The Wisdom of Madisonian Governance
September 14, 2012
The constitutional structure of the United States is unique among democracies in its having established not only a bicameral legislative body, but also in its mandating that certain matters should be either the province of one of the bodies or must begin in one body only. This division and allocation of areas of expertise and authority are a sound, logical recognition that the interests and costs of differing issues should be allocated on the basis of what is in the long-term, best and most sustainable welfare of our nation.
While every man’s vote should count equally, our Founding Father’s recognized that those casting a vote do not have equal wisdom in their decision making. For that reason, matters of a more federal concern, such as treaties and trying impeachments, were allocated to the Senate for approval where each state has an equal vote. On the other hand, matters relating to raising revenues were required to originate in the House of Representatives and required House approval. This latter requirement was a recognition that wealthier states, who likely would also be more populous, should have more say in revenue matters as it would be they who would be asked to shoulder a disproportional part of the bill.
The supreme wisdom of this governance structure becomes apparent when contrasted with the recent Latinization of the Euro, a direct consequence of the European Union’s theory of governance as reflected in the Maastricht Treaty, the founding document of the euro currency area. Under that treaty, there is only one governing body, with all countries treated as equals, much like our Senate. Thus, each country’s vote is treated as though there were a uniform level of wisdom and fiscal responsibility across the continent.
Because the euro area was set to collapse if the European Central Bank (the “ECB”) did not agree to engage in large-scale acquisitions of government debt from Spain and Italy and others similarly situated, the ECB’s governing council voted last week, over strenuous German objections, to proceed with such bailouts. Specifically, it authorized the ECB to purchase unlimited quantities of short-term national debts.
Germany lost this determination because it holds only one of the seventeen votes on the counsel. On the other hand, Germany’s population of 81 million out of the 333 million within the euro area, or roughly a quarter of the citizens, means that the debtor nations have prevailed at the ECB with the prospect that Germany’s responsible austerity will be rewarded by its funding the profligate practices of other members.
As noted in a commentary by Peter Boone and Simon Johnson in the NYT.com’s Economix blog,
“Unemployment in Spain is now around 25 percent and in Greece it is at 24.4% (with unemployment for young people aged 14 to 24 now at 55 percent). Both Portugal and Ireland have made progress implementing their austerity programs, but they are not growing and their debts remain very large (gross general government debt is projected by the IMF’s Fiscal Monitor to be 115 percent of GDP next year in Portugal and 118 percent of GDP in Ireland). The current Italian government is well regarded, but there are large political battles ahead and it is also burdened with big debts (to reach 124 percent of GDP in 2013).”
This bodes ill for the euro. Obviously, the debtor nations will have the incentive to make as few concessions as possible in exchange for such bailouts. Worse still, once the debtor-camel gets its head into the ECB’s tent, the ECB’s leverage to obtain more concessions for future bailouts evaporates. According to the traditional wisdom of sound banking, “If you owe the bank a hundred thousand dollars, the bank owns you; but if you owe a bank a hundred million dollars, you own the bank.”
Madison recognized that those states who will provide more of the funds for government should have greater input into the decision to raise such funds than those who not only will be providing a much smaller share, but who in fact turn out to be the recipient of those funds. The European Union has based its approach on the theory that all nations are deemed equal in their w and responsibility.
My money is on Madison.
© Richard L Wise and RLWise.wordpress.com 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Richard L Wise and RLWise.wordpress.com with appropriate and specific direction to the original content.
The Philosopher King and the Empiricist
September 3, 2012
If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts, he shall end in certainties. –Francis Bacon, essayist, philosopher, and statesman (1561-1626)
Let me try to simplify the choice we have to make in analyzing the two principal candidates for the presidency. Unquestionably we have two, highly principled men. For me, however, the core consideration is not their philosophy of what should be done, their personal views on life or even what their specific policies may be. All candidates once elected invariably move towards the center. All candidates make promises that they do not, and perhaps even never intended to, keep. The central issue, it seems to me – as a long-time admirer of Coach Belichick – is how each adjusts to the challenges of reality that appear to conflict with their stated “positions.”
This analysis, I submit, requires us to focus more on the core, essential methodology of a man rather than on the veneer. The strengths and weaknesses of platitudes that may appeal to one constituency or another do not become apparent until tested in the fiery crucible that reality’s challenges present. This should therefore cause one to assess the choice that a candidate must make when his philosophy conflicts with empirical results.
Historically, there are but two choices: top down or bottom up. Thus, one may start with the premise that one’s principal approach, one’s fundamental tenets, are reflective of the truth. Thus contradictions between expected results and reality is a consequence of not being within a frictionless environment, of having to compromise in order incrementally to achieve partial victories, and thus only minor adjustments are necessary. Under such an approach, ultimate success, and hence happiness, will be achieved only by perseverance in the fundamental overarching, central plan.
The alternative approach is one where a person may still hold a fundamental belief in the correctness of his beliefs, but elects to put them aside for a time because his “being right” is viewed as less important than solving a dangerous threat to everyday happiness. Such individuals’ hard wiring is simply to focus on “what works” when faced with life’s challenges. One may categorize such an approach as “flip-flopping” on one’s principles if one is inclined to be mean-spirited, or one may view such changes as a reflection of inner confidence and humility resulting from an acknowledgment that they will never be able to understand the full panoply of existence. I grew up with World War II veterans who hated guns and killing, who throughout their lives were pained by the men they had killed, but who nonetheless knew that they had to do what they did. They resigned themselves to being most imperfect men having to deal imperfectly with forces beyond their control.
Thus in most cases when one must choose between two morally and caring upright men, I find their stated positions to be less relevant than their methodology in responding to failure.
This, of course, brings us down to the present two candidates.
I do not think there is much disagreement about whose words are more appealing. Mr Obama surely presents a warmer, more caring and empathetic view of how we may wish reality eventually to be. Even Mr Romney’s Republican supporters acknowledge that there is an issue with his being less “likeable” – whatever that may mean – than Mr Obama. Moreover, Mr Obama is clearly the better orator; a man who engenders passions of hope in most of us. Thus, those who support Mr Obama and who are not mere sycophants generally acknowledge that he has made many bad decisions and mistakes in dealing with both foreign and domestic policy, but assert that as he is extremely bright – a conclusion that should be obvious – he has learned from his mistakes and his resulting experience, combined with the fundamental correctness of his basic philosophy, give him credentials that Mr Romney cannot duplicate.
I do find it ironic that this argument’s reliance on experience is diametrically opposite what Mr Obama asserted in the last election commended him for the office of president. Nonetheless, it illustrates the “top down” approach to governance. It requires one to conclude that four years is not enough of a sample by which to judge Mr Obama. It further requires one to evaluate the candidates on what they say, versus on the basis of what they have done. Clearly, Mr Romney comes up short on the basis of that analysis.
On the other hand, if we judge each of the candidates on the basis of what they have accomplished, what they have done, Mr Obama appears to be the Lilliputian in such contest. Mr Obama has no comparison to Mr Romney’s unbridled successes at Bain Capital, as a Bishop in his Church, in reorganizing a bankrupt US Olympic committee, and in governing a state controlled by the opposing party. Thus supporters of Mr Romney naturally assert that four years is enough time for us to see what Mr Obama can do, and urge voters to choose by focusing more on what a candidate has done than on what he may promise.
Supreme Court Justice Oliver Wendell Holmes was fond of saying that “when you go to court you don’t get justice, you get law.” Any experienced practitioner will tell you that because this is not understood by the newly-minted lawyers who show up in firms every fall thinking that they understand the law, their work product can easily be torn to shreds. This is because law schools do not turn our lawyers, but rather only law students. And whether one aspires to become a lawyer, a doctor, an engineer, programmer, mechanic, chef or whatever, one learns that there is a “black art” that must be mastered if one is to become successful in one’s trade; that is, techniques that one can only learn empirically from daily exposure to the subtle nuances of reality and which enable one to form a dowser’s sixth sense how to address a given situation. As the great pianist Artur Schnabel observed, “The notes I handle no better than many pianists. But the pauses between the notes — ah, that is where the art resides.”
In reflecting on Republican monetary policies of the recent past, Mr Romney acknowledged that “we let the nation down.” That statement is reflective of his businessman’s empirical approach to problems, and of his faith in the supremacy of what works over his own personal predilections and ideology. Mr Obama’s approach, befitting his professorial roots, is that of Plato’s Philosopher King: that in the long run, his ideology will be proven to be the best for us.
Those are the choices that are ours, as will be the consequences of that choice.
Let us be careful what we wish for.
© Richard L Wise and RLWise.wordpress.com 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Richard L Wise and RLWise.wordpress.com with appropriate and specific direction to the original content.
Reflections on Mr Obama’s Economic Philosophy
August 30, 2012
I have often commented laconically that the older we get, the more we become like ourselves. We all have tendencies and predispositions, and in part through trial and error, over time we settle on approaches which seem right to us. And this is true both in our personal and professional lives.
A corollary of this rule is that, over time, others who have had the opportunity to observe an individual’s actions, words and decisions have the ability better to discern just who that individual really is. Whilst I am (thankfully) for the most part shrouded in obscurity, the president of these United States lives and operates at the other end of the visible spectrum. Hence each of us has the opportunity to gain increasing insight into what makes Mr Obama tick with each new rise of the sun.
It is with this perspective that I now must comment upon Mr Obama’s press conference of a few weeks ago. The Republican’s are jumping all over his ill-advised comment that “the private sector is doing fine.” However what concerns me far more is the context in which he made that statement, for it reveals a fundamental macroeconomic philosophy that is both frightening and, to my mind, antithetical to fundamental American culture. I say this in conjunction with the observation that, as a purely technical matter, Mr Obama’s statement put in context is also completely correct as a matter of basic 101 macroeconomic theory.
To explain this apparent contradiction, I must regrettably restate briefly some of the fundamental principles of the “Grim Science” (i.e., economics). (To the extent that the two paragraphs that follow are accurate, it is due to the profound teaching of distinguished Professor Carsten Kowalczyk; to the extent there is any inaccuracy, it reflects my own limitations.)
Mr Obama was talking about Gross Domestic Product (GDP). This term refers to the sum of all goods and services produced by a country in a year (or other designated period). There are differing ways of calculating this number, but the most common and direct way is the product approach, based on expenditures. Prior to Keynes, GDP was calculated as the sum of (a) consumption, plus (b) investment, plus (c) all exports minus all imports. Formulaically, GDP = Consumption + Investment + (Exports – iMports). [Note: Historically, imports are represented by the letter “M” to distinguish it from the letter “I” which is reserved for investments.]
After Keynes, this formula was refined, as it was recognized that there are really two, very different types of consumption: private sector consumption (namely what people and companies spend) and public sector consumption (namely what the government spends). This was because economists’ principal concern was whether the people in a society were better off, happier, and thus what the government spent was technically outside of (or, to use the economists’ term, “exogenous to”) that calculation. Thus today’s formulation of GDP is: GDP = Consumption (private) + Investment + Government consumption + (Exports – iMports).
For those of you still awake, what all this means is only that, under classical (and accepted) macroeconomic theory, government spending is one of the four components of GDP. Thus, GDP is directly related to increases and decreases in government spending.
Let me now return to what Mr Obama was trying to say. Mr Obama was commenting upon the measly 1.9% growth in GDP this past quarter. What his point was that because his approach had “created 4.3 million jobs over the last 27 months, over 800,000 just this year alone,” the problem was not with private sector consumption (“C”) Rather, the problem is with the decrease in public sector spending (“G”). “Where we’re seeing weaknesses in our economy have to do with state and local government—oftentimes, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.”
Let me translate this: Mr Obama is saying that as a matter of first policy priority, in order to increase GDP the federal government should borrow or tax more so it can then finance more hiring by state and local governments. Spur the economy by growing the size of government.
While Mr Obama is correct as a matter of introductory macroeconomics, it is reflective of his apparently never having taken, or taken seriously, more advanced economic courses, or any course in microeconomics. (As a matter of fair disclosure, let me state that I believe macroeconomic theory to be a failure and have observed that it is generally followed only by governments that are controlled by elitist central planners. For those of you unfamiliar with the term “central planning” – and I know that his will offend my liberal colleagues – it is the economic philosophy followed by the communist approach to growing an economy.)
While it is true that because government spending is a major part of GDP, more government spending will increase GDP on a dollar-for-dollar basis. The problem is that government spending adds no lasting, sustainable expansion of the economy. It is temporary. Look, for example, at the lesson of the stimulus, where hundreds of billions of dollars was gifted as aid to the states, but whose effect has now has now faded. Thus, this approach is no different an approach than that of so many CEO’s of private companies who lawfully “cook the books” in accordance with proper accounting principles to give the impression that things have gotten better, or that they have done a better job turning around a company, so that they may claim entitlement to higher compensation. Mr Obama is similarly attempting to cook the books of GDP calculation so as to get elected for another four more years.
More specifically, local government layoffs are not the result of falling state revenues. Those revenues have actually increased by around 6% over the past two years according to the Census Bureau. Rather, because the cost of benefits that governments are paying their own workers is increasing far faster than their revenues, they have had to lay off workers to pay for rising pension and health care costs.
And it gets worse. Look at those states, such as California and Illinois that refuse to follow Wisconsin Scott Walker’s lead and alter the benefits that they pay or reform collective bargaining. In essence, Mr Obama’s suggestion is that Congress needs to tax Americans from every state more, and borrow more from China, in order to send money to states that have been the most spendthrift.
In summary, Mr Obama’s lack of any private sector experience, and his adherence to simplistic macroeconomic theory, has resulted in his view our current economic woes can best be solved by having our government control and regulate our production. While such an approach may have worked well for post-war Korea and for China, it is just not in accordance with American culture. But Mr Obama has already demonstrated, by his ramming Obamacare down our throats despite the overwhelming objection of the American public, that his vision for America is not one that need be in harmony with our cultural hard wiring.
Of course that’s just my opinion, I could be wrong……………
© Richard L Wise and RLWise.wordpress.com 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Richard L Wise and RLWise.wordpress.com with appropriate and specific direction to the original content.
The President’s Metal, Redeux
August 29, 2012
In yesterday’s post I analyzed what has turned out to be Mr Obama’s considerable and consistent failures in the area of foreign policy.
I should have waited one more day.
The Obama Administration has made it clear that it intends to take no active stand on the horrific events unfolding in Syria until after November’s election. The only caveat to that position was that Mr Obama might be forced to reevaluate that position should the Assad regime employ chemical weapons in the persistent air strikes that it rains down upon rebel cities.
Meanwhile, in a television interview released today, President Bashar al-Assad stated that he needed more time to “win the battle” against rebel forces. To aid in Assad’s efforts, our good friends in Iran have, according to a report in yesterday’s Wall Street Journal, sent in hundreds of soldiers and commanders from Iran’s crack Revolutionary Guard to help Assad crush the rebel uprising. Unlike Mr Obama, the Ayatollah understands the strategic significance of Syria as Iran’s only ally in the Middle East and a direct connection to the Lebanese branch of Hezbollah.
Thus, for his own political ends, Mr Obama has elected to sacrifice both innocent lives as well as the future stability of the Middle East.
Contrast this with France’s new socialist President François Hollande who has decided to take the lead in publically announcing that he would “recognize the provisional government of Syria once it is formed.” According to a report in today’s Wall Street Journal, “ ‘Bashar Assad must go,’ Mr. Hollande told French ambassadors on Monday. ‘There is no political solution with him. He constitutes a threat, he continues to massacre a population with unprecedented violence, to destroy cities and cause the deaths of women and children.’ This, he added, is ‘unbearable for the conscience of humanity’ and ‘unacceptable for the security and stability of the region.’ ”
In times of such crises, a responsible president should follow Thomas Paine’s advice that his choices are only to “Lead, follow, or get out of the way.” Sadly, this president has chosen to grant comfort to our enemies.
© Richard L Wise and RLWise.wordpress.com 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Richard L Wise and RLWise.wordpress.com with appropriate and specific direction to the original content.
The President’s Metal
August 28, 2012
Summer has tarried late in my native New England. We find ourselves still in the placidity of sun and sweat despite September’s arrival in a few days. A blessed few more moments to allow our thoughts to drift with the soft breezes, to look back at where we have come, and to reflect quietly on differences between what we believed past actions would yield and the reality which resulted.
Newspapers are not the judgment of history. Time and perspective are necessary allies in our efforts to judge accurately what has occurred. Even so, with important decisions that have to be made whose deadlines cannot be postponed, we must do the best we can to extrapolate the past into the future. And in this halcyon moment before the clanging din that will undoubtedly erupt when the political campaigns move into full attack in a few days, we may have the emotional calm to cast aside ideology and party tribalism and ask ourselves, most honestly, what has worked and what has not.
In judging Mr Obama, as we must, we his judgments fall into two areas of policy: the domestic and the foreign. I choose here to examine his foreign policy. It is simpler, more straight forward and primarily within the sole control of the executive branch. As the president’s stage, the effects of his actions redound to his credit or detriment. This cannot be so clearly ascribed in the case of domestic policy where congress and opposing parties and constituencies must be accorded and accommodated.
In his Farewell Address, President Washington warned Americans to beware of foreign entanglements. I have never viewed this advice to be reflective of a policy of isolationism on Washington’s part, but rather of an understanding that because the culture and values of our county were so fundamentally different from those of Europe, we would be at a decided disadvantage in our dealings with them. People tend to judge others as they are themselves; hence we would naturally and naively presume that others are motivated by the same things that motivate us. Washington recognized that this was not the case, and hence cautioned the adoption of a healthy skepticism, especially until we had acquired through experience a level of sophistication sufficient to allow us adequately to protect our interests. Thus in seventeenth century Europe, war was still an alternative type of diplomacy; to Americans, it was a fight for liberty. America was a formed as a “republic of reason” whereas the fundamental premise of monarchies is that men are governed in accordance with the naked preferences of the sovereign. America’s culture is enabling: everything is permitted unless specifically prohibited. Europe’s is restrictive: men live “by the leave” of the sovereign and thus everything is prohibited unless it is specifically permitted. Many of these cultural and value differences still persist to this day.
It was for this reason, that the greatest question that plagued the Obama candidacy in 2008 was his lack of experience. Yet a majority of the electorate lightly esteemed this credential, believing that Mr Obama’s native intelligence would more than make up for any lack of real-life training. Irrespective of whom we voted for, we were all hopeful. Indeed, at first he received high marks for his bold move in visiting Egypt in the initial days of his presidency where he delivered his famous and conciliatory Cairo Address. I recall how personally moved I and my colleagues were, one of whom told me he had to pull over while listening to the speech in his car as his eyes were tearing over.
With the election now a little more than two months away, what can we say about how Mr Obama’s actions have played out?
Take the Middle East. The Cairo Address seems now forgotten, as America’s stature within the Muslim world has fallen to an all-time low. His strong-arming of Israel to adopt a permanent settlement freeze has failed and has emboldened Israel’s enemies. His efforts to get China and Russia to adopt even a symbolic condemnation of Syria’s brutal dictator has failed. Iran has gotten much stronger, even in the face of the weak economic sanctions that even the United Nations regularly violates. Indeed, the annual meeting of the Non-Aligned Movement is being hosted in Iran this year and UN Secretary-General Ban Ki-moon will be ignoring Mr Obama’s plea that he not go. Egypt’s new Islamist president, Mohammed Morsi, has become Iran’s latest friend. The president’s efforts in 2009 and 2012 to negotiate a nuclear agreement with Iran were summarily rebuffed.
Other fronts reflect no better on the president’s initiatives. His personal plan to orchestrate a climate-change agreement in 2009 at Copenhagen ended in failure. His initiative to reset relations with Russia ended in failure. He failed in his attempt to make a settlement with the Taliban, and his diplomatic entreaties to North Korea ended in embarrassment. He tried to involve himself in Europe’s recent economic crisis and was summarily dismissed, German Finance Minister Wolfgang Schäuble suggesting that “Herr Obama should above all deal with the reduction of the American deficit.” Despite his grandstanding initiative, he was even incapable of bringing the 2016 Olympics to Chicago.
Hardly an impressive record.
So what went wrong? I submit that there are three causes. First, as Washington warned, Mr Obama’s lack of sophistication and experience make his policies cannon fodder for wily foreigners. Second, he operated under the assumption that his personal magnetism and charisma that had worked so well within the American environment could be exported successfully to the rest of the world. In short, he believed that if they liked him personally, they would respect him the next morning. The direct antithesis of Theodore Roosevelt’s advice to “speak softly and carry a big stick.”
Third, and perhaps most damning, is the fact that while Americans marveled at his glib sound bites, the rest of the world laughed at the lack of substance. And when one is seen as uttering pretty phrases that are meaningless, one’s basic weakness becomes obvious and one’s credibility vaporizes like the dew on a summer’s morn. Let me use just one powerful excerpt from Mr Obama’s Cairo Address as illustrative of this point. In its opening, the president said:
“I know, too, that Islam has always been a part of America’s story. The first nation to recognize my country was Morocco. In signing the Treaty of Tripoli in 1796, our second President John Adams wrote, ‘The United States has in itself no character of enmity against the laws, religion or tranquility of Muslims.’ And since our founding, American Muslims have enriched the United States. They have fought in our wars, served in government, stood for civil rights, started businesses, taught at our Universities, excelled in our sports arenas, won Nobel Prizes, built our tallest building, and lit the Olympic Torch. And when the first Muslim-American was recently elected to Congress, he took the oath to defend our Constitution using the same Holy Koran that one of our Founding Fathers — Thomas Jefferson — kept in his personal library.”
Very pretty words indeed, but wholly without a shred of substance or truth. Take each historical allegation point-by-point:
1. Moroccan recognition: It is true that Sultan Muhammad II included America in a list of countries to which Morocco’s ports were open. This was not an Islamic statement however, but a political-economic one and one not shared by the rest of Islam at that time. In any event Morocco has always been on the fringe of the Islamic club, being a staunch supporter of the US (remember Casablanca) and a country that has a zero tolerance policy towards Al Qaeda. Moreover, this recognition was not formalized until the Moroccan-American Treaty of Friendship in 1786, nine years later.
2. Treaty of Tripoli: Mr Obama is really reaching here. First, this was a routine treaty of little consequence. It gained recognition only because of a provision in the English translation that contained the following clause about religion:
“As the Government of the United States of America is not, in any sense, founded on the Christian religion,—as it has in itself no character of enmity against the laws, religion, or tranquility, of Mussulmen [Muslims],—and as the said States never entered into any war or act of hostility against any Mahometan [Muslim] nation, it is declared by the parties that no pretext arising from religious opinions shall ever produce an interruption of the harmony existing between the two countries.”
Unfortunately, not only did the president did not quote it correctly, but what it stood for was a statement to the world that Americans view all religions as equal, not that we admired Islam. Further, Adams did not write it; his diplomats did and he signed it.
3. Moslems fought in our wars: I am sure they were not draft dodgers. Do they want credit for doing what they should have done and what every other American did? Moreover one may probably assume that they were in our armed forces NOT as Moslem-Americans, but as Americans who also happened to be Moslems.
4. Moslems in Government: I am sure they took government jobs. So what? As for politics, even Mr Obama points out that we have only had one Moslem who has ever gotten elected. This is a poor record.
5. Stood for civil rights: I assume that he is talking about such luminaries as Malcolm X (who was Christian but took on the militant side of Islam), Farrakhan, and the like. They are a disgrace and not part of American culture. Indeed, they rejected it and promoted hate.
6. Started Businesses: Give me a break. Do I even have to comment on this? By the way, Islamic businessmen are also overwhelmingly (80%+) Republicans.
7. Taught in our universities: What’s the point here? That they took high-paying teaching jobs?
8. Excelled in our sports arenas: Oh come on. We are only taking about 6 boxers who converted like the admirable Mike Tyson, ten basketball players who converted (most notably Kareem Abdul Jabbar, Shaquille O’Neal, Rasheed Wallace and Larry Johnson), 9 football players, all of whom converted and only one, Ahmad Rashad, who was really good, and three other minor ones. Hell, even the Jews have a longer list.
9. Nobel Laureates: There have only been ten Muslim winners of this prize (unless you add Mr Obama), only one of whom, Ahmed Zewail, an Egyptian by birth who became a citizen after going to college here, won the prize for chemistry in 1999.
10.Built our tallest building: Well, as we now know, “he didn’t build that.” In any event, I assume that Mr Obama was referring to Fazlur Kahn, a Bangali architect considered the father of tubular design who was paid a well-deserved fortune to design the Willis Tower (formerly the Sears Tower). Obviously, he is neither an American nor did he build anything; Sears built it.
11.Lit the Olympic torch: An obvious reference to Mohammed Ali, but this was no accomplishment, it was simply giving Ali a lifetime achievement award. More importantly, Ali is not a Moslem; he became a Black Muslim, a denomination that is not recognized by either the Shiites or the Sunnis, and even had been prohibited from going to Mecca.
12.A Muslim used Thomas Jefferson’s Quran to take an oath: Is there a point here?
While I apologize for the lengthy analysis above, but it is symptomatic of the fundamental hollowness of Mr Obama’s knowledge and analytical skills and which have resulted in the failures of foreign policy that have characterized his administration. So why is it that so many democrats still cling to the view of Mr Obama as being the gold standard of presidents? Why is there a perception that Mr Romney, on the other hand, is “unlikable”? I believe the answer lies simply in Mark Twain’s sad observation:
“Gold in its native state is but dull, unornamental stuff, and only lowborn metals excite the admiration of the ignorant with an ostentatious glitter. However, like the rest of the world, I still go on underrating men of gold and glorifying men of mica.”
© Richard L Wise and RLWise.wordpress.com 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Richard L Wise and RLWise.wordpress.com with appropriate and specific direction to the original content.
Financial Crises and American Courage
April 4, 2009
Neither a man nor a crowd nor a nation can be trusted to act humanely or to think sanely under the influence of a great fear. -Bertrand Russell
The financial meltdown that has resulted in a new American Crisis has engendered a pernicious panic of confidence. Now riddled with self-doubt, we assume, without analysis, that our system is fatally flawed and thus search for new ideas and a change in approach to replace all that which has served our nation so well for most of its 233 years. At the G-20 Summit that is concluding today, we hear the general consensus that unbridled capitalism has metamorphosized into something dangerous to the modern world; that the freedom afforded the financial markets has resulted in a “toxic cocktail” that has poisoned the economies of the world and that the blunt instrument of extensive government intervention, regulation and control of such markets—a panacea that has been the norm and which is being insisted upon by the other nineteen countries—needs now to be adopted globally; that is, here in the united States.
Living as I do in the quaint New England city of Salem, Massachusetts, I am most familiar with witch hunts and witch trials, and the well-intended, albeit wholly misguided, solutions that panic regularly engenders. As Marie Curie admonished us, “Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.” Thus, let us all therefore take a deep breath, gird our loins, suspend action and let reason intervene before setting in stone our future course.
First, let us ask ourselves what exactly caused this problem. Is there any doubt that the derivatives resulting from the securitization of real estate mortgages were the core problem? Had not these instruments existed, would there be any crisis today? So why would this discrete problem result in the automatic wholesale questioning of all of capitalism? At the very least, should we not first examine these derivatives to see if there was something peculiar and different about them or their treatment as opposed to their being indicative of a fatal flaw in all of capitalism?
The fact is: there is something different. The failures that led to this sub-prime mortgage crisis are, at their core, the same type of failures that caused the more widespread market crash of 1929. In both instances there was wild speculation in unregulated securities. As L. Gordon Crovitz pointed out in the March 30, 2009 edition of The Wall Street journal, FDR’s choices in the bleak days following his inauguration were extensive market regulation on the one hand, and laws mandating full transparency and disclosure on the other hand. In opting for Louis Brandeis’ philosophy that “sunlight is the best disinfectant,” FDR chose the disclosure route that took its form in the Securities Exchange Acts of 1933 and 1934. The result was that America’s capital markets led the world for the rest of the century in robustness, strength and prosperity. Innovation and entrepreneurship blossomed here like nowhere else in the world.
The problem with mortgaged-backed securities, however, was that they fell into a loop-hole in our system of transparency and disclosure, so their carcinogenic propensities could be hidden for many years. As Mr Crovitz points out, whereas the typical traded stock has tens of thousands of relevant data points that analysts use to make investment decisions, these derivatives have only around 600. With their flaws hidden from view, these instruments proliferated rapidly in the rich Petri dish of our financial exchanges.
So why not merely apply the same medicine to these new securities as that which worked so well with all others? What is the allure of abandoning our successful system and adopting the European system? Indeed, has anyone even asked if the underpinnings of the European system are at all consistent with decidedly American values, culture and approaches? Let me therefore first briefly look at the underpinnings of these two cultures.
The painful truth for Americans is that the two cultures are not compatible. The European model of governance arose within the context of monarchical legacies where businesses existed only with the “leave” of the government. Change was viewed as potentially dangerous and thus had to be supervised and “managed” by the sovereign with paternalistic care. As a consequence, the European business and governance model reflected more of what has been called a “mandatory” approach; that is, unless specifically permitted, everything would be prohibited. Further, it followed that corporations, as a creature of and deriving benefits—such as unlimited life, limited liability for owners, separate legal recognition—from the state, should in turn acknowledge and account for the needs of the society of which it was a part. This was particularly true for the large number of privatized corporations in which the State still retained a significant interest (through “golden shares”) so that the State could be assured that its social welfare policies would be followed.
Unlike the European models of government which evolved from constitutional monarchies, our system established a constitutional democracy. In doing so, James Madison and our other founders sought expressly to reject historical monarchical traditions that, originally at least, provided for the establishment of rules based on the naked preferences of a monarch, and to replace them with a tradition founded on the concept of a “republic of reason.” When one combines that major premise with our derivative traditions, such as all individuals being endowed with equal rights, and that “The history of liberty is a history of the limitation of government power, not the increase of it,” (Woodrow Wilson), we find our culture placing a high value on individualism, and on promoting freedom of contract and choice. In the business context, this resulted in the establishment of a legal environment that sought to enable and enhance whatever a business’ organizers desired to do, leaving to market forces the decision as to which entities would thrive and which entities, fail. Thus, U.S. law is said to follow an “enabling approach;” that is, everything would be permitted unless it was specifically prohibited.
Viewed in this light, it is easy to see why Europeans find greater comfort and harmony in more government regulation and control. However we can also see that this approach is incompatible with American cultural traditions. This, however, only brings me to the more painful question of which system is better.
Capitalism has long been a favorite whipping-boy for both the European elites and the politically-correct liberal left. From a social standpoint, it has little to commend it: success or failure under such a system has nothing to do with your lineage or family background. Pity or sympathy for those who fail is not a variable among its formulations. It ascribes all of the “fault” of a failure to the individual as it does with all of the successes. It gives us no set, pre-ordained formulations as to how to succeed. Under a capitalist system being granted equal rights does not give one any equal share of the country’s wealth; it is one’s talents and industry that are the primary determinants of one’s prosperity. Similarly, the guaranty of freedom of speech does not entitle anyone to have his or her ideas count as much or to be as listened to by our fellow citizens. Not all ideas worth the same.
Capitalism has as basic tenets the unity of responsibility with authority: if you have responsibility without authority, you have no incentive to stick your neck out, no reward for risk; and the spirit of entrepreneurship dies. If you have authority without responsibility, you have a fertile environment for moral hazard; such as a Congress. As George Bernard Shaw pointed out, “Liberty means responsibility. That is why most men dread it.” True, this system, as do all systems, has abuses and may becomes corrupted for a period; but that is why the tree of capitalism—to paraphrase Thomas Jefferson—must from time to time be refreshed with the economic blood of such economic tyrants.
In sum, like the hard and immutable laws of economics to which capitalism is wed, it is regarded as a dismal and unfeeling system.
In contradistinction to capitalist structures that highlight individualism and hold us both in control of and accountable for our destinies, European socialism and liberal political correctness serves to absolve us of our failures and “level” the playing field by putting control of our lives in a paternalistic government that denies our differences and seeks to ameliorate the “harsh” consequences of economic realities. Yet seeking to legislate away our differences and repeal basic laws of economics, ultimately can only have as much effect as legislating control of the weather. Facts do not cease to exist merely because they are ignored. We may seek to walk across a lake based upon legislation that it is now terra firma, but that will not save us from drowning in the attempt.
Men and women are markedly different, and this is a very good thing. It results in the whole being stronger and greater than the sum of its parts. A very good friend and colleague once pointed out to me that if women viewed sex the same way as men viewed sex, there would probably be no inventions and we all would still be living in caves. This may be somewhat of an exaggeration, but it is illustrative of the point. Similarly, my wife has delighted in the joke that the reason why God gave men brains was so that they would not hump women’s legs at cocktail parties. If you reverse the roles of “men” and “women” in that jest, the joke makes no sense and sounds like some banal, misogynistic ranting. Why? Because the sexes are markedly different. Similarly, each sex, religious or other group, culture, country, profession, and human being all have their own strengths, weaknesses, talents and foibles. Ty Cobb was a miserable failure as a human being; but he would be among our choices were we to put together an all-time baseball team.
Putting this in classical economic terms, each individual has the potential of realizing upon his or her own, particular comparative advantage. When such comparative advantages are ignored by mandating an artificial homogeneity among citizens, we all lose out on potential excellence that can advance our civilization, and we doom ourselves to mediocrity, and ultimately, to failure.
On Grover’s Corners and Chariots of the Sun
March 8, 2009
Perhaps it is only a matter of the weight of the additional years that I now carry; perhaps it is only the blessed respite from this bitter winter that has dogged us here in New England the past several months. But I found my mind wandering back to reveries of what at least seemed like simpler, better times as I began to sip my morning coffee and parse through the histrionics that passes nowadays for commentary and analysis from the right and the left by those who apparently have the monopoly on wisdom that somehow has always eluded me. Anyway, two remembrances floated forward from some reptilian part of my brain that set me to write these paragraphs.
The first thought was the echo of the words of Kurt Vonnegut’s, “Cold Turkey”, back in 2004: “There is a tragic flaw in our precious Constitution, and I don’t know what can be done to fix it. This is it: Only nut cases want to be president.” Now I did not vote for Mr Obama, but I was truly satisfied that this time I had a choice between two principled and honourable men—in stark contradistinction to having to choose between Tweedledum and Tweedledummer last time. And like most Americans, I accepted the mandate of The People and gave him my full support. He is entitled to have a fair chance to see if his new ideas and approaches can work to get us out of this decline and fall from grace that we have brought upon ourselves.
But my second thought had more ancient origins. In the latter half of the 1970’s when I was first admitted to the bar, the practice of law was still a collegial profession and not a pure business. Yet new and automated formulations on how to determine partner compensation were just coming to the fore and creating the only annual discord in otherwise harmonious firms. At that time, however, the partners generally accepted a governing principle that overrode any numbers that a computer might spit out; a principle that reflected the idealism, innocence and, hell, dare I say “purity” of a world now long since vanished. That principle was that in every just and well-governed firm, there must not be too broad a range between the lowest and the highest paid partner. Specifically, the ratio of the highest to the lowest could not be more than three or four to one.
This fundamental “governor” on the engine of compensation was deemed necessary to preserve the collegiality and esprit de corps of the enterprise; it was to signify to all that the individual was there to serve the whole and that no partner, no matter how talented, could be successful without his brothers, nor were any partner’s contributions insignificant. Alas, but that principle has now long been out of fashion.
What brought this recollection to mind was probably catalyzed by my taking my thirteen-year-old daughter to see a marvelous production of Thornton Wilder’s Our Town at nearby Gordon College. One cannot help but being awed by the eloquent power that overwhelms us from a stark and simple stage and the characters’ quiet, small town life. Its message is an application of Occam’s razor to life.
But back to my point. I recalled this “archaic” compensation principle when reading more of the recent debate on that aspect of Mr Obama’s economic recovery plan that seeks to “redistribute wealth,” “tax the rich,” or, on the more extreme end, to “impose socialism” on us all. Of course, with our having just emerged from years devoted to the golden calf of greed, avarice, and solipsism that led to our current debacle, such laments also immediately brought to mind the thought that “the Lady doth protest too much, methinks.”
So let us drop the emotionally-charged buzz-words that are adduced to tempt us into somnambulistic, automated reactions as opposed to the rigors of critical thought. No intelligent, moral capitalist operates his business other than with an overriding approach of enlightened self interest. Democracies such as ours require an educated populace that has basic, shared moral values. It is only in third world countries, failed states and dictatorships or oligopolies where the mean of the bell curve of wealth is skewed grossly toward the poverty level. I cannot believe that we desire to emulate those.
Maybe, just maybe, there was something to that old way. Perhaps there truly is a sinister evil that can destroy the vitality and fellowship of our American community if wealth becomes more and more polarized; if more and more of our fellow citizens find their tether to the American Dream becoming a mere tow line to the party barge of the privileged few.
Bertrand Russell observed that “In all affairs it’s a healthy thing now and then to hang a question mark on the things you have long taken for granted.” This, of course, would be painful for those on the right side of the bell curve; for it is indeed difficult to get a man to understand something when his income depends on his not understanding it. But the dream that a return to such long-forgotten values might achieve is more than worth the effort. Emerson said it best:
Each man takes care that his neighbor shall not cheat him. But a day comes when he begins to care that he does not cheat his neighbor. Then all goes well — he has changed his market-cart into a chariot of the sun.
THUS SPAKE CASSANDRA
February 22, 2009
THUS SPAKE CASSANDRA
Government is not reason, it is not eloquence, it is force; like fire, a troublesome servant and a fearful master. Never for a moment should it be left to irresponsible action. -George Washington
A dear learned colleague of mine whom I respect highly recently sent me a link to an article entitled “The Growing Anger in the Heartland” (http://www.ourfuture.org/blog-entry/2009020819/growing-anger-heartland). In it, the author brings to light the growing consensus that “that we live in a country whose ruling class is deeply insane. Hardly a day goes by when you don’t see sociopathy packaged as Serious Opinion.” The commentary includes the clip of a passionate tirade of Lansing, Michigan Mayor Virg Bernero that “exemplifies a level of rage out in the country that isn’t being fully appreciated in Washington, D.C.”
This led me to reply to my friend with a story that my wife told me that I just do not know what to do with. I recount it to you here:
We were watching the news one day several months ago, listening to reports of the hundreds of billions of dollars that were going to AIG, BOA, Citicorp, etc with apparently no fixed and clear standards, and of the heads of the Big Three automakers whose team few into Washington on separate private jets to state their case for receiving more tens of billions of dollars so they could continue their incompetent policies.
My wife looked up at me in disbelief and said “Well, I know what my grandfather Ellsworth would have said about all this. He used to say it all the time.”
Ellsworth Brown, whom I regrettably did not have the pleasure of knowing, was a proud immigrant from Sweden who worked hard to care for his family. A deeply religious man, he had no prejudices except against Catholics, and that was only based on his prescient belief that they permitted their clergy sexually to abuse children. (He accordingly reveled in the knowledge that his granddaughter—my wife—was born on Orangeman’s Day.) Ellsworth imparted his lack of prejudices to my wife who, for example, as a child in school did not raise her had when the teacher asked her class, as part of a discussion about civil rights, if anyone in their all white school had any black friends. When recounting the days’ events later at dinner, my wife’s mother laughed at having to remind her daughter about one of her best friends who was an African American. My wife’s response: “She’s black? Oh, yeah; I guess she is black.” She had just never been trained to notice.
Ellsworth was an imposing figure and carried himself as one would imagine of a quintessential patriarch. Standing at around six-foot-four, Ellsworth had “muscles on top of muscles” (as the inimitable Johnny Most used to describe the Celtics’ enforcer “Jungle” Jim Luscotoff). Coming from hard-scrabble beginnings, he once found himself seeking a living in his youth as a punishing, bare-knuckle boxer of some ability, reportedly even having killed a man in the ring. He also had a passion for the virtues of Freemasonry where he rose to the status of a thirty-second degree Mason and became a long time Worshipful Master of his Lodge.
Any way, my wife continued. “My grandfather often said that what happens next in times like these is obvious. The same thing has happened over and over again for thousands of years and there is no reason why this wouldn’t happen again now. When the leaders of a nation, both industrial and political, become so corrupt and so incompetent, the solution is easy. He people rise up, take them outside, line them up and shoot them. Done.” I could not help but laugh, although it was a suppressed one; for the thought was indeed delicious and elegantly simple. “Ockham’s razor,” I thought.
But that is not the story that perplexes me. The one that I am having trouble with is this: Since chuckling over my wife’s tale, I have probably a score or two of times, when the same topic about the bailout has since come up, repeated it to professionals, professors, C-suite occupants, workers in the line, and so forth. Without exception, everyone laughed; no one disagreed, tried to say what an absurd idea it was or objected in any way. Indeed, the usual response was, “I wish I could disagree with that; but I just can’t”
So what the hell does this mean?
THE OBVERSE SIDE OF THE COIN: Should a Company “Too Big to Fail” be Governed by Rules Applicable to Companies that Are Not?
January 2, 2009
I confess to having a strong partiality for deductive logic. Conclusions that have been derived deductively are not refutable, save only if one’s main premises are faulty. Inductive logic on the other hand, like all axiomatic theories, may give us innumerable points on a curve so as to lull us into a sweet semblance of security, but is always susceptible to that one case that we have not as yet found that proves the rule. Moreover, it is based upon that most fundamental of logical fallacies; namely that of “post hoc, ergo propter hoc” (or, for those of you disdainful of classical Latin, “after this, therefore because of this”). For those reasons, in structuring any analysis I endeavour to tarry as long as possible in that perfect, halcyon tranquility of the analytic a priori, before venturing forth into the unknown, treacherous shoals of those Sirens who beckon unsuspecting thinkers with the temptations of their “scientific method.”
It was with this approach in mind that I began to wonder what exactly was entailed in our government’s concern that the money-centered institutional banks together with the Big Three Automakers “had” to be bailed out with hundreds of billions of our tax dollars. Those who have written on the subject begin and end with the question of when it is that a firm becomes “too big to fail.” Whilst defining where on the spectrum of size and importance an enterprise crosses that gossamer line of infallibility is a subject that I intend to explore another day, I am prepared, for purposes of this exposition, to deal with only the obvious, undisputed cases wherein we may apply by analogy the Supreme Court’s “stand-up-and-be-counted” definition of pornography to this situation: we may not be able to define it, but we know it when we see it. Rather, my concern is with the implications of a firm being “too big to fail;” implications which have been almost universally ignored, but which, like a two-ton, long dead elephant in the middle of the living room that everyone is trying to ignore, is beginning to stink.
For the standpoint of purely normative logic, therefore, what then does it mean to say that a firm is “too big to fail”? What do the attributes of a “failure” entail? Why and how did our society provide for the firm to achieve such status? On the macroeconomic level, such behemoths have become so inextricably intertwined in the very functioning of our economic structure that their sudden demise would lead to a chain reaction of failures and, ultimately, the collapse of the system itself. At some crucial point in their development, the nurturance provided by our capitalistic and governmental structures made them peers of those systems, with the resulting consequence that they, in turn, developed their own, independent gravitational sphere of influence. From that point forward, a symbiotic equilibrium began to develop with their environment: the larger they grew, the more they became a source of economic prosperity off of which other enterprises could feed, and this added prosperity in turn, because, they were a principal beneficiary of the political-economic environment, increased the prosperity, power and influence of these multi-national titans.
But just as a black hole warps the space around it, so do these “black holes” of economic power and social influence warp the normal rules that we take for granted and which are applicable to small to medium sized enterprises. That is also why we have different rules for our governmental units than we do for private firms. By way of example, at the beginning of the twentieth century, minimum wage laws and laws limiting the number of hours that women or children could work were held to be unconstitutional violations of the right of freedom of contract. But by 1937, however, it had become clear that the rapid and unbridled growth of the power of the barons of industry effectively had eliminated any meaningful right of “free contract” such that the new facts of economic life warranted the repudiation of the old law. Thus it became appropriate to burden industry with minimum wages and maximum hours to counterbalance the unintended economic power that our system had enabled them to acquire. Clearly, neither any American nor any of its leaders foresaw or intended industry to obtain such power; but we did encourage and intend to create an environment that would reward excellence, punish incompetence, and provide a comparative advantage to economies of scale. The adverse effects from their accumulating too much power was just an unintended consequence, although one that, in hindsight, seems obvious.
So it is with these behemoths that have grown to the point of being “too big to fail.” As with their early twentieth century ancestors, their status in our society may not have been the result of any intentional plan on their part, but was nonetheless a direct result of their having taken advantage—albeit properly—of the nurturance that our society had established. In this sense, the result too was foreseeable. So now we must ask the next question: With their having nonetheless grown in power and influence to the point whereby society cannot permit their demise so that special rules become applicable to them, have not the rules also been altered with respect to times of plenty? Putting this question another way, with their having chosen—intentionally or not—to have crossed the Rubicon of size and power so that they are so infected with a public interest that their failure is no longer a private concern, have they not also forfeited their right to claim to be governed by private company rules in general? That is, as their fate affects us all and their fortunes must be supported in lean times, should not the benefits of their success be shared as well in times of bounty? Should not as well their management be answerable to all stakeholders in the enterprise, rather than only to those transient investors who happen to hold shares of stock at any given time?
Think, too, about the fact that the Fortune Global 100 would rank between the 32nd and the 96th largest countries in the world if their revenues were simply called “gross domestic product.” Yet these companies’ governance structure is effectively a dictatorship with legal obligations only to serve the interests of a small stockholder oligopoly. Is such a governance structure for any political and economic organization of such a magnitude and influence proper in a civilized and democratic society?
R.L.W.
© Richard L Wise and RLWise.wordpress.com 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Richard L Wise and RLWise.wordpress.com with appropriate and specific direction to the original content.
Madoff, Jews and Anti-Semitism
December 31, 2008
On December 23, 2008, Rabbi Marc Gellman published and open letter to Bernie Madoff, railing at his indecency, the harm he did to the financial markets and to the image of Jews in the world. (See, http://www.newsweek.com/id/176821) My response to the rabbi is as follows:
Whilst I do appreciate the learned rabbi’s righteous indignation, his analysis is both wildly off of the mark and naïve. So let us all step back for a moment so as to able to discern the forest for the trees.
Let me begin by pointing out that I refuse to be a victim. Indeed, I am here today because my ancestors did not believe that Hitler would never do what was written in Mein Kampf, or that the German people would never allow such things to happen; nor did they believe that “arbeit macht frei.” Unlike most of the sacred six million who stayed and walked meekly with foolish hopes into oblivion, my ancestors put their trust in themselves and their analysis of the facts, and not in the hands of evil. Israel was founded and lives still today, only because the surviving remnant of European Jewry decided that they would no longer seek to entrust their survival to others, but would instead take full responsibility for it themselves. As George Bernard Shaw observed, “Liberty means responsibility. That is why most men dread it.”
Similarly, no con game can ever succeed without the voluntary complicity of the target, and to obtain that complicity the con artist preys upon a serious character flaw in the other. Usually this flaw is hubris or greed; in the case of Bernie Madoff, both were present. But for his “victim’s” complicity, no fraud could have been committed. Have we never heard the expression that if it sounds too good to be true it probably isn’t? That is why you cannot cheat an honest man. Many people did not invest with Mr Madoff who had the opportunity to do so. Did the good rabbi ever consider why those people did not?
The answer of course is that Madoff required blind trust in his omniscience, and would reject those who wished for logic. This, of course, is the essence of idolatry which is abhorrent to our religion. And I am not an idolater. Those who chose such worship obviously forgot Jefferson’s admonition that we should “Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason, then that of blindfolded fear.”
Of course idol worship has been a constant source of temptation to the Jewish people throughout our history, although in more recent times it has been the deification of tangible men or institutions above intangible ideas or the intangible notion of Emmet, of Truth. Keep in mind too that historically we have been a “stubborn and stiff-necked people;” we want to feel important, that we belong, that we are among the “knuckers.” Why else would one abandon reason when Madoff consistently paid one a “profit” on our investments when everyone else saw their portfolios devalue fifty to sixty percent? I personally never invested in WorldCom simply for the reason that I couldn’t figure out how they were making money, so I assumed that they weren’t. It was that simple. And it is always that simple.
Put your trust and faith in the Almighty; not in man.
The idealistic rabbi continues this naiveté, however, by blaming Madoff for besmirching the reputation of those “who sell real and honorable and legitimate money products.” Please, dear rabbi, have you been asleep for the past seven years? Let me make a short list: Enron, WorldCom, Tyco, Global Crossing, the banks and financial institutions that had to pay out billions of dollars in lawsuits because they knew of and participated in the fraud of the foregoing intuitions; Arthur Anderson; Fannie Mae and Freddy Mac; AIG, Lehman Brothers, Bear Sterns, Morgan Stanley; hedge funds, special purpose vehicles, sub-prime mortgages; oil going from $35 per barrel to $160 and back again. Need I go on? Hello, rabbi: there’s no there, there. Caveat emptor is as important a maxim today as it was in Caesar’s time. Recall Ecclesiastes (i. 9) observation that “there is nothing new under the sun.”
Finally, Mr Madoff did not cause any revival of insults relating to Jews and money. They have always been there. Take a quick look at the watch-dog reports issued the past few years by the ADL and you will quickly see that anti-Semitism has been on a frightening rise. You cannot make a man hate a Jew if he admires them merely because of Madoff. Those that hate us now did before as well; the only difference may be that now they have something new to whine about. Further, let us not forget that being Jewish does not entitle one to sainthood. Is Madoff any worse that Michael Milken? What about the fact that Jews were a major arm of the Mafia? The truth is that because we are frightened of being conspicuous for being Jews, we hold ourselves to a higher standard. This is, of course laudable and likely why we tend to excel as a group, but let us not take ourselves so seriously. It is only we Jews who invented the phrase of “a shande vor de goyem!” We will always stick out; we shall always be thirteenth at table. And no matter what we may do to hide it, there will always be a gentile around to remind us that we are Jews. Deal with it!
In closing, I must also give a piece of bad news to the rabbi: Madoff will not have lost everything and he will eventually be trusted again. I suspect that there likely is a billion or so dollars hidden somewhere to which he will have access. Perhaps like Milken he will “repent and find God” and then be forgiven. Then, too, we have yet to hear his defense which will portray him as a victim who really meant well, foolishly believed in his abilities to turn matters around, and thought that if he could only have stuck it out a little longer the corner would have been just around the corner and no one would have been hurt. No, rabbi, all will be forgotten, and only too soon.
My advice to the rabbi is to focus on what he could have done to have prevented his complicity in this scheme; find the fatal flaws within his own character that Madoff took advantage of. Forget about revenge; or, if he cannot, begin by first digging two graves.
Kind regards,
Richard L Wise
Richard L Wise
© Richard L Wise and RLWise.wordpress.com 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Richard L Wise and RLWise.wordpress.com with appropriate and specific direction to the original content.
Curse of Cassandra 