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GP 19 November 2008: Can We Get Over the Barackades?

“You can always count on Americans to do the right thing—after they’ve tried everything else” – Winston Churchill

Plus ça change, plus c’est la même chose.  Back during the early primaries, when then candidate Barack Obama stirred 20,000 people at a time with his grandiloquence, we hung on very word, feeling that we had been cast back a few centuries to witness the Great Awakening and to hear the divine Jonathan Edwards, America’s most important preacher, give the citizens of Enfield his 1741 expostulation “Sinners in the Hands of an Angry God.”

Only slowly did we become aware that Senator Obama had graced us with poetry, but only put standard Democratic fare on the table.  That is, from him, we were to more or less get universal health insurance, a more graduated income tax, subsidies for all manner of alternate energy schemes, quickie surgical military operations in Pakistan to fight terrorism, old-style American diplomacy, etc., etc.  While these were noble aspirations, they were small potatoes. They’re all the ideas that have come before and never worked.  They would not equip us to rendezvous with destiny.

This is rather worrisome because this mess of porridge promised us is a continuation of the sixteen years of failed, incompetent, and irresponsible government that has weighed heavily on America under Presidents Clinton and Bush.  The end of the Cold War had provided America with an opportunity to move on, but it got stuck in familiar tracks.  The Clintons, who have since grown quite close to Bush Sr., became very prosperous quasi-Republicans, and Bush the Younger co-opted many Democratic tendencies, happily endorsing runaway spending, lack of increased taxation for an unpopular war, and mounting entitlements (the Medicare drug benefit).

We would like to think that Churchill is right and that things will finally be different this time. President-elect Obama has been tutored by the Daley machine in Chicago, which has provided pretty good government, even if the city’s economy has been hollowed out, and the transportation network, the heart of Chicago’s greatness, has fallen into bad repair.  On the outside, with its soaring skyscrapers and clean streets, Chicago comes off very well.  But the inside is troubled.  It probably is half okay to be a Daley Democrat.

More disturbing is the fact that the new president is hiring so many retreads from the Clinton Administration.  The Clintonians were a second-rate lot that got promoted way beyond their abilities and their moral compass.  Despite the fact that the ex-President is exceptionally bright and a voluble policy wonk, he got little done in office because his team was not up to the job.  He made vast errors of commission in respect to diplomacy and defense and huge errors of omission on the economy.  We would caution President-elect Obama that he could follow all too easily in the footsteps of Boss Daley, father of Chicago’s present mayor, who claimed, “We shall reach great and greater platitudes of achievement.” 

What Is to Be Done.  In 1902, the architect of Soviet Russia, Vladimir Lenin, authored “What Is To Be Done?”  The U.S. does not need a Marxist agenda, but it does need prescriptions that clearly break with the past and depart from all the encumbrances of ideology—left, right, and middle.  Probably we need to be become ideologically neutral.  For example, we do not need universal health insurance, which is just one more bad patch on an irretrievably flawed healthcare system.  Rather, we need to come to grips with an unhealthy society where we eat too much, get too little exercise, take too many drugs, subject ourselves to an endless stream of carcinogens, tax our bodies with frenetic daily activities and our minds with too many digital inputs, etc.  Society needs to become healthful, something best attempted up to now by the Finns.  They have grasped the concept of a healthy society.

The direction in so many spheres has to be so different from anything currently on the drawing boards.  The best heads in the Pentagon are pushing 5th generation warfare, but even that is old hat.  The fact is that we no longer can afford old-fashioned warfare, because our widely dispersed, invisible enemies make hash out of us with their hundred-dollar military budgets, laughing at the unwieldy trillion-dollar defense forces opposing them that are beggaring our nation.  So too in energy, where we need entirely different electric grids that are not built around centralized utilities.  So too in finance, where all financial products and loans must be backed by sufficient reserves (oddly enough, Spain is the pacesetter at the moment) and where government agencies must not be headed by the very people who have created all our problems.  Ever since Donald Regan, we have had the bizarre habit of taking roulette players out of Wall Street and making them Treasury Secretaries.

In “Courtly Congressman,” we suggested that we need an infrastructure economy, instead of a consumer economy.  Can we spend what funds we have on electric grids, municipal broadband, preventive medicine, rapid urban and inter-city transit, distributed education, etc, or are we condemned to prop up dying industries, to underwrite fraudulent get-rich schemes from Wall Street, and to buy poorly constructed houses resting on financial quicksand?

We’re Broke.  We have to get away from behind-the-times thinking because it does not solve any of our problems.  More importantly, we cannot afford it because we are broke.  As we have said before, if the Feds kept an honest balance sheet, we would know that we are bankrupt.  The recent financial crisis reveals that industry after industry—finance, automobiles, and several others—are in a ditch, and the Feds don’t have enough dough to bail them out.  We can’t afford earmarks; we can’t afford bridges to nowhere; we can’t afford $10 billion-a-month wars; we cannot afford a whole lot.  But certainly we cannot afford political agendas that get us nowhere. We cannot afford transaction costs, otherwise known as friction costs, that have been vastly elevated by all the goings-on of lawyers and accountants who do not add economic value to our economy.  We refer you to a talk by Juan Enriquez that colorfully attempts to illustrate how poor we are.

With Friends Like This.  As the Wall Street Journal has cannily observed, Obama’s biggest problem may be his ‘friends.’  A few Republican no-goods are getting washed out of government.  But the same cannot be said for the Democrats.  Senator Reid (his leader in the Senate) and Speaker Pelosi (the Baltimore-now-San Francisco chief in the House) do not sparkle with greatness.  They are surrounded by a band of third stringers.  A particular worry is Henry Waxman, who is coming out of hiding and looking for more power in the House.  All these legislators are steeped in the torturous ways of interest group politics.  We need to clean house: in fact, we need to clean out both houses.

Big Thoughts.  The man who built the Brooklyn Bridge learned to think big from the German philosopher Hegel.  The test for Obama, we think, is whether he can think big thoughts or whether he is caught up in the small thinking of the past.  In the West we have moved from empiricism to logical positivism to nanotechnology.  We look at smaller and smaller things, with no time to examine the sweep of history or the glories of the heavens.  Marketing has become a science of slicing and dicing, so that we try to build our companies by serving smaller and smaller niches, and we elect presidents by letting the likes of Karl Rove target very small bits of the body politic. 

Can Obama move to an energy policy that honors nature and builds our economy?  Or is he a prisoner of corn based ethanol, which has enriched farmers from his Midwest, but created a fuel that is bad for both our pocketbooks and the world we live in?  To do right requires an imagination that can soar beyond Lilliput concerns and encompass this Spaceship Earth.

Reasons for Hope.  The 2008 campaign itself does give us serious reasons for hope.  We have learned in recent years that our presidents—such as former President Clinton and Bush the Younger—are better running for office than running the office.  But the story of President-elect Obama’s campaign unveils a side of his character in which we can rejoice.  In Ryan Lizza’s “Battle Plans,” The New Yorker, November 17, 2008, pp. 46-55, we learn that Obama and his team thought long and hard about how they would run the campaign and devised a strategy that they stuck to.  That is they had a clear message that they adhered to through thick and thin, and they had an operations plan that fitted what they were articulating.  Here was some originality, creativity—a departure.  If, in office, he is strategic, he will get us to a new place.

P.S.  Just a few short years ago businesspeople were saying strategy is dead.  Winning was all about ‘execution.’  Whatever you execute now won’t buy you much.  You had best get a strategy and play a pretty smooth chess game.  This calls for new kinds of leaders and managers, since we have favored mindless doers in our hiring—for years.

P.P.S.  It has been said by more than one historian that we will never have a real political revolution in America, but we occasionally try something in the religious sphere that feels like revolution.  The Great Awakening was such an occurrence.  To attempt something big in these United States requires more than a program: it comes from a ‘movement,’ the creation of a new belief.  New beliefs can bury the past and put us in the future.

P.P.P.S.  Our new world is so very, very different, even if pundits and preachers want to pretend that little has changed.  For instance, a Dutch nightclub now uses the dancing frenzy of its customers to power its lightbulbs.  Meanwhile, the geek who created Digital General’s mini-computer has dreamed up a high-powered scientific computer that is easy to program, the key to computer success.  We can even imagine a day when computers are not just programmer-friendly, but customer friendly.  Can we devise a governance that is not afraid of the possibilities, like these, that confront us?

P.P.P.P.S.  Both houses of Congress are filled with lawyers.  Is it any wonder then that we have been caught in the grip of laws that enrich lawyers and accountants and create endless friction costs that have brought the economy to a standstill?  Shakespeare really did have it right: “Let’s kill all the lawyers.”

P.P.P.P.P.S.  Michael Levine has written convincingly on “Why Bankruptcy is the Best Option for GM.”  In fact, pre-packaged bankruptcy is the way to remake a whole slew of our tired giants that need to be both shrunk and retooled.  Bailouts, re-engineering, job cuts—all the usual nostrums—will not work.

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