US Exceptionalism
Exceptionalism or plain old 19th century Jingoism?
Steel states: that American exceptionalism is based on “the use of individual initiative as the engine of development within a society that strives to ensure individual freedom through the rule of law.”
American exceptionalism is, among other things, the result of a difficult rigor: the use of individual initiative as the engine of development within a society that strives to ensure individual freedom through the rule of law. Over time a society like this will become great. This is how—despite all our flagrant shortcomings and self-betrayals—America evolved into an exceptional nation.
What is it?
Conservative jounalist Shelby Steele (WSJ Opinion Sept 1 2011) describes American exceptionalism as “the use of individual initiative as the engine of development within a society that strives to ensure individual freedom through the rule of law.” Individual initiative…individual freedom, rule of law..if only that were true. All that “individual initiative” and “freedom” is unfortuneately not freely available to all in this nation, but for those whose wealthy predecessors paved the way for them. So it’s not a bad theory to hold on to—if no one looks too carefully at who steadied the ladder for you, while you climbed the rungs. Most Americans and others free of social psychology’s fundamental attribution error would not agree..seeing the exceptional status of America more as “a bargain with the devil—an indulgence in militarism, racism, sexism, corporate greed, and environmental disregard as the means to a broad economic, military, and even cultural supremacy in the world” (op. cit) . Frankly, to my ears, that sounds like what Mrs. Greenburg, my former social-science teacher in New Utrecht High, would have called “jingoism” We don’t hear much of that anymore. I wonder why? Since American exceptionalism seems to fit so snugly with the actual definition of Jingoism…
Jingoism? See: http://www.globalexchange.org/resources/econ101/americandream
[Jingoism comes from a British pub song of the 19th century which went like this:
We don't want to fight but by Jingo if we do
We've got the ships, we've got the men, we've got the money too
We've fought the Bear before, and while we're Britons true
The Russians shall not have Constantinople!]
I love America dearly as a native son. I was born here more than seven decades ago in New York City, and raised and educated that City. My grandparents and parents were born there too. My maternal and paternal uncles served in WWII. I’ve traveled my beloved homeland north and south and east and west, lived in its countryside, and in one of its greatest cities. I know it as a great land, peopled with kind and decent folk. And my heart knows and loves no other place as well as this land. But loving it does not give me reason to gloss over and hide its faults, its failures and foibles, or give up wishing to perfect it.
There true are valid reasons to be proud. No one can deny that America is a unique and great land. The USA was the first “new” democratic nation. The founding fathers created a “political entity” out of whole cloth. Before we were an actual nation (such as the Germany, France or Spain) our founders forged a new political entity in 1776, and then only afterward, did we create a ‘nation’ of citizens to populate it. That is unique. To accompany that commendable history, our national ideology, based on concepts of liberty, egalitarianism, individualism, populism and a laissez-faire business environment, all make us the envy of the rest of the world. But, looking back at our nation’s history, we can see our course at times sometimes marred by wrong-headed policies which make a mockery of our great tradition of equality, justice for all. Yes at times we have exhibited pride, greed, injustice, and just plain stupidity.
“Critical thinking” is a much-touted mental process based on logical, unbiased and unfettered thought as well as an active, valid and probing self-evaluation. However, looking “critically” at our own homeland (as any true patriot must) is often frowned upon and viewed suspiciously. Those who hear our questions or with whom we share these ideas, often protest, “Air you with us, or against us?”
But one must ignore such objections. A nation of our size and diversity naturally encounters problems arising from those very characteristics. Others derive from an antiquated and hide-bound, bicameral, presidential system of representation (rather than more responsive, flexible, and democratic parliamentary system); our Senate is the most unrepresentative and undemocratic in the entire modern, western world; and our Electoral College is an unabashed embarrassment to a nation which wants to be considered as “democratic”. Here too we must mention our massive military—the largest, most expensive and most coddled in the entire world. We spend more on our military than all the other nations in the world combined. It consumes more than one-third of our total annual budget. That investment in naked power encourages us to see every problem in the world, as one that can be solved with military intervention. And we use it more than any other nation does. My dad used to say, “If you got a hammer in your hand, you can’t but help seeing everything as a nail.” Such massive investment robs our government and our society of funds for social development, improvement of its physical infrastructure, (roads, railroads, internet waterways, and electrical generation and grid system) and a modern social safety-net.
But whatever the source, efforts to correct and improve our nation are weakened or stymied by a pervasive myth often termed: “American Exceptionalism.” The concept of America as a “special nation” promotes the idea that the USA is the “city on the shining hill”, chosen by God to be an exemplar for others, and exempt from normal historical forces of decline, error, or need for renewal and course-correction to which other nations are subject. We like to think of ourselves as the political model to which all others either wish or (in our mind) should emulate. We are simply "The Best"! If we buy into that concept—our nation can make no mistakes—and thus there is need for corrective action or improvement. Such a concept and its consequences are a prescription for demise and failure. Too often it sounds too much like jingoistic ultranationalism.
Even worse, the myth of “exceptionalism” has fostered an arrogant foreign policy that has led us into disastrous adventures overseas. Recall the policies of a recent US government, which promulgated ideas of “regime change” (to a more compliant government) or “nation building”(into a system more congruent to our own how impossible or unlikely that is)---in independent nations of the Middle East-- all to our financial and political detriment.
The pseudo-religious basis for the concept of a “a shining city on the hill” or a God-ordained political entity, goes counter to most of our basic tenets of freedom, liberty, and separation of Church and State, as established by our founding fathers. This pernicious idea of a God ordained polity had its origin with the Puritans--the zealot Christian sect which Queen Elizabeth I of England wisely hounded out of her country. These radical Christians believed fervently that they had made a covenant with God and that the colonies they established in New England were destined to be a model (the source of the phrase "a shining city on the hill") for the rest of the world to emulate and follow. (The actual history of those colonies are shot through with bigotry, harsh imposition of religious uniformity, and the establishment of a fanatical religious oligarchy, too reminiscent of medieval Europe than of modern America. Though those early colonies are long gone, aspects of their zealotry too often raise their ugly head from deep within the heart-land’s native soils and tend to become manifest politically.
Myths of exceptionalism are not new. The Greeks of Classical times, (perhaps for obvious and good cause) thought of themselves as unique and honored by the Gods and considered Athens to be the zenith of human development. Those who did not speak Greek, and babbled unintelligibly (heard to the Greek-ear as "bar-bar-bar-bar’) were considered to be "barbarians", i.e. they did not speak Greek and thus were excluded as civilized folk. The Romans, during the Republic and on into the Imperial age, held a similar concept of political superiority, and adopted the Greek concept and term "barbarian" to denote those who were non-Roman and thus they considered outside the pale of civilization.
Perhaps such myths help to bind a nation together and were a necessary evil for the survival of its political system. But our circumstances and needs, in an interconnected multicultural world are very different. In modern times such jingoistic concepts do not help to support efforts for national renewal and self-evaluation that can lead to improvement. “Critical thinking,”and self-appraisal is not supported by such a philosophy.
But for those who can engage in critical thought, there is much to consider. Are we really so exceptional? Let us take an incomplete but unbiased look. Are we the nation that others wish to or should emulate? The following are facts about our nation that need an airing into the public for discourse and evaluation.
First let us examine the economy.
In a perceptive and revelatory piece in a January 2011, edition of ‘guardian.co.uk’, entitled: “The Myth of American Exceptionalism” by Prof. Richard D. Wolff (Economics, Univ. Mass., Amherst, ret 2008, presently Visiting Prof., New School Univ. NYC, and author of: “Captialism Hits The Fan,” (2009)) Wolff states. “Until the 1970s, US capitalism shared its spoils with American workers” but since that date, the tables have turned and now business, government and the powers that be have made the American working class pay for its failures.
Wolff states that the concept of American exceptionalism has stemed from US economic prowess. All US citizens (excepting a tiny percentage of Native Americans) are immigrants to these shores. The vast majority of our citizenry are either immigrants themselves or children or grandchildren, or great-grandchildren of immigrants who were attracted here, more often than not, as a direct result of the expanding American economy. My great-grandparents and my maternal grandfather came here from their native lands to a country they saw as a land of opportunity, where anyone who had a good idea, determination, and the ability to work, could find a job, get a foothold, and then start a business and prosper. And my grandpa did. In late 19th century America he found a nation where economic growth encouraged new-comers. He encountered near unlimited opportunity for work and personal betterment. In more recent times, America’s economic miracle arose from factors such as a rising population (growing from immigration and natural increase) which created increased demand for goods and services, which in turn fueled higher levels of real wages and a steady growth of the standard of living for all. Wolff states, “A profitable US capitalism kept running ahead of labor supply. So business kept raising wages to attract waves of immigration and to retain employees, during the 19th century and on into the 1970s.”
Those conditions of population growth and expanding economy tended to continue (with some interruptions by the economic downturns such as the Great Depression and flareups of heated growth such as WW II) into the 20th century. But it reached a watershed in the decade of the 1970s.
In the 1970s the entire business-labor equation altered. Factors that caused this change were both social and technological. One break in technology occurred in the early 1960s. It was the advent of the oral-contraceptive pill. The “pill" was approved by the FDA. Its use spread rapidly among women of childbearing age so much so that by the late 1960s Time Magazine thought it appropriate to feature a picture of “the pill” on its April 1967 front page. Today, twelve million US women use “the pill.” Many have argued that this new technology was a key element in altering women’s role in the economy. It is clear now that the new medical technology extended the years that young women could avoid childbearing and use those years to devote to education and career preparation, or to join the work force prior to having children or even forgoing childbearing entirely. At the present time there are more women undergraduates in US colleges than men. Women could decide when (or if) they wanted to marry, or when they wanted to enter the workforce to pursue a job or a career. The new technology encouraged the civil rights movement known as “women’s liberation” which helped to alter the social and political landscape and further encouraged women to enter the workforce. In 1973, the landmark US Supreme Court case of Roe v Wade held that women had a right to privacy under the due process clause in the 14th Amendment and that right extended to having an abortion. Though that controvercial ruling remains a contentious point in national politics and political debate to this day, its economic consequences, leading to increasing numbers of women in the workforce, are unchallenged.
Other technological advances were being initiated at that time as well. Beginning in the 1960s, experiments first using military computers and later commercial computers as well were wired in tandem to, over long distances were completed successfully. In the early 1970s computer engineers at several northeastern universities (particularly Dartmouth and MIT) began to link their university computers together using existing telephone and telecommunication systems such as telephone lines. The computer network produced was called ARPANET. It was this initial system which later spread to business and industry and was to become the internet we know of today. Just like the new means of travel by rail in the 19th century revolutionized communications the internet had its effects on business. Its use revolutionized many business functions by lowering transaction costs, Soon, with the advent of broadband, wifi, etc. manufacturing companies found it profitable to move much of their production to cheap-labor venues overseas. Off-shoring jobs became a common means of reducing production costs, breaking the backs of labor unions and maximizing profits for many large corporations. With no incentives business kept wages static, reduced benefits but continued to see increased productivity from workers. They had the best possible world..rising productivity, rising profits and stable or decreasing labor costs.
Thus since the 1970s we have seen technological, and social changes revolutionize the relationship between business and labor. US capitalism no longer faced a shortage of labor. These international corporations now can “thumb their noses” at labor. They have kept wages static (relative to inflation) they have reduced benefits. Their policies have tended to shift costs for needed social safety nets to local government and municipalities resulting in local higher taxes. Large corporations have little interest in paying taxes in their “home” nation, or submitting to regulations of a single nation. They as Jeff ……… from Columbia University stated (CNN/GPS August 18, 2011) “they have only one foot in this country and their other some place around the world!”. These capitalist entities now prefer smaller government, and less regulation, and those interests are reflected in the policies of the two political parties that they support financially.
But if the working classes have gotten poorer, the rich have gotten much richer since the 1970s by every measure available. One reason: Because American labor was working “scared” (when each job holder has several other applicants in line for their jog they work harder). In addition, these workers had more and better education, and were supplied with and more and better technology such as computers and computerized processes. Thus, productivity increased but wages remained flat. This scenario produced more profits for company owners and managers, shareholders, and increased profits to professionals such as architects, archaeologists, attorneys, consultants, and others).
Too often perceptions take a long time to catch up with reality. The perceptions of workers remained mired in the 1970s optimism while the reality changed slowly around them. As worker’s benefits and buying power slowly eroded they worked harder, they worked on their few annual holidays (the US workforce has the fewest paid holidays per year than any other industrialized nation (13 days) while nations of Europe range from 45 in France, 42 Germany and to 35 in the UK) and worked for longer hours per day, or had a wife or other family member move into the labor force to help maintain their “middle class” status. When such efforts were maximized they turned to increasing credit card debt, leveraging money from their residence by increasing debt. As Wolff states “By exhausting themselves , stressing family life ….taking on unsustainable amounts of debt, the US working class delayed the end of American exceptionalism –until the global crisis hit in 2007.”
How did that happen?
Between 1970 and 2007 the grand bargain forged between labor and capital in which the former worked to produce US products generated from US businessess in which US capitalists invested in and which made profits which sustained the capitalist class, and which products were consumed by the same labor force---was slowly crumbling. The top echelons of earners were growing richer and richer while lower economic levels were struggling mightily, using increased personal productivity, multiple jobs, longer hours, longer work year, fewer vacations, more members of the family working, more strees, and by leveraging money from their one main source of wealth—their homes. The capitalist class in these times were well heeled. With larger and larger sums of cash on hand they were seeking investments for their funds. Members of government were willing and able to help these rich clients who were supporting their reelection bids with bundles of cash. One major of the cause the several crises (housing bubble, financial crisis and resulting failing financial instituions) which we now call the “global crisis” was the deregulation legislation pushed by Republicans during the Clinton admistration. President Clinton eventually signed the Gramm-Leach—Bliley Act in 1999 a bill that would free banks, insurance companies and financial institutions to consolidate (Nobel Economist Paul Krugman called Senator Phil Gramm, main archtect and sponsor of the act, “the father of the Great Recession”). The Gramm bill overrode much of the safeguards of the early (1930s era) Glass-Stegall Act a bill wisely designed to prevent financial institutions from using bank depositor’s savings to make risky investments. The Gramm bill unraveled that restriction…providing investors with vast quantites of savings to invest in questionable enterprisises. And what were some of these enterprises?
Beginning in the 1960s and culminating in late 1980s US legislators introduced bills which premitted banks to bundle and sell mortgaged backed securities (MBS. These bonds were sold to investors based on the fact that similar to other securities they paid a regular monthly dividend, but outside of normally fluctuating business and stock cycle. Banks were eager to sell mortgages as MBSs and collect the cash face value from this transaction rather than having to wait to collect monthly payments until the mortgage matured. Furthermore, these MBS could be bundled into collateralized mortgage obligations (CMO) in which poor risk mortgages (from less than optimum properties and/or less secure mortgagees) could be incorporated into the bundle, spreading the risk to a large pool of investors over large geographic areas (often world wide). Using these methods, larger and larger numbers of mortgages could be processed from high risk clients creating a voluminous flow of cash with a minimal of risk to individual investors. Some of the mortgages in a bundle would invariably go bad…but the vast majority would continue to pay regularly.
On the other hand, those at the top, with the lowest taxes and the highest incomes by the early years of the 21 century, had accumulated more and more of the wealth of the nation. Unequal wealth distribution was about what it was in 1927-8 just prior to the economic collapse. Presently, the top 1% control 35% of the nation’s net worth leaving the bottom 99% to scramble over the remaining 65% of the nation’s net worth (another view sees the top 20% controll 85% of the nation’s net worth and the bottom 80% control only 15%). (See http://sociology.ucsc.edu/whorulesamerica/power/wealth.html) The plutocrats continued amass wealth, and used that wealth to defang and undermine government regualtions. Financiers also found novel ways to increase the overstuffed coffers of the wealthy by means of such as novel financial devices as “asset backed securites”, “hedge funds”, “credit default swaps”, and of course the now notorious mortgage backed security.
Banks and financial institutions which formerly were in the simple business of lending money to the local community to help create prosperity for all, found that they could vastly increase profits by bundling residential bank mortgages (knowing that some were going to be of good payers and others would fail to pay). Why should they hold the risk? Why not spread the risk around to reduce its impact on each investor? Sounds reasonable nes pas? So that’s what they all did. They increased their sales of mortgages (with no need to be too careful now to whom they lent money…since the downturn of such “poor borrowers” was going to be spread far and wide). Between the early 90’s and 2007 enormous numbers (some report 7-9 trillions of dollars worth) of these bundled securities were sold to investors as “AAA” stock.
Since the 1970s, most US workers postponed facing up to what capitalism had come to mean for them. They sent more family members to do more hours of paid labour, and they borrowed huge amounts. By exhausting themselves, stressing family life to the breaking point in many households, and by taking on unsustainable levels of debt, the US working class delayed the end of American exceptionalism – until the global crisis hit in 2007. By then, their buying power could no longer grow: rising unemployment kept wages flat, no more hours of work, nor more borrowing, were possible. Reckoning time had arrived. A US capitalism built on expanding mass consumption lost its foundation.
Wolff concludes that after the recent collapse of 2007-8 the rich, using their financial support as leverage, tended to widen the gulf of unequal wealth distribution…“finally burying American exceptionalism..” by through their agents in Washington encouraging President Obama to lavishly support banks, financial institutions, and the stock market, and discouraging the President to resort to massive rehiring and “make-work” programs as did FDR successfully in 1934. In addition, the Republican focus the “budget defict” and the “national debt” and its press for “austerity” has foisted the cost of the “unjustly, imbalanced response to the crisis” onto the shoulders of the very people who were passed over for help when the government resisted raising taxes on those who caused the crisis and profited the most from its effects. The people are doubly burdened with loss of jobs and revenue and loss of public services. Those Republicans who dare to even think of a tax increase (at this time September 2011) favor a “broadened tax base” (meaning increase taxes for the poor and middle class) rather than increased taxes on the very wealthy (their sponsors) who can well afford the increase but whom they are fearful of crossing.
What can these policies bring us? Economic decline and further shrinking of the USA’s minimalist safety net—the most restrictive in the industrialized western world. Reductions of Social Security, or if Medicare survives--higher co-pays are in the offing, as well as probable loss of the minimal improvements in health care-- part of what Republicans love to call “Obamacare”. Couple this with falling wages, disappearing benefits and rising taxes, as well as an increasing decline in our nation’s infrastructure, such as roads, railways and ports, make the picture of our future bleak. And when these devisive policies which separate us into a nation of “have and have nots” as they eventually will and “bite” into the very lives of our poor, workingclass and burgeoning unemployed, we will all—rich and poor alike---experience increased crime, hooliganism, and social unrest.
Get the picture?
See: Shelby Steele, Opinion, WSJ, September 1, 2011
http://online.wsj.com/article/SB10001424053111904787404576532623176115558.html
How do we stack up as an exceptional nation?
How does our American nation rank in Scientific thinking, Health Care, Longevity, Education, Upward Mobility, Public Transportation, Broadband Access, Crime, Science, Incarceration, Quality of Life? To be “exceptional” should not our nation be on top in these categories and others.
Acceptance of Evolution:
The US ranks 33rd after most of the industrialized world and Asia and just above Turkey (34th) in its acceptance of the modern concept of evolution. http://rankingamerica.wordpress.com/2009/02/12/the-us-ranks-33rd-in-acceptance-of-evolution/
Health Care System:
In a Wall Street Journal article (“Ill Conceived Ranking Makes for Unhealthy Debate”, October 21, 2009) decrying the use of a World Health Organization ranking which placed the US health care system in an embarrassing 37th place, the author, Carl Bialik, cries “foul” suggesting that the data is old, the figures were soft estimates, and the ranking system which used as a factor the total amount of expenditure each country makes in pursuit of their health-care goals (note that in that measure the US is # 1) tends to heavily distort the rankings. To prove his point, Mr Bialik provides a graph of these data in which that factor is discounted. In that revised (Balick-WSJ) ranking the US health care system comes up to (15) fifteenth! It is below such nations as Japan (1), Netherlands (3), France(5), Canada(6), UK (8), and Italy(10). Thus we need not depend on the non-biased WHO to establish how well or poorly we are performing in this area. Even in the pro-business WSJ rankings the US health-care system does not rate! That the nation which is without question the greatest industrial power in the world and which outspends all the others in health care winds up ranking in 15th place is not something we should be proud of.
It is noteworthy that we do rank very high in one related category. The US ranks near the very top (#2) in out of pocket expenses for health care services.
What about life expectancy?
In regard to life expectancy of our citizens we are not exceptional either. We rank 24th in average life expectancy (so called HALE values). These simple figures are difficult to argue with. An average person in Japan, Australia, France, Sweden, Spain, Italy Greece , Switzerland, Monaco, Andorra, San Marino, Canada, Netherlands, UK, Norway Belgium, Austria, Luxembourg, Iceland, Finland, Malta, Germany, and tiny, militarily threatened Israel, all live longer than we do in the US where the average life expectancy is 70.0 years. Why should the most powerful nation in the world, a nation with the largest economy, and the source of so many medical innovations rank so low? Why are we not at the top--near France and Switzerland at least? Perhaps the reason is that many of these longer-lived nations have better health care systems and one might attribute such factors as quality of health care, and out of pocket expenses as a controlling factor for this poor showing. Note that these figures are derived from the WHO for the year 1999 to 2000. But since that time, more recent figures suggest we have slipped a little lower down on the scale.
What about education?
USA Today, December 7, 2010 reports :
In education as in health, the US is trailing other nations in performance and outcome -- yet we outspend them mightily. While we spend more per student than most other nations in the Program for International Student Assessment (PISA) (except for rich and tiny which Luxembourg spends a bit more) our results are only “average”. PISA’s high-scorers include South Korea, Finland, Singapore, Hong Kong and Shanghai in China, and Canada. Our system for schools is based on local property taxes means that more affluent communities can spend more and poorer communities less. The most productive and successful nations in this area are able to target spending on the most challenged students and schools. We do not do this. “United States students are continuing to trail behind their peers in a pack of higher performing nations, according to results from a key international assessment. Scores from the 2009 Program for International Student Assessment to be released Tuesday show 15-year-old students in the U.S. performing about average in reading and science, and below average in math. Out of 34 countries, the U.S. ranked 14th in reading, 17th in science and 25th in math. Those scores are all higher than those from 2003 and 2006, but far behind the highest scoring countries, including South Korea, Finland and Singapore, Hong Kong and Shanghai in China and Canada.”
But where we are undisputed leaders is in military expenditures. Today we spend more on our military than all the other nations in the world. Do you get that? Pile up the defense expenditures of all the nations in one column, China is the largest at about 60 billion dollars (1/10 of US spending), France, UK, Germany, Sweden, Italy, Saudia Arabia, etc., etc. add all the nations on top. The total comes to a very big number—about 680-690 billion dollars world-wide. Yes, we all spend too much to kill each other. But if we were to align that column with another, a column that represents USA military expenditures, the second column would equal the first. Yes, the two columns would be of equal height since we all by our selves spend just a bit more than all the other nations combined. China spends only one-tenth of what we spend and Russia, spends a fraction of what China spends. Iran—our worst enemy—its expenditures are miniscule in comparison to ours.
One question to ask here is why? Who are we gearing up to fight? We now spend ten times more than China, our only putative competitor. Russia spends less than China and is anyway our ally. Why do we spend so much? Ask you congressman to explain that. Since almost every time the Pentagon asks for money they agree to it plus an excess. Why do we need such extravagance? It is not “defence”. Think about it.
Today July 9, 2011, our local newspaper ran a piece entitled: “Military budget Grows” (Newsday 7-09-11) by Donna Cassata, in which the author states that “Money for the Pentagon and the nation’s wars in Iraq and Afghanistan is proving largely immune to budget cutting that’s slamming other government agencies…” The author reports that on a 336-87 vote Friday, the Republican controlled House supported a nearly 650 billion military spending bill that boosts the Defense Department budget by 17 billion dollars. The bipartisan vote came amid demands by the Republicans to slash spending in an attempt to cut the deficit. After the vote, Rep Barney Frank (D Mass) scoffed at the suggestion that “everything is on the table” in the budget negotiations between the White House and congressional leaders. This vote proves that the “military budget is not on the table” said Frank, “but the military is there at the table---eating everybody else’s lunch.’
What about our political system? We are a Republic governed by an indirectly elected president (remember the college of electors), a directly elected House of Representatives and a very much less representative—Senate. We also have a much-touted system of “checks and balances”. In the last several years, gridlock in Congress has illustrated the weaknesses of our system.
In modern times Presidents have tend to increase their power. Some have even supported their expansion of power using the questionable interpretations of historic documents, coining the term “unitary presidentialism.” Some have taken to using “signing statements” which restrict or modify the way they will implement legislation duly passed by the House and Senate.
During the recent downgrade of our credit system from AAA to AA+ , Fareed Zakaria, of Time Magazine has noted a revealing face: that the only states with AAA ratings are those with parliamentary systems. Those with presidential systems of government such as ours, do not have AAA ratings. (And now we don’t have it either). Zakaria questioned why that was the case. Were presidential systems less stable?
Parlimentary vs Presidential Systems
Most modern democratic nations in the western world have parliamentary systems of government. Germany, France, UK, Spain, Italy, Australia, Canada, New Zealand, Israel, Belgium, Denmark, Sweden, Finland, Portugal, Greece, etc. etc. are all parliamentary systems Some like the UK, Sweden, Belgium, Spain, and others have titular monarchies. In those latter systems a monarch sits as a national figure-head, but all political power resides in the parliament and head of state, and the monarch in these systems have little or no political power. In parliamentary systems the people directly elect representatives to the parliament within a one-person-one-vote system. When the parliament meets these elected members caucus to vote for a leader, generally called the “prime minister” (PM) (or sometimes “the president”) who generally represents the majority party elected at that time. Thus the people’s voices were heard. The PM presides over the government as long as he or she can maintain a majority in parliament. The PM is both the head of state, and the head of a majority in parliament, as well as the leader of his or her party. Political scientists and theorists have suggested that in such system there is little conflict between the head of state (PM) and the parliament or representative body, since the former is actually chosen by the latter and derives its legitimacy from the latter.
On the other hand, in our presidential system, the President and the Congress are often in conflict, since they each can claim a mandate from the people. At the present time, President Obama, a Democrat who was elected in 2008, serves with a House of Representatives (elected in 2010) and now dominated by Republicans. In addition, the sharply divided Senate (some of whom were elected in 2010) is sharply divided with nearly half the seats Republican and half Democrat. The Democrats have held onto a single a one-vote majority in the last election. On top of that, since the Senate has generated its own rules of order (not indicated in the Constitution) and now insists on a sixty-vote majority for nearly all significant legislation (50% plus one was not good enough for them), in the present Senate, it is nearly impossible for the President’s party to muster the necessary (60) votes to pass significant legislation. (Keep in mind, this is just another way the Senate acts to insulate itself from the wishes of the citizens who elected them). Besides the fact that there is no one-person-one-vote rule to elect Senators, since some Senators in small states represent only thirty or forty thousand citizens, while a Senator in Texas, New York or California will represent perhaps ten times that many. For example, the two Senators from California represent 36 million citizens, or each Senator represents 18 million citizens, while the two Senators from Vermont (600,000 population) represent only 300,000 each. A Senate vote in vote California represent sixty times the number of people represented in the Vermont Senator’s vote. But both the California and Vermont Senators can each cast one vote in the Senate for or against legislation. These votes are not representative of the wishes of the total citizenry of the USA in any democratic way. Such a system in the upper house tends to award greater political power in the Senate to low density, under-populated states. Combined with the present Senate supermajority rules, and its inherent unrepresentative election system, a small, well-funded minority can control major legislation for the entire 325 million US citizens. That is not how a democracy is supposed to work. We expect that in a democracy…the majority should rule! But not in the exceptional USA. What does this do? These policies weaken our democracy. They discourage and dilute political activism, causing citizenry to feel that they have little or no impact in their once every four year vote for a president. Such behavior permits and encourages political power to move toward the elites who can pay to get the attention of Senators and Congress members.
To be continued
But do you get the picture?
Wednesday, September 28, 2011
Tuesday, September 20, 2011
WHAT THE REPUBLICANS STAND FOR TODAY
Last week I cringed as I watched the early Republican debates on TV. What has happened to the Grand Old Party, the party of Lincoln, Eisenhower, Nixon and yes even Reagan? The shades of those earlier GOP presidents must be sitting up in their tombs, with quizzical expressions on their faces, mumbling “Did I hear that right?”. There is no line, ever so contorted, which seems able to connect the policies of these past leaders to this new crop of hopefuls.
Here’s what I gather from listening to these men (and one woman) who represent modern-day Republicanism.
Today Republicans have no use at all for government. They have taken Reagan’s plea for smaller government to a ”reductio ad absurdum” conclusion.
They would either throttle Ben Bernanke, (Chairman of the Board of Governors, Federal Reserve System) or threaten him as “treasonous”. The FED is supposed to be a body which is indepenedent of government intervention, tasked with promoting the objectives of maximum employment, stable prices and moderate long-term interest rates. Bernanke’s past use of “quantitative easing” (QE) is one way of stimulating the economy by increasing money in the system. In effect, decreasing the value of the dollar (inflation) so as to undermine the great overhang of debt that is stifling public demand and spending. Of course, the “rentier” class of oligarchs who favor and support the Republicans are not in favor of even minor increases in inflation, since that would mean that they are paid back in dollars which have a slightly lower value than what they had invested. So all the Republican candidates would have the FED focus its policies only on what favors the rich. They want Bernanke to just keep inflation low and ignore the task of promoting maximum employment. To sustain that goal, they have not shirked from actual threats against the Chairman, such Rick Perry's comment about “getting ugly” with Bernanke were he to increase inflation.
They are opposed to almost all government spending and all taxation--for the rich. They would “broaden and flatten the tax base” meaning that the wealthy (so called “job generators”) would continue to have low taxes and those in the bottom half of income distribution would pay more in taxes. But there is no evidence at all that over the last decades, when wealth has been concentrated in the hands of the wealthy, that the rich have used those resources to generate jobs. Jobs have decreased steadily for the middle and working classes over those years, while money has concentrated steadily in the coffers of the wealthy. The Republicans of today steadfastly ignore the fact that wealth in this country has been more and more concentrated in the upper levels of income classes, so that today the top 20% of income earners control 80% of the nation’s wealth, leaving the lower 80% of the population to squabble over the remaining 20%. (In another view, the top 1% control 40% of the nation’s wealth--leaving the lower 99% only 60% of the “pie”.) The Republicans continue to repeat the inaccurate claim that “50% of the population pay no taxes at all”. This is a distortion and a lie. Those at the bottom who pay little or no income taxes are the working poor, (those below the poverty level), the indigent, very poor, or disabled. Can you get blood from a stone? However, all these low tax payers all pay state and local taxes, sales taxes, gasoline taxes, et cetera. These flat rate taxes are less just since they cut more deeply into the pocketbooks of the poor than of the wealthy. In regard to the working and middle class tax payers they pay a greater proportion of their income on taxes than the wealthy classes (who are most often taxed at the 15% capital-gains rate), while salaried workers, pay social security, payroll taxes and are hit with income taxes at a rate of 30-35%. Thus the working and middle classes are the ones who pay the most--yet they are the ones who stupidly support the Republican candidates the most avidly. Are they stupid or simply less informed?
Today's Republicans are all anti-environment, favoring quick profits for (their business clients) the exploiters of our water, air, forests, wildlife and mineral resources over the wise, clean, and long-term, multi-generational use of these resources. They would all hobble our government environment-protection agencies and pack them with business advocates so to undermine their regulatory function as watchmen over these resources. I need not state here—but I can not contain the urge—that such behavior in the former G.W Bush administration (but which continued into the Obama administration) led to the disastrous oil spill in the Gulf of Mexico.
This crop of Republicans are all anti-science. They are unwilling or unable to distinguish between political and religious dogma and scientific fact. They would take us back in time and logical processes to before Francis Bacon’s Novum Organum in 1620 where Bacon outlines the syllogism of scientific reasoning, and before Galileo who in 1632 questioned the authority of Aristotle and the Church. Their thinking is at a pre-Gallileo “pseudo science” level where religious dogma controlled what a scientist could think, rather than what logic dictated.
New Republicans are all opposed to Medicare, Medicaid, and Social Security and would either shrink these popular programs to a near-ineffectual status, or do away with them all-together. They love to attack Social Security (some call it a "Ponzi scheme") which is a government run, pay-as-you-go-insurance system. It is not in trouble. I recall well all that big chunk of money withdrawn from my meager monthly checks. Amounts that I could have used to better feed and house my family. Each social security recipient paid for what he or she gets. The only reforms which are needed (and not until 2030s) are minor adjustments to future payments and withdrawls. Just leave SS alone. It works.
What all the current crop of Republicans should be looking at and which they all ignore is military spending, which has gone through the roof. Military spending eats up more than one third of the federal budget. What do we get for it? We have no existential threats out there. The Russians and Chinese are our friends now. The few hundred al Qaieda running around in Afghanistan and the borderlands of Pakistan in sandals and rags on their heads are not an existential threat to our nation, and their threat certainly does not justify an expenditure over more than $600 billion dollars annually in "defense spending". Why do we spend more on our military than all the other nations in the world combined? To believe that it is for defense is silly. Why do we need a $400 billion dollar compound the size of the Vatican in Iraq? Or the vast military and naval base we have made out of the nation of Japan? Why is Germany such a huge hole in the ground for our military dollars? Ask that same question for nearly a thousand US military intallations around the world. There are no justifiable reasons for such expenditures when we are laying off teachers, librarians, firemen and policemen here at home and when more than 16 million of our citizens are either under-employed or idle. But no Republicans care. They would like to undermine the middle class and pick their pockets for taxes before they would even talk about military spending.
They are all in favor of “old-time Christian values” as well as “freedom” and “personal responsibility” and yet forget the explicit commands of the Good Book (to which they all seem to give excessive fealty) to give succor to your neighbor, as they vote to remove or defund government programs to aid people who have for some reason or other, bad luck, accident or poor decisions find themselves poor, sick, disabled or destitute.
They are all for "privacy" but not in the bedroom where they are concerned what goes on in there.
They are pro-life to a man (and woman) for the unborn. And they ignore the right of women to determine their own reporductive future. Yet they are pro-death and perfectly happy to kill off adults (the elderly and children too) particularly individuals of other cultural and religious backgrounds, often these are muslims and of a deeper-brown skin-shade who succumb to aerial bombs, drone strikes, or other means, if these brown people have the audacity to oppose US interventionism, expansionism, exploitation and occupation of their lands. They favor taking the lives of adults incarcerated for violent crimes by legal executions too, either by electrocution or lethal injection.
Here’s what I gather from listening to these men (and one woman) who represent modern-day Republicanism.
Today Republicans have no use at all for government. They have taken Reagan’s plea for smaller government to a ”reductio ad absurdum” conclusion.
They would either throttle Ben Bernanke, (Chairman of the Board of Governors, Federal Reserve System) or threaten him as “treasonous”. The FED is supposed to be a body which is indepenedent of government intervention, tasked with promoting the objectives of maximum employment, stable prices and moderate long-term interest rates. Bernanke’s past use of “quantitative easing” (QE) is one way of stimulating the economy by increasing money in the system. In effect, decreasing the value of the dollar (inflation) so as to undermine the great overhang of debt that is stifling public demand and spending. Of course, the “rentier” class of oligarchs who favor and support the Republicans are not in favor of even minor increases in inflation, since that would mean that they are paid back in dollars which have a slightly lower value than what they had invested. So all the Republican candidates would have the FED focus its policies only on what favors the rich. They want Bernanke to just keep inflation low and ignore the task of promoting maximum employment. To sustain that goal, they have not shirked from actual threats against the Chairman, such Rick Perry's comment about “getting ugly” with Bernanke were he to increase inflation.
They are opposed to almost all government spending and all taxation--for the rich. They would “broaden and flatten the tax base” meaning that the wealthy (so called “job generators”) would continue to have low taxes and those in the bottom half of income distribution would pay more in taxes. But there is no evidence at all that over the last decades, when wealth has been concentrated in the hands of the wealthy, that the rich have used those resources to generate jobs. Jobs have decreased steadily for the middle and working classes over those years, while money has concentrated steadily in the coffers of the wealthy. The Republicans of today steadfastly ignore the fact that wealth in this country has been more and more concentrated in the upper levels of income classes, so that today the top 20% of income earners control 80% of the nation’s wealth, leaving the lower 80% of the population to squabble over the remaining 20%. (In another view, the top 1% control 40% of the nation’s wealth--leaving the lower 99% only 60% of the “pie”.) The Republicans continue to repeat the inaccurate claim that “50% of the population pay no taxes at all”. This is a distortion and a lie. Those at the bottom who pay little or no income taxes are the working poor, (those below the poverty level), the indigent, very poor, or disabled. Can you get blood from a stone? However, all these low tax payers all pay state and local taxes, sales taxes, gasoline taxes, et cetera. These flat rate taxes are less just since they cut more deeply into the pocketbooks of the poor than of the wealthy. In regard to the working and middle class tax payers they pay a greater proportion of their income on taxes than the wealthy classes (who are most often taxed at the 15% capital-gains rate), while salaried workers, pay social security, payroll taxes and are hit with income taxes at a rate of 30-35%. Thus the working and middle classes are the ones who pay the most--yet they are the ones who stupidly support the Republican candidates the most avidly. Are they stupid or simply less informed?
Today's Republicans are all anti-environment, favoring quick profits for (their business clients) the exploiters of our water, air, forests, wildlife and mineral resources over the wise, clean, and long-term, multi-generational use of these resources. They would all hobble our government environment-protection agencies and pack them with business advocates so to undermine their regulatory function as watchmen over these resources. I need not state here—but I can not contain the urge—that such behavior in the former G.W Bush administration (but which continued into the Obama administration) led to the disastrous oil spill in the Gulf of Mexico.
This crop of Republicans are all anti-science. They are unwilling or unable to distinguish between political and religious dogma and scientific fact. They would take us back in time and logical processes to before Francis Bacon’s Novum Organum in 1620 where Bacon outlines the syllogism of scientific reasoning, and before Galileo who in 1632 questioned the authority of Aristotle and the Church. Their thinking is at a pre-Gallileo “pseudo science” level where religious dogma controlled what a scientist could think, rather than what logic dictated.
New Republicans are all opposed to Medicare, Medicaid, and Social Security and would either shrink these popular programs to a near-ineffectual status, or do away with them all-together. They love to attack Social Security (some call it a "Ponzi scheme") which is a government run, pay-as-you-go-insurance system. It is not in trouble. I recall well all that big chunk of money withdrawn from my meager monthly checks. Amounts that I could have used to better feed and house my family. Each social security recipient paid for what he or she gets. The only reforms which are needed (and not until 2030s) are minor adjustments to future payments and withdrawls. Just leave SS alone. It works.
What all the current crop of Republicans should be looking at and which they all ignore is military spending, which has gone through the roof. Military spending eats up more than one third of the federal budget. What do we get for it? We have no existential threats out there. The Russians and Chinese are our friends now. The few hundred al Qaieda running around in Afghanistan and the borderlands of Pakistan in sandals and rags on their heads are not an existential threat to our nation, and their threat certainly does not justify an expenditure over more than $600 billion dollars annually in "defense spending". Why do we spend more on our military than all the other nations in the world combined? To believe that it is for defense is silly. Why do we need a $400 billion dollar compound the size of the Vatican in Iraq? Or the vast military and naval base we have made out of the nation of Japan? Why is Germany such a huge hole in the ground for our military dollars? Ask that same question for nearly a thousand US military intallations around the world. There are no justifiable reasons for such expenditures when we are laying off teachers, librarians, firemen and policemen here at home and when more than 16 million of our citizens are either under-employed or idle. But no Republicans care. They would like to undermine the middle class and pick their pockets for taxes before they would even talk about military spending.
They are all in favor of “old-time Christian values” as well as “freedom” and “personal responsibility” and yet forget the explicit commands of the Good Book (to which they all seem to give excessive fealty) to give succor to your neighbor, as they vote to remove or defund government programs to aid people who have for some reason or other, bad luck, accident or poor decisions find themselves poor, sick, disabled or destitute.
They are all for "privacy" but not in the bedroom where they are concerned what goes on in there.
They are pro-life to a man (and woman) for the unborn. And they ignore the right of women to determine their own reporductive future. Yet they are pro-death and perfectly happy to kill off adults (the elderly and children too) particularly individuals of other cultural and religious backgrounds, often these are muslims and of a deeper-brown skin-shade who succumb to aerial bombs, drone strikes, or other means, if these brown people have the audacity to oppose US interventionism, expansionism, exploitation and occupation of their lands. They favor taking the lives of adults incarcerated for violent crimes by legal executions too, either by electrocution or lethal injection.
Friday, September 16, 2011
JAPAN MANAGES SUMMER HEAT WITHOUT NUKES
WITH HALF OF ITS NUKES IDLE JAPAN MANAGES WELL WITH CONSERVATION ALONE
Over the last few months, since the disastrous March 11 earthquake and tsunami, Japan's shattered Fukushima Diichi nuclear plant continues to emit radioactive gases and particulate matter which spreads out contaminating a fifty kilometer wide zone. In the rest of the nation more than 30 of Japan's 54 other nuclear plants, (many of them aging GE models similar to those we have here in the US), lay idle in cold-shutdown, while their siting-suitability and safety are reevaluated. This long and slow process has forced Japan into an unwanted, unplanned nationwide summer conservation program. The good news is that the nation's efforts have been highly successful.
I hear through my Nipponese friends, (as well as the Sept 17, 2011 "Economist", iphone editors highlights) that one striking difference you may observe were you to have visited corporate Japan this summer is that everyone was going about tieless and in shirtsleeves rather than in the traditional business suit. The reason? No air conditioning.
It is a tribute to the Japanese that they have managed to continue their personal lives, busineses and vital activites with most of their nuclear plants shuttered and idle. It is remarkable that Japan, a modern, top-tier industrialized nation, has come through the hot summer, when demand is highest on its nuclear-power-driven electrical generation system, unscathed, with its people working, its factories operating, and its infrastructure and society intact . It is a tribute to the Japanese national character which prizes social cohesion, cooperation, and hard work, but it is also encouraging that a modern industrialized nation can give up 55% of its electrical power generation and still manage to avoid dreaded brownouts and blackout--over a hot summer. How?
Japan put into place a wide-ranging set of simple conservation measures, such as having some employees limit daily travel to work from home, by closing certain factories in the day and operating them at night when electrical demand is low, limiting use of air conditoning and excess lighting, and by broadcasting the nation's peak electrical demand figures over over TV and radio stations to encourage citizen cooperation and compliance. An enormous amount of electricity goes to waste in our modern usage. Contrary to what the nay-sayers claim, simple conservation measures can be significant. Conservation can and should be seen as another energy resource--that part of what we produce, but which is generally wasted--which, as the Japanese experiment this summer seems to prove--is a significant fraction of the whole. Other industrialized nations can use less electricity (much less) and continue to thrive.
Do the Japanese want to live under strict conservation all the time? It depends on where you are coming from and what choices you have. But without significant fossil fuel resources Japan must turn to its existing efficient use of its wind, tidal, hydropower resources--as well as conservation. There are few places in Japan---which is geologically, essentially a series of merged volcanic cones--where nukes can be safely sited. But as Father Michael often encouraged us: "make a stepping stone out of every stumbling block". For the Japanese that would be to make use of the great pool of subterranean heat which causes its earthquakes and tsunamis and which lies under its surface. Geothermal energy can be used either to directly heat homes and factories, or to generate electricity. After all that is what is accomplished in a nuclear plant-- water is heated by nuclear fission to make steam to drive generators--. The irony is that directly under the Fukishima Diichi plant there is an enormous amount of free, safe, and unlimited heat to drive all of Japan's electric generation needs.
What is your preference? Continual anxiety, uncertainty and business disruption and an existential threat by the danger of exposure to nuclear melt-down and radiation poisoning, or tapping into geothermal heat?
In the interim, as geothermal, wind, tidal and hydropower are developed...Japan will probably continue to have to cope as they have this summer with conservation---and the electricity generated from those nuclear plants which are considered safe--for now.
The good news is that there are good options for Japan.
Get the picture?
Over the last few months, since the disastrous March 11 earthquake and tsunami, Japan's shattered Fukushima Diichi nuclear plant continues to emit radioactive gases and particulate matter which spreads out contaminating a fifty kilometer wide zone. In the rest of the nation more than 30 of Japan's 54 other nuclear plants, (many of them aging GE models similar to those we have here in the US), lay idle in cold-shutdown, while their siting-suitability and safety are reevaluated. This long and slow process has forced Japan into an unwanted, unplanned nationwide summer conservation program. The good news is that the nation's efforts have been highly successful.
I hear through my Nipponese friends, (as well as the Sept 17, 2011 "Economist", iphone editors highlights) that one striking difference you may observe were you to have visited corporate Japan this summer is that everyone was going about tieless and in shirtsleeves rather than in the traditional business suit. The reason? No air conditioning.
It is a tribute to the Japanese that they have managed to continue their personal lives, busineses and vital activites with most of their nuclear plants shuttered and idle. It is remarkable that Japan, a modern, top-tier industrialized nation, has come through the hot summer, when demand is highest on its nuclear-power-driven electrical generation system, unscathed, with its people working, its factories operating, and its infrastructure and society intact . It is a tribute to the Japanese national character which prizes social cohesion, cooperation, and hard work, but it is also encouraging that a modern industrialized nation can give up 55% of its electrical power generation and still manage to avoid dreaded brownouts and blackout--over a hot summer. How?
Japan put into place a wide-ranging set of simple conservation measures, such as having some employees limit daily travel to work from home, by closing certain factories in the day and operating them at night when electrical demand is low, limiting use of air conditoning and excess lighting, and by broadcasting the nation's peak electrical demand figures over over TV and radio stations to encourage citizen cooperation and compliance. An enormous amount of electricity goes to waste in our modern usage. Contrary to what the nay-sayers claim, simple conservation measures can be significant. Conservation can and should be seen as another energy resource--that part of what we produce, but which is generally wasted--which, as the Japanese experiment this summer seems to prove--is a significant fraction of the whole. Other industrialized nations can use less electricity (much less) and continue to thrive.
Do the Japanese want to live under strict conservation all the time? It depends on where you are coming from and what choices you have. But without significant fossil fuel resources Japan must turn to its existing efficient use of its wind, tidal, hydropower resources--as well as conservation. There are few places in Japan---which is geologically, essentially a series of merged volcanic cones--where nukes can be safely sited. But as Father Michael often encouraged us: "make a stepping stone out of every stumbling block". For the Japanese that would be to make use of the great pool of subterranean heat which causes its earthquakes and tsunamis and which lies under its surface. Geothermal energy can be used either to directly heat homes and factories, or to generate electricity. After all that is what is accomplished in a nuclear plant-- water is heated by nuclear fission to make steam to drive generators--. The irony is that directly under the Fukishima Diichi plant there is an enormous amount of free, safe, and unlimited heat to drive all of Japan's electric generation needs.
What is your preference? Continual anxiety, uncertainty and business disruption and an existential threat by the danger of exposure to nuclear melt-down and radiation poisoning, or tapping into geothermal heat?
In the interim, as geothermal, wind, tidal and hydropower are developed...Japan will probably continue to have to cope as they have this summer with conservation---and the electricity generated from those nuclear plants which are considered safe--for now.
The good news is that there are good options for Japan.
Get the picture?
Thursday, September 15, 2011
GLASS STEAGALL ACT REINTRODUCED---IN BRITAIN!
THE UK RETURNS TO A “GLASS-STEAGALL-LIKE ACT” TO PROTECT THEIR BANKS--THE USA DOES NOTHING.
One major cause of the Great Recession of 2007-8 was the deregulation of banks, successfully pushed by Republicans during the Clinton administration. A Republican mantra since before the Goldwater nomination in the 1960s has always been "too big government" and "too much regulation". They couldn't get their wish to gut federal banking regualtions with wiser, earlier Presidents from both parties. But it was wily, (and politically comprimised) President Clinton who eventually signed the Gramm-Leach-Bliley Act in 1999, a bill that freed investment commercial banks and financial institutions (which issued and sold securities) to own and interact with savings banks (which accepted citizen deposits). The resulting free-for all in our banking and financial sector is often sited as a prime cause of the Great Recession of 2007. (In fact, Nobel Economist Paul Krugman called Senator Phil Gramm, main architect and sponsor of the act, “the father of the Great Recession”).
The Gramm bill overrode most of the safeguards of the 1934 Glass-Steagall Act, a bill written just after the bank failures of the Great Depression to prevent the recurrence of collusion and interaction of high risk, unregulated, financial institutions with retail and savings banks. It was that legislation which over the intervening decades had prevented risk-prone financial institutions from using bank depositor’s savings to make high risk investments. The Gramm bill unraveled those restrictions…providing banks and investors access to vast quantities of savings money to invest in questionable securities and enterprises. There is little doubt that the free-wheeling, no-holds barred, casino-like and risky behavior unleashed by US bankers and their financial collaborators fed the housing bubble and ushered in a near-decade long period of greed and excess which most economists concede was a major factor contributing to the collapse of 2007-8.
But not only did we stupidly let Senator Gramm undermine our banking system's stability, but after the collapse, we added insult to injury by bailing-out those corporations responsible (or irresponsible) for the disaster! Yes, the big banks, financial institutions, and investment houses that generated the problem were awarded bail-out funds to the tune of more than three-quarters of a trillion dollars. Money which came from the pockets of the middle-class taxpayers of this nation--the very ones who have taken the brunt of the economic downturn.
As President Bush (and later President Obama) handed over that money, they foolishly demanded no quid pro quo in return. At that low point, a wise government should have required the system to accede to a reinstatement of those sensible regulations of the 1933 Act. But we did nothing, and since then there has been no appetite for re-regulation of our banking system from either Republicans or Democrats. We continue to remain in dire financial jeopardy of a similar event reoccurring. Furthermore, the lack of confidence in our banking system may even be a contributory factor in our stuttering recovery.
However, even if we didn't learn from our mistakes, others have. Today I read in the UK “Telegraph” (September 15, 2011) that Sir John Vickers (economist at All Souls College, Oxford, and Chair of the UK's Independent Commission on Banking (ICB) has released that august group's report on a recent investigation into British banking. “Sir John Vicker's ICB published its final report on Monday, recommending that banks should protect their retail operations from riskier investment banking units and raise capital levels to protect taxpayers from future crises.”
The ICB has concluded that they need more protection from the possible collusion of banks and financial institutions and have published a report that in effect reproduces a form of the US 1933 Glass Steagall Act for the British banking system. Aware that in the future, “high street” savings and retail banks (read “Main Street banks”) and the citizen’s savings upon which the local economy is based, must be protected from risky investments, the ICB wisely recommended "ringfencing" the retail banks.
Some of the prime provisions of the ICB report: The need is immediate and widespread with the new regulations to take effect as soon as 2019. Retail banks should be “ringfenced” to be isolated and protected from interaction with financial institutions. Services such as stock trading, market activities and especially use or sale of derivatives are excluded from the retail banks. One third of banks would be placed within the ringfence. Ringfenced banks must have separate boards with independent directors. Ringfenced banks shall have higher equity capital requirements.
These ICB proposals are very sound ones. It is a sad commentary that the USA pioneered this very idea nearly eighty years ago, and it operated successfully for more sixty years (with only minor revisions) but succumbed to greed, hubris, bad politics and simple stupidity in 1999 only eight years before it was really needed. Like Germany, Australia, and several other nations which had strong banking regulations, were it not for Senator Gramm and his ilk we too might have missed the "Great Recession bullet".
I recommend that we either dig up the old Glass Stegall Act and reintroduce that legislation, or follow the British lead on "ringfencing" our banks. We will all feel a lot more confident about our savings, our future and our children's futures. That confidence may help buoy this faltering economy as well.
Get the picture?
One major cause of the Great Recession of 2007-8 was the deregulation of banks, successfully pushed by Republicans during the Clinton administration. A Republican mantra since before the Goldwater nomination in the 1960s has always been "too big government" and "too much regulation". They couldn't get their wish to gut federal banking regualtions with wiser, earlier Presidents from both parties. But it was wily, (and politically comprimised) President Clinton who eventually signed the Gramm-Leach-Bliley Act in 1999, a bill that freed investment commercial banks and financial institutions (which issued and sold securities) to own and interact with savings banks (which accepted citizen deposits). The resulting free-for all in our banking and financial sector is often sited as a prime cause of the Great Recession of 2007. (In fact, Nobel Economist Paul Krugman called Senator Phil Gramm, main architect and sponsor of the act, “the father of the Great Recession”).
The Gramm bill overrode most of the safeguards of the 1934 Glass-Steagall Act, a bill written just after the bank failures of the Great Depression to prevent the recurrence of collusion and interaction of high risk, unregulated, financial institutions with retail and savings banks. It was that legislation which over the intervening decades had prevented risk-prone financial institutions from using bank depositor’s savings to make high risk investments. The Gramm bill unraveled those restrictions…providing banks and investors access to vast quantities of savings money to invest in questionable securities and enterprises. There is little doubt that the free-wheeling, no-holds barred, casino-like and risky behavior unleashed by US bankers and their financial collaborators fed the housing bubble and ushered in a near-decade long period of greed and excess which most economists concede was a major factor contributing to the collapse of 2007-8.
But not only did we stupidly let Senator Gramm undermine our banking system's stability, but after the collapse, we added insult to injury by bailing-out those corporations responsible (or irresponsible) for the disaster! Yes, the big banks, financial institutions, and investment houses that generated the problem were awarded bail-out funds to the tune of more than three-quarters of a trillion dollars. Money which came from the pockets of the middle-class taxpayers of this nation--the very ones who have taken the brunt of the economic downturn.
As President Bush (and later President Obama) handed over that money, they foolishly demanded no quid pro quo in return. At that low point, a wise government should have required the system to accede to a reinstatement of those sensible regulations of the 1933 Act. But we did nothing, and since then there has been no appetite for re-regulation of our banking system from either Republicans or Democrats. We continue to remain in dire financial jeopardy of a similar event reoccurring. Furthermore, the lack of confidence in our banking system may even be a contributory factor in our stuttering recovery.
However, even if we didn't learn from our mistakes, others have. Today I read in the UK “Telegraph” (September 15, 2011) that Sir John Vickers (economist at All Souls College, Oxford, and Chair of the UK's Independent Commission on Banking (ICB) has released that august group's report on a recent investigation into British banking. “Sir John Vicker's ICB published its final report on Monday, recommending that banks should protect their retail operations from riskier investment banking units and raise capital levels to protect taxpayers from future crises.”
The ICB has concluded that they need more protection from the possible collusion of banks and financial institutions and have published a report that in effect reproduces a form of the US 1933 Glass Steagall Act for the British banking system. Aware that in the future, “high street” savings and retail banks (read “Main Street banks”) and the citizen’s savings upon which the local economy is based, must be protected from risky investments, the ICB wisely recommended "ringfencing" the retail banks.
Some of the prime provisions of the ICB report: The need is immediate and widespread with the new regulations to take effect as soon as 2019. Retail banks should be “ringfenced” to be isolated and protected from interaction with financial institutions. Services such as stock trading, market activities and especially use or sale of derivatives are excluded from the retail banks. One third of banks would be placed within the ringfence. Ringfenced banks must have separate boards with independent directors. Ringfenced banks shall have higher equity capital requirements.
These ICB proposals are very sound ones. It is a sad commentary that the USA pioneered this very idea nearly eighty years ago, and it operated successfully for more sixty years (with only minor revisions) but succumbed to greed, hubris, bad politics and simple stupidity in 1999 only eight years before it was really needed. Like Germany, Australia, and several other nations which had strong banking regulations, were it not for Senator Gramm and his ilk we too might have missed the "Great Recession bullet".
I recommend that we either dig up the old Glass Stegall Act and reintroduce that legislation, or follow the British lead on "ringfencing" our banks. We will all feel a lot more confident about our savings, our future and our children's futures. That confidence may help buoy this faltering economy as well.
Get the picture?
Monday, September 12, 2011
PAUL KRUGMAN SAID IT, WE ARE ALL THINKING IT
I reprint Paul Krugman's Blog from the 9-11-11 NYT below.
September 11, 2011, 8:41 am
The Years of Shame
Is it just me, or are the 9/11 commemorations oddly subdued?
Actually, I don’t think it’s me, and it’s not really that odd.
What happened after 9/11 — and I think even people on the right know this, whether they admit it or not — was deeply shameful. The atrocity should have been a unifying event, but instead it became a wedge issue. Fake heroes like Bernie Kerik, Rudy Giuliani, and, yes, George W. Bush raced to cash in on the horror. And then the attack was used to justify an unrelated war the neocons wanted to fight, for all the wrong reasons.
A lot of other people behaved badly. How many of our professional pundits — people who should have understood very well what was happening — took the easy way out, turning a blind eye to the corruption and lending their support to the hijacking of the atrocity?
The memory of 9/11 has been irrevocably poisoned; it has become an occasion for shame. And in its heart, the nation knows it.
I’m not going to allow comments on this post, for obvious reasons.
.
September 11, 2011, 8:41 am
The Years of Shame
Is it just me, or are the 9/11 commemorations oddly subdued?
Actually, I don’t think it’s me, and it’s not really that odd.
What happened after 9/11 — and I think even people on the right know this, whether they admit it or not — was deeply shameful. The atrocity should have been a unifying event, but instead it became a wedge issue. Fake heroes like Bernie Kerik, Rudy Giuliani, and, yes, George W. Bush raced to cash in on the horror. And then the attack was used to justify an unrelated war the neocons wanted to fight, for all the wrong reasons.
A lot of other people behaved badly. How many of our professional pundits — people who should have understood very well what was happening — took the easy way out, turning a blind eye to the corruption and lending their support to the hijacking of the atrocity?
The memory of 9/11 has been irrevocably poisoned; it has become an occasion for shame. And in its heart, the nation knows it.
I’m not going to allow comments on this post, for obvious reasons.
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