Sixes and Sevens

Since I’m a Boston area blogger, I’ll accept Gus Van Horn’s tag to come up with Seven (Possibly) Interesting Things about Me, especially since at least two of the items on his list ring true with me.

However, after coming up with six, I was getting tired and couldn’t really think of another one, so I left off there. Having written an entire essay for each one, I figured the reader would be pretty worn out after six anyway.

1. In an episode similar to Gus’ story about the monkey rings, a few years ago (when I about to turn forty, I think), I was watching the kids play on the swing set in the back yard. For some reason - not the least of which may have been that my father in law, who can still do chin-ups like a high school athlete, was looking on - I got it in my head that it would be fun to start horsing around on the monkey rings. Now, I’m a short, skinny guy, so it was easy to do a few flips, traverse the length of rings a few times, and do a couple of “iron crosses,” without a problem... until the next day. I woke up with a sharp pain in my shoulder blade that didn’t go away for a week. Then a month. Then two months.

Having grown up playing street hockey, overcoming aches and pains was kind of a way of life with me. But when I was younger, it took just about a week for the sore parts to heal - which was perfect because we generally played pick-up games every Sunday. This was different; the shoulder pain was not going away.

Sometime later, I happened to have a routine physical with my doctor and I told him about the injury. He considered all the evidence and presented this advice: “You’re forty and have a basically sedentary lifestyle. Don’t do the ‘iron cross’ on monkey rings any more.” Brilliant.

I’m happy to say that the shoulder pain eventually went away. And no, I haven’t played on the monkey rings since then.

2. Like Gus, I am negatively buoyant. Actually, I am indebted to him for providing the link to negative buoyancy because I had never heard that term before. I did not learn to swim properly as a child - I mean, I can flail about in the water, but that is not swimming. My wife and even my kids have tried to teach me, but I haven’t made much progress beyond being able to move some distance under water. The fundamental problem is that I settle way too low in the water; I am significantly more submerged than the average person. If I relax and lean my head back in a pool, my nose is about five inches below the water line.

My twin brother (who is a little taller, stronger, and faster, but built basically like me) and I took an adult swimming class together some years ago. Now, I assure you that we are both pretty coordinated and approach things with a high level of determination and discipline. The instructor was quite good and he offered a lot of clear advice about mechanics. But nothing he could teach can alter our buoyancy. After a time, he sighed and said about the two of us, “Yeah, I’ve seen this before. I’m sorry, but there’s not much I can do with you guys.”

3. I love music, though have never become accomplished at any instrument except for percussion, which I started playing in the seventh grade. My practice time dwindled down to nearly zero when I got to college, and I scarcely play at all anymore - though LB makes me play for her on her birthday every year!

I’ve dabbled a little with guitar, bass, and piano, but in no sense can I claim to know how to play these instruments. I used my guitar lessons more as a means of learning music theory than in learning to play the guitar. In the last few years, I’ve sort of taught myself violin so that I can keep up with my daughter who has been playing since she was four.

4. Speaking of music, I have some pretty widespread and eclectic tastes, the results of at least five distinct periods of my music-listening life, which could be summarized as follows: my concert/orchestral stage, my jazz/fusion stage, my art rock stage, my post-punk/industrial/hardcore stage, and finally, my renaissance of concert/orchestral music, this last of which is by far the most enduring.

My early musical influences came out of the bands and orchestras that I was playing in when I was in elementary and high school. At that time, I had favorites like Gustav Holst and Modest Mussorgsky, and because I was playing in the jazz band, I fell in love with the music of Chuck Mangione, Pat Metheny, and Weather Report. From there, it was natural for me to turn to the so-called “art rock” of the 1970’s and 1980’s - the dense, well-written, and virtuosic music of Yes, Emerson Lake & Palmer, King Crimson, and above all, Rush (see item 6). I still listen to this music from time to time today.

In my mid-twenties, I developed a somewhat surprising interest in music that is much more raw and unrefined - and in terms of specific content (such as lyrics), often revolting and utterly contrary to my philosophy. Yet within this post-punk genre, I found several groups whose music I really liked - Siouxsie and the Banshees, Nick Cave and the Bad Seeds, Wire, Joy Division, The Legendary Pink Dots. Anyway, that phase didn’t last too long, and in the end I saw first-hand the emptiness behind most (though not all) of that music.

For the last fifteen years or so, my tastes have run back to the chamber and orchestral music of the last four centuries. Without a doubt, my favorite composer is J.S. Bach, and I also love the music of Vivaldi, Beethoven, Schubert, Brahms, Mahler, Sibelius, and Shostakovich.

5. The best car I ever owned was a 1972 Camaro SS, which I pampered and drove around for a few years when I was in my twenties. (It was identical to the one in the photo below, except it did not have the white racing stripes or the spoiler in the back.) Looking back, I have to admit that the car was running in perfect shape only about ten percent of the time; the remaining ninety percent was characterized by a succession of minor glitches that were entirely of my own doing, all pointing to my repeated violations of that universal hot rodder’s axiom: “If it ain’t broke, don’t fix it.”

I ended up building a motor for the car, one of those kits that one used to be able to get from Performance Auto Wholesale. It was a great experience, though I was a little bit out of my element, having no friends or family who were particularly knowledgeable about such things. Plus, for a long while the Camaro was my only car, so the mistakes that I inevitably made had to get fixed... or else I’d have to ride my bike to work.

To this day, my drives through neighboring towns are peppered with the nostalgic landmarks of those days: here, the McDonald’s parking lot where I had to take off my carburetor to reseat the gasket; there, the overpass that I stopped under to remove the muffler that had dropped off the tailpipe, etc.

photo from Cincinnati Enquirer

Eventually my enthusiasm for spending every Saturday under my car waned. I got a much more reasonable commuter car (a VW Jetta), and (I am ashamed to admit) the Camaro ended up sitting at the end of my driveway for a number of years. The last time I opened it, there was about an inch of water on the floor in the back and some wasps had built a nest in the hinge of a door. I put a “best offer” ad in the paper and some sixteen-year old kid came to buy it. He asked me how much I wanted for it. I said, “How about fifty bucks?” He said, “How much? Sixty?” I said, “Yup.”

6. I have Rush to thank for my first introduction to Ayn Rand. I was probably about fifteen or sixteen when I bought their legendary concept album 2112. Of course, I was one of those guys that spent hours immersed in the lyrics and artwork on album gatefolds, so I wondered about this intriguing note at the top: “With acknowledgement to the genius of Ayn Rand.” I had no idea who Ayn Rand was, but this one note piqued my curiosity enough to read Anthem, which in turn was enough to get me to read The Fountainhead. And that changed everything.

One Reality

It was one year ago today that I officially kicked off One Reality, so I thought I would take the opportunity to explain the name.  Whence One Reality?

A long time ago - about twenty years, I think - I heard a song on a college radio station that had a line that stuck with me.  It went, “Reality is the only word in the language that should always be used in quotes.”[Note 1.]  This line stood out to me because of how piercingly and profoundly wrong it is.  Of course, to say the least, on college radios stations it is not hard to find views that are implicitly based on incorrect premises, but here in the middle of a song by an anti-intellectual, post-punk, industrial group was an explicit statement of metaphysics saying there is no reality, but only “reality.”  Or: there is not one reality, but a multitude of “realities,” one for each observer.  Considering its presence in a pop (or not-so-pop) song, the statement is an unusually distilled expression of the primacy of consciousness, as against the primacy of existence. 

When the time came to choose a name for my blog, I recalled this idea.  For the URL of my blog, I had already chosen http://realityandreason.blogspot.com, which captured the metaphysical and epistemological foundations of the ideas I want to defend: reality (i.e. that which exists) and reason (i.e. the means of discovering what exists.)  

But for the actual name of my blog, I did not want to use Reality and Reason.  For one thing, it was a bit daunting.  I was just starting out with my public writing, and it seemed too ambitious to label a blank canvas with a title of such enormous scope.  I wasn’t entirely sure I could live up to its promise.  Every word that I write, which I labor over as it is, would have been that much more measured and second guessed with such a grand title.  Even Brahms shuddered in Beethoven’s shadow.  

Furthermore, my plan was to use my blog to post writings of varied importance... and indeed, this has proven to be the case.  The serious, deeply-considered essays are interspersed with more extemporaneous, personal, or fun posts.  I think it’s important to do these less serious posts to keep things enjoyable for me (and perhaps for my readers), but they would tend to trivialize Reality and Reason if placed under that moniker.

On the other hand, every thing I write (and for that matter, everything I do) is informed by my fundamental philosophy, so I wanted the title of my blog to reflect that somehow.  So, I chose One Reality as an explicit rejection of the idea from that song that I had heard so long ago.  Or to put the point positively, I chose One Reality as an explicit embrace of the primacy of existence.  The description at the top of my blog elaborates: “There exists but one reality, to be perceived with one’s senses and comprehended via reason.”

Now, it has occurred to me - and for a while, it troubled me - that the title could convey the exact opposite of what I was trying to express.  The “one” in One Reality could be interpreted as, “this is just one ‘reality’ among other possible ‘realities.’”  Obviously, the blog description, not to mention my writing itself, would disabuse anyone of this idea, but still the ambiguity worried me a little bit.  For a while, I even tried to italicize the “One” in One Reality, but that caused some viewing problems in applications that didn’t handle the HTML code gracefully.  Furthermore, it didn’t really resolve the issue. 

In the end, I’ve come to embrace the ambiguity.  Insofar as the name could be temporarily misleading it provides a little bit of irony, and I am confident that for any visitors that happen upon One Reality and actually read my writing, I could not possibly be taken for a primacy-of-consciousness advocate!  

NOTES

1.  The song was by MLWTTKK, an acronym that is short for the revoltingly nihilistic My Life with the Thrill Kill Kult.  There are videos from this group available on YouTube if you are curious, but I do not wish to promote them by including links.

Ted Kennedy’s Down Payment

About a week ago, a Boston Globe article noted a somewhat surprising admission by Republicans. At least a few conservatives are recognizing their own party’s culpability in the headlong drive toward universal serfdom in America:

Sure, President Obama is moving toward nationalizing the banks, conservatives grumbled at their annual conference here [in Washington] this weekend. But former President Bush started it, they noted testily, with his $700 billion Wall Street bailout package.

“Sadly, our former president propelled America to socialism - all the way to third base,” with Obama set to bring it home, said conservative columnist Deroy Murdoch. “Our side emerged with neither principle nor power.” [Note 1, emphasis mine.]

I agree with this, though I would say the Republicans “started it” long before last fall’s bailout.

For instance, it was back in 2003 when Republicans initiated and eventually pushed through the prescription-drug bill. “When we get this as a down payment,” said Senator Edward Kennedy, “we’re going to come back again and again and again and fight to make sure that we have a good program.”[Note 2, emphasis mine.] The “we” in this quote, of course, refers to the left-leaning technocratic elite who believe that government compulsion is the answer to every problem, and the “again and again and again” is an apt description of the pummeling America is taking now that this elite wields power. Why didn’t conservatives recognize then that they were doing the job of their alleged opponents?

And lest we be tempted to blame this entirely on George W. Bush, we may go back still further to notice that government spending increased dramatically under the first President Bush and his predecessor Ronald Reagan. (Interestingly, the only intervening Democrat, Bill Clinton, slowed the increase in spending and oversaw significant welfare reforms.) President Reagan in particular was hailed as being the champion of limited government, yet as philosopher Harry Binswanger pointed out on his private email list, far from cutting the budget when he rode in on his election mandate, Mr. Reagan actually proposed a 6.1% increase.

So, why do conservatives give lip service to freedom and limited government, yet fail to actually act accordingly?

The reason is that conservatives cannot escape the logic of their own fundamental premises. Morally, they share the same basic code as the so-called liberals: altruism. The political right may differ from the political left in the particular programs that they advance, but they are in complete agreement that men must serve something “larger than themselves.” For Republicans, it is a supernatural God; for Democrats, it is a secular godhead, such as society or the state.

It is impossible to consistently defend liberty and capitalism on sacrificial grounds. Freedom is inherently selfish - freedom means: freedom for the individual. By “selfish,” of course, I mean not the hedonistic, range-of-the-moment type of selfishness that is commonly connoted, but the long-range, rational self-interest that every human being must exercise to live and flourish.

As long as they hold an adherence to “traditional values” instead of a respect for individual rights as a rationale, conservatives will fail to make their case for capitalism. From “Reaganomics” (which advocated lower taxes not on the grounds that it reduced rights violations, but because it would help to “trickle” the wealth to all) to “compassionate conservatism” (which explicitly bound government activities to religious goals), conservative policies will inevitably erode liberties. Even when sincere emphasis is given to the free market, individual responsibility, and other aspects of liberty, when pressed, the conservative cannot bring himself to say that the reason capitalism is moral is because it permits him to seek his own happiness.

Until and unless the Republicans completely reject sacrifice as a moral ideal, they will simply pave the way for their leftist opponents.

NOTES

1. “Reeling conservatives assess damage,” Boston Globe, 1 Mar 2009, p. A9.

2. Transcript from Judy Woodruff’s Inside Politics, CNN, 18 Jun 2003, http://transcripts.cnn.com/TRANSCRIPTS/0306/18/ip.00.html.

3. See “2008 Federal Revenue and Spending Book of Charts,” Heritage Foundation, http://www.heritage.org/research/features/BudgetChartBook/index.html

To Begrudge

The "Notable & Quotable" section of last Thursday's Wall Street Journal featured a good quote:

Bertrand de Jouvenel, writing in 1951 about popular attitudes toward income inequality in "The Ethics of Redistribution":

The film-star or the crooner is not grudged the income that is grudged to the oil magnate, because the people appreciate the entertainer's accomplishment and not the entrepreneur's, and because the former's personality is liked and the latter's is not.  They feel that consumption of the entertainer's income is itself an entertainment, while the capitalist's is not, and somehow think that what the entertainer enjoys is deliberately given by them while the capitalist's income is somehow filched from them.[Note 1.]

NOTES

1.  Wall Street Journal, 5 Mar 2009, p. A17.

A Bumper Sticker

I am not generally a fan of bumper sticker slogans, which are often designed to appeal to emotions by deliberately ignoring some fundamental consideration or other.  But every now and then I come across one that genuinely captures the full context, condensing a broad idea into a pithy and clever phrase.  Conservative radio talk-show host Jay Severin shot out an excellent one-liner in one of his monologues the other day:

If you think health care is expensive now, wait until it is free!

This could hardly be original (and he made no claim that it was), but I had never heard it before.[Note 1.]  It aptly captures the fantasy and fraud that is "liberal" welfare policy.

NOTES

1.  The slogan is similar to the popular bumper sticker, "If you think education is expensive, try ignorance," which is also clever.

Lorraine Hunt Lieberson

I was listening to the radio the other day and heard a beautiful and intriguing song cycle.  The singer was Lorraine Hunt Lieberson (who died in 2006) and the music was composed by her husband, Peter Lieberson.  The songs are set to the poems of Pablo Neruda.

I confess a near total ignorance of Neruda’s poetry.  I am somewhat familiar with his political convictions, which to say the least, do not present a favorable impression, but I’d like to read some of his poems someday.

Shock and Awe: Obama’s First Forty Days

In describing the rapidity and voracity with which the Obama administration and Congress have pursued the decapitation of America, it is not inappropriate to apply the military concept of rapid dominance, better known by the term “shock and awe.”

Though the president is surely well-intentioned and in no way regards the American public as an “enemy,” in his pursuit of political power he nonetheless conforms to “shock and awe” objectives: overwhelming and dominating the landscape so rapidly, there is little will or ability to resist. Just as the targets of a military attack can be incapacitated and disoriented by a sudden overpowering blitz, so too the American people seem to be stunned and unable to fathom or resist the onslaught of government intervention. The American citizen, faced with a bailout yesterday, a budget and “stimulus package” today, and more bailouts tomorrow, is rendered senseless by the number of zeroes following the dollar signs. He cannot comprehend it. It is a sort of shell shock. By the time any kind of backlash takes hold, we will be immersed in a socialist bog from which it will take decades to pull ourselves out.[Note 1.] Entitlements, once issued, are rarely removed. Freedoms, once abrogated, are difficult to restore.

In a mere forty days, the president has, among other things, signaled his foreign policy direction by granting his very first interview as president to Hisham Melhem of Al-Arabiya Arab TV; indicated his domestic policy direction by signing as his very first bill the Lilly Ledbetter Fair Pay Act of 2009, which dictates to employers the wages they can offer to employees; shut down the Guantanamo Bay detention facility without resolving what to do with the remaining detainees; pushed through and signed the $789 billion American Recovery and Reinvestment Act, a comprehensive government spending program that defies comparison to any other in American history, save perhaps to the New Deal programs that prolonged the Great Depression; laid the groundwork for nationalizing the banks[Note 2.]; issued a $275 billion Housing Plan to ensure that people could stay in homes they can’t afford; signed an executive order expanding the faith-based initiatives started by President Bush; advanced the Treasury Department’s Financial Stability Plan and its Capital Assistance Program.

And last week, Mr. Obama released his budget proposal, A New Era of Responsibility: Renewing America’s Promise. It is a promise indeed, but of staggering irresponsibility.

What he calls “fiscal responsibility” is to cut the deficit in half by the end of his first term - a sheer fantasy with the explosion of manifestly irresponsible spending that he advocates. What he calls a “fair tax code” is a “tax cut” for 95% of American workers, which means only that more burden is placed on the remaining 5% that are the greatest producers.[Note 3.] What he calls “clean energy economy” is to waste money and effort capitulating to “green” special interests. What he means by “real health care reform” is to spend billions of dollars to render our health care system as incompetent and unjust as any other socialized system in the world.

The president promises to increase food stamp benefits, to create a National Infrastructure Bank, to “invest” billions of dollars in roads, bridges, mass transit, high-speed rail, air traffic control, and broadband access, to divert billions of dollars to “clean” energy supplies, miscellaneous “green” research, weatherizing private homes, reforming farms and utilities, and to further federalize schools. The list goes on and on.

To summarize, President Obama and the Democratic Congress have in just forty days not only delivered a devastating wave of government intervention that has rocked the bulwarks of our liberty - bulwarks, incidentally, that were already cracked from previous storms of Republican controls - but have promised that a tsunami of their bounteous tyranny is yet to come.

__________

In the first sentence of this post, I accused the Obama administration and Congress of pursuing the decapitation of America. I use the word “decapitation” not in the typical military parlance meaning to kill or dethrone the head of state. Rather, I mean that the federal government is directly attacking productive minds.

One would think that with such breadth and scope of the government’s reach, with such a multiplicity of simultaneous intentions, it would be hard to find a coherent principle behind Mr. Obama’s policies - yet, this is not the case. The clear and consistent theme of the Obama administration is to sacrifice individual producers on the altar of so-called “liberal” policy. The more one thinks, works, and earns, the more one is to be disposed of by the state.

Effort, ingenuity, and talent, which would constitute the fortune of a free man, become his yoke in the welfare state.

On page 17 of his budget proposal, Mr. Obama reveals a significant clue to his intentions:

The past eight years have discredited once and for all the philosophy of trickle-down economics - that tax breaks, income gains, and wealth creation among the wealthy eventually will work their way down to the middle class. In its place, we need economic opportunity to trickle up.[Note 4.]

Putting aside the association of “trickle-down economics” with specific policies of the late twentieth century - namely, so-called supply-side economics or “Reaganomics” - there is an important and universal truth in the concept itself. There is absolutely no question that in a free country, people create and trade wealth to the benefit of all. It is not “wealth creation among the wealthy,” as Mr. Obama puts it (making it seem like “wealth creation” is just something that occurs in nature, to be enjoyed by a privileged class), but wealth created by the wealthy, that “trickles down” to all. Who can deny that in free and even semi-free nations, the citizens who are relatively poor benefit enormously from the efforts of those that are more productive - and crucially, without those productive citizens being compelled to deliver or even being aware of the benefits they confer?

In Ayn Rand’s Atlas Shrugged, the hero John Galt expresses this:

“In proportion to the mental energy he spent, the man who creates a new invention receives but a small percentage of his value in terms of material payment, no matter what fortune he makes, no matter what millions he earns. But the man who works as a janitor in the factory producing that invention, receives an enormous payment in proportion to the mental effort that his job requires of him. And the same is true of all men between, on all levels of ambition and ability. The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains. Such is the nature of the ‘competition’ between the strong and the weak of the intellect. Such is the pattern of ‘exploitation’ for which you have damned the strong. [Note 5.]

But there is one vital prerequisite for this “trickle down,” one essential condition required for this incalculable benefit to every human being: political freedom.

For the president to deny that wealth created by men who are permitted to associate and exchange freely does in fact “trickle down” is either a colossal evasion or a deliberate deception. And for him to announce his promise to reverse this principle - to compel wealth to “trickle up” (whatever that is supposed to mean) - is an alarming threat to all Americans, but particularly to those at whom the threat is leveled: the most productive Americans.

It certainly did not start with Barack Obama, but since he has taken the Oval Office, a fact has become very clear. The federal government has declared war on the men of the mind.

NOTES

1. “Decades” is an optimistic estimate that assumes we will be able to gradually shift the culture toward reason and self-interest. Incidentally, though this post is focused on President Obama’s first forty days in office, I do not wish to downplay the fact that it was the Republicans that started this latest round of expanding government. Messrs. Bush, Paulson, and company gave the Democrats all the push they needed.

2. For more on this, see my post, “Greasing the Skids for Nationalization of Financial Insititutions.”

3. I put “tax cut” in scare quotes because I do not see how it is possible to cut taxes for 95% of American workers when far fewer than 95% pay taxes in the first place.

4. The quote is from the president’s budget proposal, “A New Era of Responsibility: Renewing America’s Promise,” White House, 2009, p. 20. Shortly after denigrating the trickle-down effect, the President has the gall to add, referring to of his own socialist policies, that “some may say that in this environment this [i.e. establishing his own programs] is aiming too high. Settling never has been the American way, and now is no time to lower our sights.” He brazenly rallies his followers to participate in the systematic destruction of America by appealing to their American spirit!

5. Ayn Rand, Atlas Shrugged, Signet/Penguin Books, New York 1957, reprinted 1992, p. 989.

UPDATES

I fixed a couple of minor typographical errors.

Leonard Peikoff Podcast 51

The latest podcast:

Podcast 51 (2 Mar 2009)

Teasers: moral value of masturbation; incidental participation in religious ceremony; morbid obesity; the possibility of evading without knowing it; "You're in my prayers"; the "threat" of someone else smoking.

(I’m guessing some of these teasers might be even more provocative than usual!)

Greasing the Skids for Nationalization of Financial Institutions

In an (unpublished) letter-to-the-editor that I sent to the Wall Street Journal a few weeks ago, I expressed alarm at the apparent nonchalance of the American public as the specter of bank nationalization looms, and warned of the loss of freedoms that it signaled:

Let us summarize the government’s step-by-step procedure: (1) Hobble industries for decades with myriad regulations.  (2) All the while, seize by force trillions of dollars earned by individuals and corporations.  (3) When industries inevitably show signs of weakness, blame their failures on “unfettered capitalism,” and magnanimously bestow part of the seized funds in the form of a “bailout” to key corporations.  (4) Use the “gift” as a quid pro quo to exert control over those corporations.  

This form of nationalization may be more polite and subtle than the type achieved by dictators abroad, but it does not change its essence.  The strings attached to government handouts are strings that bind.  We are fools if we applaud the government for throwing leashes about the necks of resented CEO’s, evading the permission it grants to leash all of us.

Don’t Americans understand what is at stake?  Perhaps the public is so saturated with the daily reports of new government programs costing billions, and even trillions, of dollars, that the prospect of nationalizing an industry gets lost in the disorder.  I rather hope that is the case; it is preferable to Americans simply not knowing what nationalization means, or not caring whether companies are run by free citizens or by the government.

No matter what the reason is, not enough people seem to be paying attention.  I am convinced that it is the Obama administration’s intention to wrest control of industries from the hands of private individuals and concentrate that power in the federal government.

Naturally, the administration will have to do so in a more or less stealthy manner, and will deny its intentions every step of the way.  "This administration,” said White House Press Secretary Robert Gibbs in a recent daily briefing, “continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government.”[Note 1, emphasis mine.]  Far from being a reassurance that bank nationalization is not a possibility, this lukewarm disavowal is a thinly disguised attempt to soften up the American public for an eventual takeover.  In a week or a month or a year, President Obama will be able to feign reluctance as his administration seizes control of one company after the other, and will do his best to characterize his activities as “regulation” or as “temporary emergency measures.”

Treasury Secretary Timothy Geithner

photo from United States Department of Treasury

Treasury Secretary Timothy Geithner couched the issue in a similar manner in a white paper on his Capital Assistance Program (CAP), a part of the Treasury’s Financial Stability Plan:

The economy functions better when banking organizations are well managed in the private sector.  U.S. government ownership is not an objective of CAP.  However, to the extent that significant government stake in a financial institution is an outcome of the program, our goal will be to keep the period of government ownership as temporary as possible and encourage the return of private capital to replace government investment.  In addition, any capital investments made by Treasury under this plan will be placed in a separate trust set up to manage the government’s investments in US financial institutions.  The objective of the trustees will be to protect and create value for the taxpayer as a shareholder over time. [Note 2.]

Again, this ostensibly expresses that the federal government has no interest in seizing control of banks.  But what it actually indicates is precisely the opposite: that the government can and will exercise that power.  The threat is indirect, and the more chilling and ominous for it.  It is as if while you are having an argument with another man, your opponent suddenly pulls out a gun, puts it down on the table in front of him, and says, “I have no intention of using that gun.”  The words belie the action.  

It is completely contradictory and disingenuous for the government to say, in effect, “Ownership of private firms is not a goal of ours... but if we really have to seize control, it will be as temporary as possible.”  Who determines if (as the CAP paper puts it in its craven passive voice) a “significant government stake” is a necessary “outcome of the program?”  The government.  Who determines how temporary is “temporary?”  The government.    

In some respects, it is a moot point to talk about nationalization as something that can yet be averted.  It is already here.  In using the bailout money to dictate limits on executive pay in financial institutions, the federal government has already begun the process.  A provision of the American Recovery and Reinvestment Act of 2009, H.R. 1, signed into law on 17 Feb 2009, limits the salary and bonuses of top executives in financial firms that have received or will receive Troubled Asset Relief Program (TARP) funds.[Note 3.]  Having accomplished this, what could the government not now demand from any company that it plied with loot?

Defenders of nationalization will here claim that the government has every “right” to dictate terms to firms that have accepted bailout money; but this logic is based on a faulty premise.  The implication is that it cannot be considered tyranny to demand concessions from firms in exchange for the government largesse that they have received.  Indeed, if this had actually been a voluntary exchange, the type that occurs in laissez faire capitalism, that would be true.  However, there is nothing voluntary about it.  Companies that received bailout money were either directly or indirectly forced to take it.[Note 4.]  The government cannot excuse itself from tyranny on the grounds of quid pro quo, when the entire situation is a consequence of its previous tyrannical actions (i.e. its seizure and redistribution of property in the form of a “bailout”).

__________

Many of the apologists of nationalization recognize the importance of not calling it “nationalization,” a term that (hopefully) isn’t yet swallowed quite so easily by some Americans as it is in other parts of the world.  (I’ve recently been seeing the word “receivership” replacing “nationalization”; having the connotation of a temporary state, it serves as a polite euphemism.)  Paul Krugman, the economist who holds about the best imaginable left-leaning credentials - Princeton University professor, Nobel Prize-winning economist, and New York Times columnist - placates us accordingly.  Referring to the fears of bank nationalization, he wrote:

We are not talking about fears that leftist radicals will expropriate perfectly good private companies.  At least since last fall the major banks - certainly Citi and B of A - have only been able to stay in business because their counterparties believe that there’s an implicit federal guarantee on their obligations.  The banks are already, in a fundamental sense, wards of the state...

What’s happening now is a growing sense that the federal government, in return for rescuing these institutions, will demand the same thing a private-sector white knight would have demanded - namely, ownership.[Note 5.] 

This passage echoes what I wrote above: the process of nationalization has already begun.  It also demonstrates an application of the same false logic that I described - evading the distinction between voluntary exchange and government coercion.  

__________

Unfortunately, we cannot forever count on the average American’s aversion to big government.  The liberty that was so dearly earned by our forefathers has been withering under a relentless attack.  Freedom, that rarest jewel of history, can be broken by neither a hammer nor a sword... but can erode and decay over time if left unattended.  For decades, both Democrats and Republicans have been expanding the role of government in our lives, disagreeing only on the particulars by which, or the degree to which, our individual efforts may be disposed.  

If we are to somehow forestall the complete demise of liberty in this country, we will have to convince Americans to wake up and identify the bewildering events that they see on their televisions and laptops.  We will have to convince them that they should not take the word of “experts” without understanding what they say; that they should not be placated when they hear that government takeovers are only “temporary emergency measures”; and that they should be suspicious of politicians that blame crises on a few “greedy Wall Street executives,” or on any other envied or resented citizens that serve as suitable scapegoats.  To save America, we do not need the average American to be a genius, or brilliant, or even unusually smart.  We just need enough of us to be honest, think independently, and not surrender our values in exchange for a promised “free lunch.”

I have long encapsulated the difference between the cultures of America and Europe by means of comparing the American Revolution with the French Revolution.  If two centuries ago you had asked the average American - the farmer, the craftsman, the clergyman, the fisherman, the printer -  what he longed for, he would have said, “Liberty!”  If you asked the average Frenchman what he wished for, he would have answered, “Bread!”  Therein lies the difference between freedom and servitude.

If we cannot convince enough Americans of this, then we have little hope of recovering our freedom.  An anonymous comment to another one of Krugman’s blog posts, signed by “Incognito,” aptly captures the sentiment of this new American sheep, the tired American that will gratefully accept manacles (or better still, feel relief when it is his neighbor who is enslaved instead of himself) in exchange for a loaf of bread.  The “them” he refers to is the government as he laments:

I just want them to fix it.  I don’t care how it’s done, or how expensive it is, just fix it and make sure it doesn’t happen again.[Note 6.]

NOTES

1. Quote from Yahoo News, “White House tries to end bank nationalization talk,” 20 Feb 2009, http://news.yahoo.com/s/ap/20090220/ap_on_bi_ge/obama_banks.
   
2. “Treasury White Paper: The Capital Assistance Program and its Role in the Financial Stability Plan,” Department of the Treasury of the United States of America, 2009, p. 3.
   
3. The final version of the American Recovery and Reinvestment Act of 2009, H.R.1, is available online at http://fdsys.gpo.gov/fdsys/pkg/BILLS-111hr1ENR/pdf/BILLS-111hr1ENR.pdf.  I spent a fruitless hour looking for the particular passage on executive pay limits, only to discover that I was looking at an earlier version of the bill that didn’t have that clause.  This prompts the question: did each legislator himself have the time, inclination - or let’s face it, endurance - to read the whole bill before he signed it?  See also “Stimulus Plan Places New Limits on Wall St. Bonuses,” The New York Times, http://www.nytimes.com/2009/02/14/business/economy/14pay.html?scp=5&sq=cap%20on%20executive%20salaries&st=cse.
   
4. For example, see “Healthy banks complain: we don’t want bailout,” International Herald Tribune, 2 Nov 2008, http://www.iht.com/articles/2008/10/31/business/31plan.php.  Even when the banks aren’t literally strong-armed into accepting bailout money, though, the mere presence of government largesse distorts the market, so that many must either accept it or perish.  No private firm can compete with an entity that can legally seize or print its own money.
   
5. Paul Krugman, “Nationalization fears,” The New York Times, 20 Feb 2009, http://krugman.blogs.nytimes.com/2009/02/20/nationalization-fears/.
   
6. Paul Krugman, “All the President’s Zombies,” The New York Times, 25 Feb 2009, http://krugman.blogs.nytimes.com/2009/02/25/all-the-presidents-zombies/?scp=1&sq=nationalization%20receivership&st=cse.