serve as the intellectual bodyguard of their particular ruling class.
In a profound sense, the free market is the method and society "natural" to man; it can and does therefore arise "naturally" without an elaborate intellectual system to explain and defend it. The unlettered peasant knows in his heart the difference between hard work and production on the one hand, and predation and expropriation on the other. Unmolested then, there tends to grow up a society of agriculture and commerce where each man works at the task at which he is best suited in the conditions of the time, and then trades his product for the products of others. The peasant grows wheat and exchanges it for the salt of other producers or for the shoes of the local craftsman. If disputes arise over property or over contracts, the peasants and villagers take their problem to the wise men of the area, sometimes the elders of the tribe, to arbitrate their dispute.
There are numerous historical examples of the growth and development of such a purely free-market society. Two may be mentioned here. One is the fair at Champagne, that for hundreds of years in the Middle Ages was the major center of international trade in Europe. Seeing the importance of the fairs, the kings and barons left them unmolested, untaxed, and unregulated, and any disputes that arose at the fairs were settled in one of many competing, voluntary courts, maintained by church, nobles, and the merchants themselves. A more sweeping and lesser-known example is Celtic Ireland, which for a thousand years maintained a flourishing free-market society without a State. Ireland was finally conquered by the English State in the seventeenth century, but the statelessness of Ireland, the lack of a governmental channel to transmit and enforce the orders and dictates of the conquerors, delayed the conquest for centuries.[2]
The American colonies were blessed with a strain of individualist libertarian thought that managed to supersede Calvinist authoritarianism, a stream of thought inherited from the libertarian and anti-statist radicals of the English revolution of the seventeenth century. These libertarian ideas were able to take firmer hold in the United States than in the mother country owing to the fact that the American colonies were largely free from the feudal land monopoly that ruled Britain.[3] But in addition to this ideology, the absence of effective central government in many of the colonies allowed the springing up of a "natural" and unselfconscious free-market society, devoid of any political government whatever. This was particularly true of three colonies. One was Albemarle, in what later became northeastern North Carolina, where no government existed for decades until the English Crown bestowed the mammoth Carolina land grant in 1663. Another, and more prominent example was Rhode Island, originally a series of anarchistic settlements founded by groups of refugees from the autocracy of Massachusetts Bay. Finally, a peculiar set of circumstances brought effective individualistic anarchism to Pennsylvania for about a decade in the 1680s and 1690s.[4]
While the purely free and laissez-faire society arises unselfconsciously where people are given free rein to exert their creative energies, statism has been the dominant principle throughout history. Where State despotism already exists, then liberty can only arise from a self-conscious ideological movement that wages a protracted struggle against statism, and reveals to the mass of the public the grave flaw in its acceptance of the propaganda of the ruling classes. The role of this "revolutionary" movement is to mobilize the various ranks of the oppressed masses, and to desanctify and delegitimize the rule of the State in their eyes.
It is the glory of Western civilization that it was in Western Europe, in the seventeenth and eighteenth centuries, where, for the first time in history, a large-scale, determined, and at least partially successful self-conscious movement arose to liberate men from the restrictive shackles of statism. As Western Europe became progressively enmeshed in a coercive web of feudal and guild restrictions, and of state monopolies and privileges with the king functioning as the feudal overlord, the liberating movement arose with the conscious aim of freeing the creative energies of the individual, of enabling a society of free men to replace the frozen repression of the old order. The Levellers and the Commonwealthmen and John Locke in England, the philosophes and the Physiocrats in France, inaugurated the Modern Revolution in thought and action that finally culminated in the American and the French Revolutions of the late eighteenth century.
This Revolution was a movement on behalf of individual liberty, and all of its facets were essentially derivations from this fundamental axiom. In religion, the movement stressed separation of Church and State, in other words the end of theocratic tyranny and the advent of religious liberty. In foreign affairs, this was a revolution on behalf of international peace and the end to ceaseless wars on behalf of State conquest and glory to the ruling elite. Politically, it was a movement to divest the ruling class of its absolute power, to reduce the scope of government altogether and to put whatever government remained under the checks of democratic choice and frequent elections. Economically, the movement stressed the freeing of man's productive energies from governmental shackles, so that men could be allowed to work, invest, produce, and exchange where they wished. The famous cry to power was laissez faire: let us be, let us work, produce, trade, move from one jurisdiction or country to another. Let us live and work and produce unhampered by taxes, control, regulations, or monopoly privileges. Adam Smith and the classical economists were only the most economically specialized group of this broad liberating movement.
It was the partial success of this movement that freed the market economy and thereby gave rise to the Industrial Revolution, probably the most decisive and most liberating event of modern times. It was no accident that the Industrial Revolution in England emerged, not in guild-ridden and State-controlled London, but in the new industrial towns and areas that arose in the previously rural and therefore unregulated north of England. The Industrial Revolution could not come to France until the French Revolution freed the economy from the fetters of feudal landlordism and innumerable local restrictions on trade and production. The Industrial Revolution freed the masses of men from their abject poverty and hopelessness — a poverty aggravated by a growing population that could find no employment in the frozen economy of pre-industrial Europe. The Industrial Revolution, the achievement of free-market capitalism, meant a steady and rapid improvement in the living conditions and the quality of life for the broad masses of people, for workers and consumers alike, wherever the impact of the market was felt.
An undeveloped and sparsely populated area originally, America did not begin as the leading capitalist country. But after a century of independence it achieved this eminence, and why? Not, as the common myth has it, because of superior natural resources. The resources of Brazil, of Africa, of Asia, are at least as great. The difference came because of the relative freedom in the United States, because it was here that the free-market economy more than in any other country was allowed its head. We began free of a feudal or monopolizing landlord class, and we began with a strongly individualist ideology that permeated much of the population. Obviously, the market in the United States was never completely free or unhampered; but its relatively greater freedom (relative to other countries or centuries) resulted in the enormous release of productive energies, the massive capital equipment, and the unprecedentedly high standard of living that the mass of Americans not only enjoy but take blithely for granted. Living in the lap of a luxury that could not have been dreamed of by the wealthiest emperor of the past, we are all increasingly acting like the man who murdered the goose that laid the golden egg.
And so we have a mass of intellectuals who habitually sneer at "materialism" and "material values," who proclaim absurdly that we are living in a "post-scarcity age" that permits an unlimited cornucopia of production without requiring anyone to work or produce, who attack our undue affluence as somehow sinful in a perverse recreation of a new form of Puritanism. The idea that our capital machine is automatic and self-perpetuating, that whatever is done to it or not done for it does not matter because it will go on perpetually — this is the farmer blindly destroying the golden goose. Already we are beginning to suffer from the decay of capital equipment, from the restrictions and taxes and special privileges that have increasingly been imposed on the industrial machine in recent decades.
We are unfortunately making ever more relevant the dire warning of the Spanish philosopher Ortega y Gasset, who analyzed modern man as
finding himself in a world so excellent, technically and socially, [he] believes that it has been produced by nature, and never thinks of the personal efforts of highly-endowed individuals which the creation of this new world presupposed. Still less will he admit the notion that all these facilities still require the support of certain difficult human virtues, the least failure of which would cause the rapid disappearance of the whole magnificent edifice.
Ortega held the "mass man" to have one fundamental trait: "his radical ingratitude towards all that has made possible the ease of his existence." This ingratitude is the basic ingredient in the "psychology of the spoiled child." As Ortega declares:
Heir to an ample and generous past … the new commonality has been spoiled by the world around it … the new masses find themselves in the presence of a prospect full of possibilities, and furthermore, quite secure, with everything ready to their hands, independent of any previous efforts on their part, just as we find the sun in the heavens…. And these spoiled masses are unintelligent enough to believe that the material and social organization, placed at their disposition like the air, is of the same origin, since apparently it never fails them, and is almost as perfect as the natural scheme of things….
As they do not see, behind the benefits of civilization, marvels of invention and construction that can only be maintained by great effort and foresight, they imagine that their role is limited to demanding these benefits peremptorily, as if they were natural rights. In the disturbances caused by scarcity of food, the mob goes in search of bread, and the means it employs is generally to wreck the bakeries. This may serve as a symbol of the attitude adopted, on a greater and more complicated scale, by the masses of today towards the civilization by which they are supported.[5]
In an era when countless numbers of irresponsible intellectuals call for the destruction of technology and the return to a primitive "nature" that could only result in the death by starvation of the overwhelmingly greatest part of the world's population, it is instructive to recall Ortega's conclusion:
Civilization is not "just there," it is not self-supporting. It is artificial and requires the artist or the artisan. If you want to make use of the advantages of civilization, but are not prepared to concern yourself with the upholding of civilization — you are done. In a trice you find yourself left without civilization…. The primitive forest appears in its native state, just as if curtains covering pure Nature had been drawn back.[6]
The steady decline in the underpinnings of our civilization began in the late nineteenth century, and accelerated during the World Wars I and II and the 1930s. The decline consisted of an accelerating retreat back from the Revolution, and of a shift back to the old order of mercantilism, statism, and international war. In England, the laissez-faire capitalism of Price and Priestly, of the Radicals and of Cobden and Bright and the Manchester school, was replaced by a Tory statism driving toward aggressive Empire and war against other imperial powers. In the United States the story was the same, as businessmen increasingly turned to the government to impose cartels, monopolies, subsidies, and special privileges. Here as in Western Europe, the advent of World War I was the great turning point — in aggravating the imposition of militarism and government-business economic planning at home, and imperial expansion and intervention overseas. The medieval guilds have been re-established in a new form — that of labor unions with their network of restrictions and their role as junior partners of government and industry in the new mercantilism. All the despotic trappings of the old order have returned in a new form. Instead of the absolute monarch, we have the President of the United States, wielding far more power than any monarch of the past. Instead of a constituted nobility, we have an Establishment of wealth and power that continues to rule us regardless of which political party is technically in power. The growth of a bipartisan civil service, of a bipartisan domestic and foreign policy, the advent of cool technicians of power who seem to sit in positions of command regardless of how we vote (the Achesons, the Bundys, the Baruchs, the McCloys, the J. Edgar Hoovers), all underscore our increasing domination by an elite that grows ever fatter and more privileged on the taxes that they are able to extract from the public hide.
The result of the aggravated network of mercantilist burdens and restrictions has been to place our economy under greater and greater strain. High taxes burden us all, and the military-industrial complex means an enormous diversion of resources, of capital, technology, and of scientists and engineers, from productive uses to the overkill waste of the military machine. Industry after industry has been regulated and cartelized into decline: the railroads, electric power, natural gas, and telephone industries being the most obvious examples. Housing and construction have been saddled with the blight of high property taxes, zoning restrictions, building codes, rent controls, and union featherbedding. As free-market capitalism has been replaced by state capitalism, more and more of our economy has begun to decay and our liberties to erode.
In fact, it is instructive to make a list of the universally acknowledged problem areas of our economy and our society, and we will find running through that list a common glaring leitmotif: government. In all the high problem areas, government operation or control has been especially conspicuous.
Let us consider:
- Foreign policy and war: Exclusively governmental.
- Conscription: Exclusively governmental.
- Crime in the streets: The police and the judges are a monopoly of government, and so are the streets.
- Welfare system: The problem is in government welfare; there is no special problem in the private welfare agencies.
- Water pollution: Municipally owned garbage is dumped in government owned rivers and oceans.
- Postal service: The failings are in the government owned Post Office, not, for example, among such highly successful private competitors as bus-delivered packages and the Independent Postal System of America, for third-class mail.
- The military-industrial complex: Rests entirely on government contracts.
- Railroads: Subsidized and regulated heavily by government for a century.
- Telephone: A government-privileged monopoly.
- Gas and electric: A government-privileged monopoly.
- Housing: Bedeviled by rent controls, property taxes, zoning laws, and urban renewal programs (all government).
- Excess highways: All built and owned by government.
- Union restrictions and strikes: The result of government privilege, notably in the Wagner Act of 1935.
- High taxation: Exclusively governmental.
- The schools: Almost all governmental, or if not directly so, heavily government subsidized and regulated.
- Wiretapping and invasion of civil liberties: Almost all done by government.
- Money and inflation: The money and banking system is totally under the control and manipulation of government.
Examine the problem areas, and everywhere, like a red thread, there lies the overweening stain of government. In contrast, consider the frisbee industry. Frisbees are produced, sold, and purchased without headaches, without upheavals, without mass breakdowns or protests. As a relatively free industry, the peaceful and productive frisbee business is a model of what the American economy once was and can be again — if it is freed of the repressive shackles of big government.
In The Affluent Society, written in the late 1950s, John Kenneth Galbraith pinpointed the fact that the governmental areas are our problem areas. But his explanation was that we have "starved" the public sector and that therefore we should be taxed more heavily in order to enlarge the public sector still further at the expense of the private. But Galbraith overlooked the glaring fact that the proportion of national income and resources devoted to government has been expanding enormously since the turn of the century. If the problems did not appear before, and have appeared increasingly in precisely the expanded governmental sector, the judicious might well conclude that perhaps the problem lies in the public sector itself. And that is precisely the contention of the free-market libertarian. Problems and breakdowns are inherent in the operations of the public sector and of government generally. Deprived of a profit-and-loss test to gauge productivity and efficiency, the sphere of government shifts decision-making power from the hands of every individual and cooperating group, and places that power in the hands of an overall governmental machine. Not only is that machine coercive and inefficient; it is necessarily dictatorial because whichever decision it may make, there are always minorities or majorities whose desires and choices have been overridden. A public school must make one decision in each area: it must decide whether to be disciplined or progressive or some blend of the two; whether to be pro-capitalist or pro-socialist or neutral; whether to be integrated or segregated, elitist or egalitarian, and so on. Whatever it decides, there are citizens who are permanently deprived. But in the free market, parents are free to patronize whatever private or voluntary schools they wish, and different groups of parents will then be able to exercise their choice unhampered. The free market enables every individual and group to maximize its range of choice, to make its own decisions and choices and to put them into effect.
It is ironic that Professor Galbraith does not seem to be very happy about the public sector as it has lately been manifesting itself: in the military-industrial complex, in the war in Vietnam, in what Galbraith has himself properly derided as President Nixon's "Big Business Socialism." But if the glorious public sector, if expanded government, has brought us to this pretty pass, perhaps the answer is to roll government back, to return to the truly revolutionary path of dismantling the Big State.
Indeed, American liberals — who for decades have been the main heralds and apologists for big government and the welfare state — have increasingly become unhappy at the results of their own efforts. For just as in the days of oriental despotism, state rule cannot endure for long without a corps of intellectuals to spin the arguments and the rationale to gain the support and the sense of legitimacy among the public, and the liberals (the overwhelming majority of American intellectuals) have served since the New Deal as the celebrants of big government and the welfare state. But many liberals are coming to realize that they have been in power, have fashioned American society, for four decades now, and it is clear to them that something has gone radically wrong. After four decades of the welfare state at home and "collective security" abroad, the consequences of New Deal liberalism have clearly seen aggravated breakdowns and conflicts at home and perpetual war and intervention abroad. Lyndon Johnson, with whom liberals became extremely unhappy, correctly referred to Franklin Roosevelt as his "Big Daddy" — and the parentage on all foreign and domestic fronts was quite clear. Richard Nixon is scarcely distinguishable from his predecessor. If many liberals have become strangers and afraid in a world they have made, then perhaps the fault lies precisely in liberalism itself.
If, then, there is to be a rollback of statism, there will have to be another ideological revolution to match the rise of the classical radicals of the seventeenth and eighteenth centuries. Intellectuals will have to shift, in large part, back from their role as apologists for the State to resume their function as upholders of the standards of truth and reason as against the status quo. In the last several years, there have been signs of disenchantment by the intellectuals, but the shift has been largely a wrongheaded one. As a result, in the current split between liberals and radicals among the intelligentsia, neither side provides us with the requisites of civilization, with the requisites for maintaining a prosperous and free industrial order. The liberals have offered us the spurious rationality of technocratic service to the Leviathan State of fitting in as manipulated cogs in the bureaucratic government-industrial machinery. Liberalism's solution to every domestic problem is to tax and inflate more and to allocate more federal funds; its solution for foreign crises is to "send the Marines" (accompanied, of course, by politico-economic planners to alleviate the destruction that the Marines cause). Surely we cannot continue to accept the proffered solutions of a liberalism that has manifestly failed. But the tragedy is that the radicals have taken the liberals at their face value: identifying reason, technology, and industry with the current liberal-mercantilist order, the radicals, in order to reject the current system, have turned their backs on the former necessary virtues as well.
In short, the radicals, feeling themselves forced into a visceral rejection of the world of liberalism, of Vietnam and the public-school system, have adopted the liberals' own identification of their own system with reason, industry, and technology. Hence the radicals raise the cry for the rejection of reason on behalf of emotions and vague mysticism, of rationality for inchoate and capricious spontaneity, of work and foresight for hedonism and dropping out, of technology and industry for the return to "nature" and the primitive tribe. In doing so, in adopting this pervasive nihilism, the radicals are offering us even less of a viable solution than their liberal enemies. For the murder of millions in Vietnam they would, in effect, substitute the death by starvation of the vast bulk of the world's population. The radicals' vision cannot be accepted by sane people, and the bulk of Americans, their ignorance or errors otherwise, are astute enough to recognize this fact and to make loud, clear, and sometimes brutal their rejection of the radicals and their alternative ethic, society, and life-style.
The point of this essay is that the public need not be forced to choose between the alternative of repressive and stifling welfare-warfare state monopoly liberalism on the one hand, or the irrational and nihilistic return to tribal primitivism on the other. The radical alternative is evidently not compatible with a prosperous life and industrial civilization; this much is crystal clear. But less clear is the fact that corporate state liberalism is in the long run also not compatible with an industrial civilization. The one route offers our society a quick suicide; the other a slow and lingering murder.
There is, then, a third alternative — one that has still gone unheeded amid the great debate between liberals and radicals. That alternative is to return to the ideals and to the structure that generated our industrial order and that is needed for that order's long-run survival — to return to the system that will bring us industry, technology, and rapidly advancing prosperity without war, militarism, or stifling governmental bureaucracy. That system is laissez-faire capitalism, what Adam Smith called "the natural system of liberty," a system that rests on an ethic that encourages individual reason, purpose, and achievement. The nineteenth-century libertarian theorists — men like the Frenchmen of the Restoration era, Charles Comte and Charles Dunoyer, and the Englishman Herbert Spencer — saw clearly that militarism and statism are relics and throwbacks of the past, that they are incompatible with the functioning of an industrial civilization. That is why Spencer and the others contrasted the "military" with the "industrial" principle, and judged that one or the other would have to prevail.
What I am suggesting, in short, in the oversimplified categories made popular by Charles Reich, is a return to "Consciousness I" — a Consciousness that is brusquely dismissed by Reich and his readers as they proceed to take sides in the great debate between Consciousness II and III. To Reich, Consciousness I was made obsolete by the growth of modern technology and mass production, which made the turn to the corporate state inevitable. But here Reich is not being radical enough; he is simply adopting the conventional liberal historiography that big government was made necessary by the growth of large-scale industry. If he were familiar with economics, Reich would realize that it is precisely advanced industrial economies that require a free market to survive and flourish; on the contrary, an agricultural society can plod along indefinitely under despotism provided that the peasants are left enough of their produce to survive. The Communist countries of Eastern Europe have discovered this fact in recent years; hence, the more they industrialize the greater and more inexorable their movement away from socialism and central planning and toward a free-market economy. The rapid shift of the East European countries toward the free market is one of the most heartening and dramatic developments in the last two decades; yet the trend has gone almost unnoticed, for the left finds the shift away from statism and egalitarianism in Yugoslavia and the other East European countries extremely embarrassing, while the conservatives are reluctant to concede that there may be anything hopeful about the Communist nations.
Furthermore, Reich is clearly unaware of the finds of Gabriel Kolko and other recent historians that completely revise our picture of the origins of the current welfare-warfare state. Far from large-scale industry forcing the knowledge that regulation and big government were inevitable, it was precisely the effectiveness of free-market competition that led big businessmen seeking monopoly to turn to the government to provide such privileges. There was nothing in the economy that objectively required a shift from Consciousness I to Consciousness II: only the age-old desire of men for subsidy and special privilege created the "counter revolution" of statism. In fact, as we have seen, this development only cripples and hampers the workings of modern industry; objective reality would require a return to Consciousness I. In this world of remarkably swift changes in values and ideologies, such a change in consciousness cannot be ruled out as impossible; far stranger things have been happening.
In one sense, the adoption of libertarian values and institutions would be a return; in another, it would be a profound and radical advance. For while the older libertarians were essentially revolutionary, they allowed partial successes to turn themselves strategically and tactically into seeming defenders of the status quo, mere resisters of change. In taking this stance, the earlier libertarians lost their radical perspective; for libertarianism has never come fully into being. What they must do is become "radicals" once again, as Jefferson and Price and Cobden and Thoreau were before them. To do this they must hold aloft the banner of their ultimate goal, the ultimate triumph of the age-old logic of the concepts of free market, liberty, and private property rights. That ultimate goal is the dissolution of the State into the social organism, the privatizing of the public sector.
In contrast to the dysfunctional vision of the New Left, this is a goal wholly compatible with the functioning of an industrial society — and with peace and freedom as well. All too many of the older libertarians lacked the intellectual courage to press on — to call for total victory rather than settle for partial triumph — to apply their principles to the fields of money, police, the courts, the State itself. They failed to heed the injunction of William Lloyd Garrison that "gradualism in theory is perpetuity in practice." For if the pure theory is never held aloft, how can it ever be achieved?
Against Preemptive Strike
During the 1920s and 1930s, a majority of Americans came to believe that our involvement in World War I had been a horrendous mistake. The war was supposed to have made the world safe for democracy, but fascism, communism, and aggressive nationalism were the order of the day in Europe. In an effort to forestall future involvements in European conflagrations, Congress enacted stringent neutrality legislation.
Toward the end of the 1930s, a crucial question confronted Americans. Did the growing power of the Nazi regime require Americans to alter their newfound commitment to neutrality? The question could not be avoided once Britain and France decided in 1939 to resist Hitler's endeavors to revise the Versailles and Locarno treaties in Germany's favor. War in Europe began on September 3, 1939, when Hitler refused British and French ultimatums that he stop his invasion of Poland.
Garet Garrett, an outstanding critic of Roosevelt's New Deal, brilliantly argued in favor of continued American neutrality. Garrett, during the decisive years 1940 and 1941, was the chief editorial writer for the Saturday Evening Post, then one of the most popular American magazines. Bruce Ramsey has very usefully gathered together a selection of Garrett's articles from this and a slightly earlier period.
One way to defend American neutrality was to argue that Hitler posed no danger to the United States. Garrett decisively rejected this line of thought. As he saw matters, the Nazi regime had built up a military machine of unparalleled power. This might very well pose severe problems for America. In an editorial of July 6, 1940, Garrett said:
A new and frightful power has appeared, an offensive power moved by an unappeasable earth hunger, conscious of no right but the right of might. It does not threaten this country with invasion: at least, not yet. It does threaten the Western Hemisphere by economic and political designs in the Latin American countries, and this is, for us, an ominous fact. But the larger aspect of what has happened is that the world is in a state of unbalance. (p. 51)
If this is Garrett's view, does he not at once confront a difficulty? If Germany was moved by "an unappeasable earth hunger," should not the United States act to contain this malign power? If so, should not neutrality be abandoned? Whatever the failings of Britain and the nations allied with her, was it not in the interest of the United States to provide the anti-Hitler forces with all possible aid?
Garrett's decisive move was to deny that an adequate response to Hitler required military aid to the Allies. Quite the contrary, America should make its borders impregnable to attack:
In the whole world … there is one people able to create a defensive power equal to the new power of frightful aggression that has destroyed the basis of international peace and civility. We are that people.…
We are the most nearly self-contained nation of modern times, an empire entire, possessing of our own in plenty practically every essential thing.…
Our productive power is equal to that of all Europe, and may be increased, so far as we know, without limit.…
Finally, as we lie between two oceans, our geographical advantages in the military sense are such as to give us great natural odds against any aggressor. (pp. 58–59)
Defenders of American intervention in the war might answer Garrett in this way: "Maybe America can do as you say. But why should we retreat to a Fortress America? If, as you concede, Germany menaces us, why should we not aid those already struggling against the Third Reich and its Führer?"
Garrett fully anticipated this objection, and in his response he showed himself a better economist than his critics. If America sent arms to other countries, would this not weaken our own forces? Interventionists thought only of the benefits that aid would help secure, but they ignored the fact that stripping America of its arms weakened us, all the more so as America had not yet built up secure defenses. In sum, Garrett, unlike his critics, was fully alive to the concept of opportunity cost.
If it should turn out that to strip this country of armaments and send them to Europe at a moment when our existing power of defense was pitifully inadequate … had been a tragic blunder … then the leader who had done it might wish that his page in the book of fame would refuse to receive ink, for it would be written of him that in his passionate zeal to save civilization in Europe he had forgotten his own country. (p. 56)[1]
Garrett supplemented his argument with a further point. Did not interventionists realize that if they armed one side in a war, the enemy would deem this a hostile act? Roosevelt, beginning with his notorious Chicago Bridge speech of October 1937, had spoken of the need to "quarantine" aggressors. But how could this be done "short of war," as the interventionists promised? Garrett accused his interventionist opponents of seeking a victory on the cheap over the Axis powers. Others would do the fighting, while America would secure without bloodshed the end of the German threat.
For Garrett, this course of action was foolhardy and cowardly as well. In June 1940 the Navy arranged for France to buy American bombers, a sale that Garrett claimed had put us into the war.
Suppose we were at war and a government that had been neutral in form, but not in feeling, suddenly opened its arsenals to our enemy, exactly as we have opened ours to the Allies.
Would we regard it as an act of war? We would. (pp. 55–56)
Not only did Roosevelt's unneutral conduct risk reprisal from Germany, but it also displayed a lack of moral fiber. If the Germans were really our enemies, we should take up the battle ourselves rather than rely on others to give their lives on our behalf.
Interventionists rarely sought to directly counter Garrett's powerful rhetoric, but a Roosevelt supporter rash enough to do so might have replied to him in this way: "Your case is too exclusively strategic. Even if you are right, what about the moral dimension of the war? Do we not have a duty to fight against evil, even if it has not yet reached America?"
Our imagined objector is quite wrong; Garrett did not ignore the moral dimension. For him, the preservation of America as an independent civilization was a categorical imperative. A worldwide crusade against evil could not succeed and would put in peril our unique contribution to the world:
They are defeatists who develop the beautiful thought that if America will now put her strength forth in the world, instead of keeping it selfishly to herself, the principle of evil can be chained down.… Suppose we had reconquered Europe for democracy, and the principle of evil were chained down. What should we do about the peace? Leave it to Europe? We did that once [without success].… Should we stay there to police it? Or should we come home and stand ready to go back to mind or mend it when something went wrong? (pp. 138–39)
It is apparent that Garrett had learned the lessons of Woodrow Wilson's futile crusade.
The essentials of Garrett's case remained constant from the onset of war in Europe until Pearl Harbor; but as Roosevelt proceeded relentlessly on the path to war, another issue emerged: Garrett and his fellow noninterventionists had ably stated their case, and their opponents were not slow to follow with their own point of view. Who should now decide what course of action America should follow?
For Garrett the answer was obvious: the American people, through their representatives in Congress. Unfortunately, Franklin Roosevelt had other ideas. He gradually maneuvered America into the war, all the while professing his peaceful intentions. Congress for him was but a minor obstacle, to be evaded or ignored if it refused to obey his bidding.
Roosevelt's policy of executive dictatorship continued and extended his conduct into domestic affairs. Garrett, who had long been one of the president's fiercest critics on this score, stressed a devastating admission by Roosevelt:
As he was receiving into his hand from an obedient Congress the new instrumentalities of power [in 1936], Mr. Roosevelt himself remarkably said: "In the hands of a people's government this power is wholesome and proper;" in bad hands, he added, it "would provide shackles for the liberties of people." (p. 101)
But could not the American people, if they wished to do so, repudiate Roosevelt and all his works? Had the Republicans in 1940 nominated for President a resolute noninterventionist, such as Senator Robert Taft, the choice of peace or war would have been up to the voters. But they did not do so, instead choosing, under mysterious circumstances, Wendell Willkie. He favored, like Roosevelt, a policy of unneutral aid to the allies; voters who saw through the "aid short of war" deception could do nothing.
Garrett puts the essence of the matter this way, in his inimitable style:
When you consider what must be involved in the decision [on whether America should defend Britain and her allies], who will have to fight and die for it, whose country it is, you might think that with all the facts submitted, it could be left to the people. Was it? Did they vote on it? (p. 123)
Incidentally, Garrett's point undermines his surprising defense of conscription. Although Garrett fully grasped that conscription was a step toward totalitarianism, he thought it was needed to build up America's defenses. Did not the extraordinary nature of the European situation require drastic action?
Perhaps it did; but why could not Americans of military age decide the matter for themselves by volunteering? Garrett relied on a peculiar argument of Woodrow Wilson's that the volunteer system was "unscientific." As near as I can make out, the contention is that a draft allows men to be deployed efficiently, as the central command wishes.
With volunteers, the armed forces must rely piecemeal on those who happen to appear at recruitment stations. But this argument ignores the fact that volunteers can register for future call up, in the same fashion as draftees. In the context of his magnificent defense of liberty, Garrett's lapse is a minor failing.
Garrett noted that once Roosevelt won reelection, he dropped the mask. Although he had promised during the election to keep us out of "foreign wars," Roosevelt three months later said that America would never accept a peace dictated by aggressors.
Garrett commented,
"We" were the people, suddenly staring at the fact that we had assumed ultimate and unlimited liability — moral, physical, and financial — for the outcome of war on three continents, for the survival of the British Empire, and for the utter destruction of Hitler. (p. 161)
If the American people did not accept this broad and ambitious mandate, what did it matter? Roosevelt, like Woodrow Wilson before him, viewed himself as the indispensable man who would guide Americans as he saw fit.
Conferencia de las Américas
La colombianización de México es reversible, según expertos
La guerra contra el narcotráfico parece similarmente peligrosa a la de Colombia hace una década, pero el país tiene buenas oportunidades de controlar la violencia y derrotar a los carteles de las drogas, dijo el miércoles un alto ejecutivo de una firma global de seguridad e inteligencia.
David Robillard, jefe de Kroll en México, declaró a un panel en la Conferencia de las Américas en Coral Gables que México enfrenta muchos de los mismos retos que enfrentó Colombia en el 2000 y que al presidente Felipe Calderón le tomará varios años derrotar a los carteles.
Luis Enrique Mercado, legislador del gobernante Partido Acción Nacional (PAN) de México, concordó con Robillard en que la situación mexicana se parece cada vez más a Colombia durante los días de mayor actividad en el combate al narcotráfico y que los retos que enfrenta el gobierno no son fáciles.
"Sí, México se está colombianizando. Esperemos que [el país] tenga la misma capacidad de Colombia para controlar la situación'', dijo.
Robillard citó la frecuencia de los casos de secuestro y extorsión, el alto nivel de sofisticación de las armas adquiridas y el enorme poder monetario de los carteles como similaridades con la guerra que libró Colombia contra el narcotráfico a principios de esta década.
"Una cosa que favorece a México es que no tenemos guerrillas. En México no hay nada parecido a las FARC, el ELN o los paramilitares. Eso facilita las cosas'', expresó en una entrevista con The Miami Herald después de su presentación.
Según estadísticas del gobierno mexicano, unas 6,000 personas han muerto en incidentes relacionados con el narcotráfico en lo que va de este año.
Subsecretaria de Estado se reunió con la disidencia
WASHINGTON
La subsecretaria de Estado adjunta para Latinoamérica Bisa Williams se reunió con dirigentes opositores en Cuba, tras prolongar su estancia en la isla para mantener conversaciones de alto nivel con funcionarios del gobierno castrista, confirmaron fuentes oficiales.
Hasta ahora, el Departamento de Estado únicamente se había referido oficialmente al diálogo que retomaron ambos países el día 17 en La Habana sobre el correo directo, suspendido en 1963.
"La señora Williams se encontró con funcionarios del gobierno cubano'', entre ellos "el vicecanciller Dagoberto Rodríguez'', "y representantes de la sociedad civil (disidentes) para tener una valoración de la situación política y económica de la isla'', precisó el portavoz de la Sección de Intereses de Washington en La Habana (SINA).
El dirigente opositor Elizardo Sánchez dijo a Agence France Press que Willliams se reunió con los disidentes el 21 de septiembre en las instalaciones de la SINA, con la participación de una docena de dirigentes opositores entre los que estaban, además de él, Marta Beatriz Roque, Oscar Espinosa Chepe y Vladimiro Roca.
"Ellos querían escucharnos. Marcaron un poco la diferencia en relación con la Unión Europea, que insiste en hablar solo con el gobierno. En cambio, la funcionaria habló con las autoridades, pero también con la sociedad civil", comentó Sánchez.
Las autoridades cubanas tildan a los opositores de "mercenarios al servicio del imperio (Estados Unidos)''.
La funcionaria prolongó su estancia en Cuba para mantener conversaciones no divulgadas hasta ahora, en las que se trataron asuntos como el funcionamiento de la Sección de Intereses de EEUU en La Habana y las relaciones migratorias, admitió el Departamento de Estado.
Williams, permaneció en la isla durante seis días tras haber encabezado la delegación que el 17 de septiembre dialogó con las autoridades cubanas sobre la posibilidad de restablecer el correo directo entre los dos países, indicaron fuentes del Departamento.
Un funcionario estadounidense describió las conversaciones como "respetuosas'' y dijo que eran más significativas por el hecho de haber ocurrido que porque se hubiera logrado algún avance de importancia entre ambos países, que han estado en pugna desde el triunfo de la revolución de Fidel Castro en 1959.
"Estamos repasando cosas que no se han repasado desde hace mucho'' dijo el funcionario en declaraciones a la AP. "Cada lado ha aprovechado la oportunidad para poder estudiar al otro de cerca''.
Las conversaciones, las primeras que mantuvo una funcionaria de este rango en Cuba en seis años, incluían asuntos relacionados con el funcionamiento de la Sección de Intereses de EEUU en La Habana y sobre las relaciones migratorias, señalaron las fuentes.
En un comunicado al día siguiente, el gobierno se mostró satisfecho con la primera ronda de conversaciones sobre este tema, al considerar que se habían desarrollado positivamente, y únicamente afirmó que se discutieron temas relacionados con el transporte, la calidad y seguridad del servicio postal entre los dos países.
Sin embargo, EEUU y Cuba no sólo hablaron del correo directo en la reunión de un día de duración y Williams prolongó su estancia en la isla para abordar otros asuntos de interés para ambas naciones, como la migración.
Estados Unidos y Cuba reanudaron el pasado 14 de julio en Naciones Unidas sus conversaciones sobre migración, después de haberse interrumpido formalmente en 2004.
Washington y La Habana retomaron así unas conversaciones que se suspendieron de facto en 2003 y oficialmente un año después, durante el segundo mandato del presidente George W. Bush y por orden suya.
Sin embargo, desde el Departamento de Estado se quiere quitar hierro a estas conversaciones no divulgadas hasta ahora.
''Bisa Williams encabezó una delegación a La Habana para entablar conversaciones sobre el posible restablecimiento del correo directo entre EEUU y Cuba'' que estaba formada por funcionarios del Departamento de Estado y del Servicio Postal de Estados Unidos, señaló a Efe el portavoz para Latinoamérica, Charles Luoma-Overstreet.
''Durante estas conversaciones, los representantes de EEUU y Cuba hablaron del estatus actual del servicio postal entre ambos países y de varios puntos técnicos relacionados con la entrega de correos'', dijo.
Williams también habló "de aspectos relacionados con la operación eficaz de la Sección de Intereses en La Habana y después también de asuntos referentes a las relaciones migratorias entre EEUU y Cuba'', afirmó el portavoz.
Luoma-Overstreet recalcó que, como lo suelen hacer los funcionarios cuando viajan al exterior y a Cuba, Williams se reunió con "varios funcionarios del gobierno de La Habana y con representantes de la sociedad civil con el fin de poder hacerse una imagen de la situación política y económica en el lugar''.
Además, como dato curioso fuentes de la Sección de Intereses de EEUU en La Habana dijeron a Efe que Williams se quedó incluso al concierto de Juanes y asistió en persona al evento.
Asimismo, la funcionaria visitó una zona afectada por huracanes en la provincia occidental de Pinar del Río y una instalación agrícola del gobierno, según conoció la AP.
La Administración del presidente Barack Obama ha intentado, desde su llegada a la Casa Blanca, mejorar las relaciones con el país latinoamericano.
En abril pasado, Obama levantó las restricciones a los viajes de familiares y envíos de remesas a Cuba, lo que dio pie a una cierta apertura hacia la isla.
Estados Unidos y Cuba no tienen relaciones diplomáticas desde hace casi medio siglo, cuando Washington estableció en febrero de 1962 un embargo total contra la isla bajo gobierno comunista.
Lochner and Liberty
Lochner and Liberty
Dissecting the Supreme Court case that unites the new regulatory czar and his conservative critics.
DAMON W. ROOT
From Reason Magazine
Last week, the Senate voted 57-40 to confirm Harvard and University of Chicago law professor Cass Sunstein as the new head of the Office of Information and Regulatory Affairs. This narrow vote brought an end to months of overheated and frequently misguided attacks on the would-be "regulatory czar," including a sensationalistic website operated by the American Conservative Union that falsely painted Sunstein as an out-of-control radical.
Too busy making outlandish claims about his positions on gun control and radio censorship, Sunstein's conservative critics have ignored one of the biggest problems that his ideas pose to limited constitutional government. Sunstein is one of the most influential modern critics of Lochner v. New York (1905), perhaps the Supreme Court's most famous decision defending economic liberty. So why aren't conservatives going after Sunstein for his opposition to this case? Because many of them don't like Lochner either.
At issue in the case was a provision capping working hours in New York's 1895 Bakeshop Act, which banned bakery employees from working more than 10 hours per day or 60 hours per week. In its 5-4 decision, the Court nullified this provision for violating the liberty of contract secured by the Due Process Clause of the 14th Amendment.
In his 1987 Columbia Law Review article "Lochner's Legacy," which is one of the most cited articles on the case from the last two decades, Sunstein criticized Lochner for preventing the state from using its lawful power "to help those unable to protect themselves in the marketplace." Similarly, in his 1998 book The Partial Constitution, Sunstein asserted that the Lochner Court "made the system of 'laissez faire' into a constitutional requirement."
But compare those claims with the actual text of the Lochner decision. As Justice Rufus Peckham wrote for the majority, while New York certainly possessed the power to enact valid health and safety regulations, the maximum hours provision of the Bakeshop Act "is not, within any fair meaning of the term, a health law." Not only was the baking trade "not dangerous in any degree to morals, or in any real and substantial degree to the health of the employee," the limit on working hours involved "neither the safety, the morals, nor the welfare, of the public." In other words, "clean and wholesome bread does not depend on whether the baker works but ten hours per day or only sixty hours a week."
Indeed, as Peckham carefully explained, those sections of the Bakeshop Act regulating "proper washrooms and closets," the height of ceilings, floor conditions, and "proper drainage, plumbing, and painting," remained perfectly valid health and safety regulations; only the hours provision was struck down. Moreover, just three years later, in Muller v. Oregon, the Supreme Court unanimously upheld a state law limiting female laundry employees from working more than 10 hours a day. So much for Lochner making "'laissez faire' into a constitutional requirement."
In fact, as George Mason University legal scholar David Bernstein has thoroughly documented, the mainstream version of the Lochner story, which pits evil bosses against viciously exploited workers, bears zero resemblance to the historical evidence. The real origins of the Bakeshop Act lie in an economic conflict between unionized New York bakers, who labored in large shops, and their non-unionized, mostly immigrant competitors, who tended to work longer hours in small, old-fashioned bakeries. As Bernstein observed, "a ten-hour day law would not only aid those unionized workers who had not successfully demanded that their hours be reduced, but would also help reduce competition from nonunionized workers."
To put it another way, Lochner v. New York secured a fundamental right against arbitrary government interference while undercutting an act of naked economic protectionism. Yet Sunstein's right-wing foes haven't mentioned the case in their opposition to his appointment. Why? Perhaps it's because prominent leaders of the conservative legal movement also dislike Lochner.
In his 1991 bestseller The Tempting of America, for example, former federal appeals court Judge Robert Bork denounced Lochner as "the symbol, indeed the quintessence, of judicial usurpation of power," linking it to the Court's later rulings securing privacy and abortion rights under the 14th Amendment. Supreme Court Justice Antonin Scalia routinely attacks the Court's abortion and gay rights rulings for their Lochnerian judicial activism. And during his 2005 Senate confirmation hearings, future Chief Justice John Roberts declared, "You go to a case like the Lochner case, you can read that opinion today and it's quite clear that they're not interpreting the law, they're making the law."
These judicial conservatives aren't necessarily worried about restricting state regulatory power, but they are very leery of the Court protecting unenumerated rights—be it liberty of contract or privacy. Which matches nicely with Sunstein's claim that part of the problem with the Lochner Court was its "aggressiveness" and "judicial intrusions into the democratic process."
Yet both sides ignore the Ninth Amendment, which reads, "the enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people." Which means we possess more rights than any document could ever list, including the right to earn an honest living free from arbitrary and unnecessary regulation. They also both ignore the Privileges or Immunities Clause of the 14th Amendment, which was specifically designed to protect both civil rights and economic liberties against predatory state governments.
That's the real problem with Cass Sunstein—and with the conservatives who share his hostility towards Lochner. They don't give economic liberty its constitutional due.
Mr. Root is an associate editor at Reason magazine.
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