What Is "Fair"?

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When taxes are under discussion, we often hear a call for rich people to “pay their fair share.” The message is that tax rates on those with higher incomes should be raised to make sure that fairness is achieved. However, if we look at this honestly, as a real-life ethical issue, we will have to conclude that people with higher incomes are already paying more than their fair share. Let’s try a thought experiment.

Suppose we are part of a group of friends from work who decide to go out to dinner together. “We” includes the owner of the business, the new person in the mailroom, and two of us in between. We choose a nice restaurant and enjoy our meal together. For some reason we cannot get separate checks and are given one large bill. What are some fair ways to pay for this meal — and what are some unfair ways?

Normally what happens is this: each person puts money into the kitty based on what he or she ordered. Often after the check goes around the table it isn’t quite enough because people forget to add in enough money to cover the tip or their second drink or the taxes or something. So the check goes around again while everyone refigures the cost and puts in a little more. So each pays based on what each received. That is what we ordinarily regard as fair.

Now suppose the bill isn’t itemized and we can’t find out what each person received and therefore what each person owes. People might try to guess, but generally we feel that one fair way is for each to pay the same amount. If we do that, we recognize that people who ordered a more lavish dinner or an extra bottle of wine will be getting more than their fair share, but still the same amount for each person seems close to fair. So each person paying the same amount without regard to any other criterion looks fair to us. This is equivalent to a per capita or per person tax. But that is not how we do taxes in America. We don’t all pay the same amount or the same amount per person, do we, despite the fact that it’s impossible to construct an itemized list of each taxpayer’s liability for government services received?

So let’s go back to the arrival of the unitemized bill for the group’s dinner. How should we divide it up fairly?

When the check came, the boss could offer to pay for everyone’s dinner. That would be voluntary, private charity. But imagine if, when that happened, the new mail oom guy said, “Wow. This is great. I got this fabulous meal for free. I propose we do this every night! How many people are in favor?” Perhaps most of us who received the boss’ charity would vote to make him give it more often, but that would be clearly unfair.

No one would dream that three people should “vote” to make the fourth person pay for them. Why does it become right when we do it through the government?

The boss would be well within his rights to say, “You guys can do this again if you want, but count me out. I’m not interested in paying for everyone’s meal night after night.” Would it be fair or right to claim that he must do so because it was a “majority vote?” People shouldn’t just be able to vote to oblige others to give them things, should they? In normal, face-to-face interactions, in a small group of four people no one would dream that three people should “vote” to make the fourth person pay for them. Why does it become right when we do it through the government?

Now imagine this. Imagine that someone in the group said, “Let’s take a vote. Who thinks we should base what we pay on how much income each of us has? Wouldn’t that be fair?” Several things come to mind right away. First, it’s extremely rude to require people to tell you what they earn. It is simply not anyone else’s business. But we do it as a country when we make people fill out their income tax returns so that a progressive tax can be levied. We intrude in a way we ordinarily don’t think is right or fair — because we do it through the government. Does that make it fair?

Second, voting on this proposition doesn’t seem right, because the boss makes more than any of the rest of the group, and will always have to pay more, yet he has only one vote. So of course, voting for this proposition is self-serving for everyone else. It is the same as the other case, when the boss was made to pay the whole tab: we are voting to force the boss to subsidize us.

Charity performed voluntarily is one thing. It is common for people who are better off to pay a bit more than their equal share, voluntarily. But where do the lower paid people get the right to vote to force the higher paid person to pay more? Does that strike you as fair? Again, what if we voted to regularize it by law, so that he had to do it every night? Would that make it fair?

This unfair situation is equivalent to the flat income tax that people propose from time to time. The flat tax would have everyone pay the same percentage. If you made more money, you would therefore pay more, whether you received more from the government or not. When we take this down to the personal level in our thought experiment, basing the fair share calculation on someone’s income level is embarrassingly unfair, yet it is criticized as being not fair enough. They aren’t paying their fair share, that’s true. They are paying more than their fair share.

But instead of having a flat tax, which requires people to pay more if they earn more, we have a tax system in which the percentage goes up as they earn more. The harder they work, the more money they make, the higher the percentage of their income is taken. The federal income tax percentage goes up to 35% for some people, while others, with lower incomes, pay 10%, and many pay nothing at all. Yet people are calling for the top tax brackets to go even higher, so that wealthy people will be required to “pay their fair share.”

Well, how will we know when fairness is achieved? How will we establish the “fair share”? We will take a vote, of course — because that’s really the fair way to decide.




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Bowdlerizing Huck

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Professor Alan Gribben, who teaches at Auburn University in Montgomery, has introduced a sanitized version of Mark Twain’s Adventures of Huckleberry Finn. Controversy has gathered around this latest incarnation of the novel because of its substitution of the word “slave” for the “n-word.” Somehow lost in the controversy is the editor’s decision to change “Injun” to “Indian.” At any rate, Gribben’s book has become a media sensation and has resurrected long-buried arguments over the legacy and import of one of American literature’s greatest works.

So much has been made of the words “political correctness” that it is difficult to know just what meaning they retain. If they mean anything, surely they apply to Gribben’s editing, which seeks to satisfy modern taste and decorum at the expense of accurate knowledge about the past. Of course the novel is problematic — American history is problematic — but erasing problems of the past will do little to aid our understanding of history and culture in the present and future. In light of the number of scholars working at the intersection of race and culture, America today hardly risks, as it once did, suffering from historical amnesia. Yet bowdlerizing texts could affect the way we remember racial history.

One thing that Twain probably wanted his novel to do was address the multivalence of racism by viewing it through the eyes of a young boy. Doing so would allow him to critique Southern race relations while avoiding offense. This unfortunate edition undercuts Twain’s critique.

None can challenge the idea that the “n-word” is hurtful and strong. But editing it out of Huck Finn, however understandable and well-meaning the effort may be, simply removes the book from its social and historical context. It is an historical text — not just a delightful work of fiction. It follows that reading the actual text can give us insights into the past.

Twain’s prose mimicked the vernacular of folks in the Mississippi valley. What other word than the n-word would someone in Huck’s time and place have used to refer to black people? Apparently the editor thinks the answer to that question is “slave.” But of course, this is nonsense, as even a cursory acquaintance with contemporary documents will show. Like many if not most of Twain’s contemporaries, the characters in his novel use the n-word casually. Examining its use is more than an exploration of authorial intent. It is studying a way of life in a world in which some people are grappling to overcome the racism that others casually accept. Twain’s book has that overcoming as its goal. Twain’s use of the “n-word” is ironic. He isn’t endorsing the word. He’s criticizing it. The way the n-word is used in Huck Finn shows very clearly Twain himself never would have applauded that word in “real” life.

Of course the novel is problematic — American history is problematic.

If Huck Finn is a narrative seeking out racial understanding — and this is a plausible and common reading — then Gribben’s editing undermines themes of racial and cultural understanding. Jim, a black slave and a principal character in the novel, is a courageous and complex figure. His place in Southern culture — both the fictional culture of the novel and the real one upon which the novel was based — is critically compromised by a whitewashing of the offensive diction that he is forced to confront.

Huck is also a complex character. The n-word may mean one thing to Huck at the beginning of the book, but it means something different to him at the end. At first, Huck never considers what the word might signify to Jim, but as Huck himself develops as a personality, and as his bond with Jim grows stronger, he begins to think, well, differently. Huck decides to “steal Jim out of slavery” despite his belief that he’ll go to hell for doing so (“All right then, I’ll go to hell,” he says). That grave decision seems less morally significant when Huck’s culture becomes, with the sweep of an eraser, less racist than it actually was.

It will not do to pretend that distasteful epithets did not exist in history. Nor will it do to sugarcoat history or historical texts in order to validate one man’s legacy, even if that man is a cultural and literary father figure (Faulkner called Twain the “father of American literature”). Twain hardly needs us to validate his legacy, especially since his sophistication is apparently far beyond that of today’s editors, who seem to miss the irony and criticism with which he loads his words.

I suppose the editor has a point when he claims to want to avoid teaching children that the n-word is OK, because Twain used it. But this little touch up — substituting “slave” for the n-word — risks undoing the racial tension in the novel and in the culture that influenced Twain. The deepest understandings come from investigating tensions. Even Huck learns that, as he challenges racism in subtle and nuanced ways.

We are not products of culture, but we are, all of us, influenced by it. Culture does not excuse our actions or beliefs, but it does help to explain them. Readers of Huck Finn would benefit from understanding the culture of the novel and of the novel’s author. How can we understand the present if we don’t understand the events and attitudes that shaped the present? Rather than altering Twain’s text, we should teach the novel, with all its fraught diction intact, to students who are mature enough to handle it.

The edited version of Huck Finn forces young students to skip over critical thinking about race relations in America. Yet the classroom is the very place where students are supposed to confront harsh realities and to learn from them. Isn't it the point of critical learning to hold social and cultural phenomena under a microscope, so as to understand them better? If students in schools or universities are not allowed to consider harsh truths about the past, even truths about offensive lexica, where will they learn about truths? Contemporary and popular film, television, and music are rarely good sources for learning about the past.

Changing the “n-word” to “slave” does not redeem Twain or Huck Finn — not that they need redeeming — but it does rob students of the opportunity to learn from history. Worse, it robs students of the opportunity to become, like Huck, more racially sensitive as they experience, withHuck, life on and around the Mississippi — as they read, in other words, about Huck’s gradual coming to “terms.”

That’s what this whole debate is about: coming to terms. The particular term at issue is the “n word.” The larger issue is American history. I’m not sure I would say that the bowdlerized novel sets us back, because I’m not convinced we’re moving in the right direction anymore, but I would say that blotting out history never lends itself to social progress.




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Confessions from China

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I must start with a bit of history. Two years back, I drove a van that I later sold for $150, yes, one hundred and fifty dollars. It actually ran very well, and I never saw a reason to sell, until one person I went to pick up in it almost jumped out. Another person never returned my phone calls.

I discovered that I might have the oldest van in downtown Vancouver. Rusted pieces fell off quite frequently. But it never gave me problems during the four years it was mine. I still regret that I sold it. I realized, however, that I had to go for a better car.

By the time I finally did the purchase, the target vehicle was no longer a new car, but a secondhand one bought after much depressing Indian-style negotiation. It is still a swanky gas guzzler. Nevertheless, I bought it not to show off — who cares about showing off to mindless consumerists? — but to irritate environmentalists who like to tell me how I should live.

Then I thought I must buy a nice watch — I owned none until then. I did that on eBay after hard negotiations. I knew that what eBay was offering had the lowest price when I received the eBay version of "f**k off." I still regret wasting money on that watch.

Anyway, I realized that I was cheap, so I made no more large material acquisitions. Why one should buy things is actually beyond me. I haven't bought a suit for 12 years, and I have just one of them. My formal shoes were bought eight years ago.

I also realized that my cheap van had done a lot of self-selecting of friends for me, and I didn't want people to befriend me because of my swanky car. I am indeed an ascetic by instinct. It's a family tradition. Asceticism is important in Jainism, the religion of my family.

Anyway, my expenses did go up quite a bit after I met a couple from St. Kitts, who taught me to buy high-quality, low-carbohydrate, organic food. I haven't eaten those $1.50 pizza slices for a long time now, and I'm not sure whether to thank the couple or blame them about the food. I do thank them for is the many other benefits their friendship has brought to my life.

When I do personal traveling, I always stay in youth hostels, paying $20 or less a night. That doesn't make me hypocritical when I spend $500 a night when I travel on business — I have told my company that I'm happy with cheaper accommodations, but they still put me up in expensive ones. Ironically, I find low value in expensive hotels, because I want to be able to meet people informally.

A couple of years ago my mom gave me a long lecture on budgeting. I started to budget, but soon stopped. I didn't need it. My real problem isn't saving; it's never spending money. I once tried to force myself to spend by putting half my salary into my checking account, but the money remained unspent. Eventually I had to start transferring it back to my trading account.

I am just not made to spend. This week, I realized that the stupid Canadian government spends several times more of my money (on killing Libyans and other projects) than I do myself. Am I an accomplice in murdering people?

Now I am on a trip to China, my third in six months. I will be here for a month.

I'm currently in Beijing. Before I left, I told myself I must start living like a grown-up. I decided that I did not want to stay in a youth hostel this time. So I booked myself a five-star hotel. The problem is that it is hard to get rid of one's cheapness. I looked for a nice hotel on Expedia, but when I finally got here, I realized that by trying to pay too low for my room, I had found a hotel that's in the middle of nowhere, among the ruins of what was recently Olympics frenzy. It is very posh, but I must take a taxi for everything. No one speaks a word of English.

I continue to believe that in the larger scheme of things this over-building is just noise. China's growth is unstoppable, for many future decades.

But in terms of service it is a true Shangri-la. No non-Chinese face exists here. When I go the gym, I get a huge amount of attention from the servers. They all try to speak whatever one or two words of English they know. I get a cup of warm tea, which keeps getting filled up. But I have decided not to explore the hotel thoroughly. Some of the hostesses are dressed like sluts and there is a lot of drinking going on in the club. I feel self-conscious when two of the skimpily dressed girls escort me around. But then I don't know. . . Chinese do over-drink anyway.

Today I saw a lot of government officials, military personnel, etc., arriving in their Audis and limousines. I laugh at the robotic way these military-men and bureaucrats walk, and I wonder why some people get so impressed. Hope they don't know that there is a Misesian snoop staying here.

I have met a lot of people. The only exposure that many tourists have to China (or any other country) is to touts, pimps, and prostitutes in busy touristic places. I go to none of them except briefly. (To digress, I actually like those touts. They are entrepreneurial people and once in a while I even strike up a conversation with them. It is the losers in governments, who have never done a day of honest work, and who disrupt the free market, who convert those entrepreneurial people into touts.) The Chinese I have met in non-touristic places are friendly and helpful. Unlike other visitors, I find genuine honesty and conscientiousness.

I might change that statement tomorrow. . . I met a Chinese couple yesterday. They are taking me out to show me the Great Wall. Are they going to ask me for money? Am I taking too much risk? I will see, but I guess I know how to discern who is good and who is not. And if I have failings in this area, I must pay to learn. That reminds me that I have only once been swindled out of real money — in Zurich, Switzerland, of all places.

During my several trips to China I have seen hundreds of empty buildings, even towns. But I continue to believe that in the larger scheme of things this over-building is just noise. China's growth is unstoppable, for many future decades. There is truly an ethical and cultural revolution taking place, though not the Maoist kind. The new generation is much more enlightened and confident than their parents — as the result of widespread information technology, as I have witnessed in many other developing countries. I don't care about economic numbers (which are fleeting) but about the changes taking place in the character of the people. This is what will give China a sustainable growth rate. I recognise increased snobbishness and consumerism, but this is part of growing up. I intend to make a huge amount of money from Chinese growth.

It's true that by investing in real estate, the Chinese may be wasting resources, but investing in inflated housing is still a trillion times better than consuming inflation-priced perfumes. Also, it is better that a government should build more roads, even if they lead to nowhere, than distribute free money to losers, thus creating a cascading moral problem. China is an economy of savers. Many people whom I have met share a room with six or seven other people. To a modern-day economist this sounds bad. My grand-mom, a much better economist, though uneducated, would have said that it's a recipe for significant future wealth. I follow her teachings and will bet on China and its commodities.

But this is not just the story of one country. In my travels in the developing world, I see many changes happening in real time, and many cultures opening up. The developing world is indeed at a cusp of a revolution.

On Sunday, thanks to Facebook, I will meet a whole bunch of anti-statist American runaways in a Beijing restaurant. Contrary to outsiders' perceptions, this is possible without any major fear. I will let you know if I get arrested, though in my view some of the worst governments are democratic ones. I find Chinese governance very good in many ways, at least for me as a tourist. Policemen stand in a corner like statues, non-intrusively. I'm able to make out a customer satisfaction survey whenever I cross Chinese immigration or interact with a bank teller. That is true capitalism.

I'm very fortunate to be able to visit overseas several times a year without any worry about money or about the time I must take off from work. I work as I travel, and even if my expenses weren't taken care of as well as they are, I wouldn't be inclined to spend much. I've explained that. But I also want to explain that I am thankful to my family, who not only made me cheap but also gave me the super-concept of compound interest. And I'm grateful to the many people (Doug Casey, Rick Rule, Frank Holmes, and others) who influenced me with their speeches and writings.

Now I am off to my gym and then for a walk to the business district to watch rich Chinese women wearing very short skirts and buying junk. Not long ago, Chinese women were wearing Mao jackets, and there wasn't a lot of junk to buy.




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French Intellectuals: Telling Stories

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There is a French intellectual class. It's better defined — around the figure of the public intellectual — than it is in other countries that I know. French men and women from a handful (that's one handful) of schools dominate public discourse in France to an extent difficult to imagine in this country.

Here is an illustration: One evening, I found my septuagenarian mother transfixed before her television with the pious look on her face she reserved for moments when she thought she was listening to elevating material. She was following an exposition about Claude Lévi-Strauss' “Structuralism.” My mother only had a high-school education (but she did read quite a bit). Of course, no one understands Lévi-Strauss' scholarly work. I am not referring to his young man's slim travelogue, Tristes tropiques. That is a charming and intelligent book. I refer to the impenetrable Le cru et le cuit, for example. And no, dear former colleagues, the translation is not to blame; the original French is rather worse! In fact, Professor Lévi-Strauss himself once famously confessed that there was little chance that anyone who had not taken his seminar would understand any of his writings. It's difficult to imagine an American author combining so much opacity with so much public favor, the latter entirely on the basis of trust. I mean, the trust the general public places in other intellectuals who declared Lévi-Strauss great and essential.

I am not arguing that American scholars and American journalists don't try to become public intellectuals in the French model but that they meet with little success. Different historical conditions, different outcomes. Nevertheless, the French intellectual class is well worth studying because it seems to offer a ready, constant, and tempting model to many in this country, mostly on the liberal end of the spectrum.

In my experience, Americans with higher degrees who are also politically of the Left are almost to a man and woman ardent Francophiles. Of course, I am well aware that my personal encounters may not add up to a representative sample. Or maybe they do, or maybe they are representative enough to allow for a fair degree of generalization. (We worry about samples only because we want to be able to generalize, from “pismire to parliament,” so to speak.) In any case, I suspect that American liberals' Francophilia does not spring from admiration for French cuisine, an admiration that would be amply justified, or from aesthetic appreciation of the beautiful, civilized French countryside, or from their thorough assessment of French culture in general.

The latter explanation is especially unlikely to be correct because American Francophiles — except some language teachers — seldom know the French language well enough to listen to it or to read it with ease. A small remark about the last assertion: American journalists, scholarly authors, and novelists often spice up their narrative with a few words of French, or with a single word. Their batting average in getting both the usage and the spelling right at the same time hovers just above zero, in my experience. In this case, I operate from a reasonably good quantitative basis: I read in English one newspaper a day, one newsweekly, three magazines a month, around fifty books of all kinds a year. About half the books are fiction. I have been doing this for 40 years. Until six years ago, I read a little less fiction, but I perused a medley of scholarly journals every month. And yes, I also know that a large sample is not always representative. See the disclaimer above about samples in general.

Lévi-Strauss himself once famously confessed that there was little chance that anyone who had not taken his seminar would understand any of his writings.

So, by a process of reasonable elimination strengthened by numerous concrete examples, I speculate that many left-leaning American intellectuals admire France because that countryseems to give pride of place to its intellectuals, and recognition, and honor, and often, considerable financial rewards. They wish America would become more like France, in part so they will have a better crack at becoming public intellectuals themselves, with all the attendant material advantages, or even for the glory alone.

I think the French model is poisonous but ultimately not fatal. More credentials are needed here, since I present a strong opinion unsupported by systematic data: I lived in France until I was 21. French is my native language. I read in French all the time. I have published a couple of things in that language. My proficiency in the language, I am confident, is superior to that of most well-educated people living in France. That is true, although I flunked out of French high-school. (This is a confession, not bragging. It's needed because the issue of sour grapes is sure to surface below.) I follow the French media on the internet and through cable television. (I subscribe to TV 5, the French language international television channel. I watch it nearly every day.) I go to France and to other French-speaking countries often enough to make me confident that I have not lost touch with my culture of origin. More importantly, I spy daily on my French nieces and nephews through Facebook. I have a doctorate in sociology from a good American university. I believe it helps me gaze detachedly at the society in which I grew up. I taught — in disciplines other than French — in American universities for about 30 years. Below, I use several tiny anecdotes and three more substantial true stories to try to show why the French model of the public intellectual is poisonous. Those are just anecdotes and stories, of course; they don't prove anything, of course. I just think they might give pause and feed faculty-club conversations, even if only on a modest scale.

Incidentally, and in spite of the acidic tone of this introduction, I do not despise all French intellectual workers who are also public intellectuals, or who aim to be. I have nothing but admiration for the social philosopher Raymond Aron (1905–1983), for political commentator Jean-François Revel (1924–2006), and for my high-school buddy, the sociologist Jean-Loup Amselle. Those are individuals who have escaped the general curse, for reasons I don't quite grasp. It might just be character. And of course, if Frédéric Bastiat (1801–1850) did not exist, one would have to invent him. The French may just be reinventing him right now incidentally, because they have to, after ignoring or reviling him for more than 160 years.

First, what I am not talking about: I do not refer here to the general pokeyness of much contemporary French culture that manages to come through small, haphaphazardly selected cultural imports into the US. I mean some movies and a very few singers. (Translator's note: “Pokey” would be a 55-year-old divorced accountant who has his ear pierced for a big gold ring although he does not even own a motorcycle.) Pokeyness and the poisonous nature of the French intellectual model are probably related, but the discussion of such a relationship would take me too far onto thin ice.

Many left-leaning American intellectuals wish America would become more like France, in part so they will have a better crack at becoming public intellectuals themselves.

The general idea I am promoting is that to switch to French is to enter a world of uninformation, of disinformation, and of involuntary poetry. I recall fondly an hour and half I spent driving through the admirable Loire Valley, intrigued by an animated discussion of the damage being inflicted on Cuban society by the “American blockade” (le blocus). No, the year was not 1962 when the US imposed a partial blockade for a couple of weeks. I was listening to that discussion nearly 40 years later. The correct descriptive term, “embargo,” is the same in French as in English. So, here again, don't blame translation. The discussion took place on a specialized radio channel called France-Culture. Would anyone make this up?

That was the aperitif. By way of appetizers, here are three pearls I collected from TV5’s Le Journal (“The News”) in a span of two weeks (February-March 2011). I admit, they were all gleaned from the same news anchor:

“The Rosenbergs, a couple who were executed because they were Communists. . . .” The speaker was announcing that the soldier accused of leaking military secrets to Wikileaks theoretically risks the death penalty. He added, gratuitously and of his own accord, that Wikileaks’ Julian Assange “knows what to expect if he is extradited to the US.”

To switch to French is to enter a world of uninformation, of disinformation, and of involuntary poetry.

Reminder: at the time of this report, no authority, civilian or military, had called for the soldier to face capital punishment. Assange was facing extradition from the UK to Sweden to respond there to accusations of sex crimes. The US has not asked for his extradition here, something that would be easy to expedite with the UK. Whatever penalty, if any, Assange would face in the US, the editor of the New York Times would face the same. There is solid legal opinion that the dissemination of illegally obtained information breaks no federal law.

Only a few days later, the announcement comes on the same Le Journal that the “North American cougar is officially extinct.” (Translator's note: “cougar” is another name for “mountain lion” and “puma.”) The same perverse announcer makes his melancholy comment while standing before an old Western poster.

This time, I am stunned instead of merely annoyed. Mountain lions, cougars, are stealing pets and carrying goats across eight-foot fences five miles from my house. Oversize alley cats are not committing the misdeeds, I am sure. I’ve even written a story in French about the animal's ubiquity in California. (“Les pumas de Bécons-les-Bruyères.” It's on my blog at factsmatter.wordpress.com.) I am so astonished that I take the trouble to follow through online, where I find a big title in an environmentalist magazine (Planète, March 4, 2011):

“Les cougars ont officiellement disparu.”

But the text beneath the title does not say that at all. The real news, three paragraphs down, is about as newsworthy as “Madagascar dodo officially extinct.” The announcement is of the official extinction of the eastern “sub-species” of the cougar that no one had seen for a century anyway. It matters not; there are dozens of readers' comments about how the demise of the mountain lion is just another horrible case of humans raping the earth.

I know, it's just one zealous announcer blindly following one misleading title. But the news anchor is not a nobody, and he is not a kid. He has an important job, one much prized. I was unable track him down, but I would bet good money that he is a graduate from one of the elite Paris schools. You don't get his kind of position of influence and power without the right credentials.

Finally, here are the main stories, the several main dishes, if you will.

It's 2005. I am living in Morocco for a little while, pretending to gather material for a scholarly book on ethnic identities I never wrote. I go to the central railroad station news kiosk to pick up several Moroccan weeklies in French, because it's convenient. A delivery man dumps a pack of newspapers practically on my feet. I look at them, of course. It's a bundle of Le Monde, fresh from Paris. Le Monde is the French sociological equivalent of the New York Times, except more so. It's resolutely highbrow and unashamedly elitist. Working for Le Monde in any capacity elevates one's social standing. Often, being employed by Le Monde is the only thing that stands between a person and precipitous downward mobility. Le Monde is not exactly the informational equivalent of the NYT, however. It's thin in content, although it's an evening paper. Maybe it's because it defines itself strictly as a political periodical. (No entertaining “Life Style” pages.) For years, it has been run as a kind of “collective” with the unavoidable consequence that its journalists are co-opted from the same small circle. Invited guests play a minimal role, in part because they also come from the same small circle.

The host enjoys a good rapport with the general French television audience because of his fluency in the childish, empty, mindless slang that is the ordinary French language of the mainstream today.

By that day, in Morocco, I have already forsworn reading Le Monde for several years. It annoys me without enlightening me so, why bother, I say? But the unexpected appearance of the French paper in my field of vision induces an involuntary reflex to glance at the front page. A big title catches my eye. It's on the revival of the Baghdad theater. The subject is right down my alley. It's about Iraq and it’s about a performance art. I like Arab culture and I am endlessly curious about it. My guard is also down because the French often do that kind of reporting well. My fugitive favorable prejudice is multiplied in an instant by the realization that a French reporter in an Arab country is about five times more likely to be accompanied by an actual Arabic speaker than is an American reporter. (Hundreds of thousands of French people speak Arabic as their native tongue.)

Favor for Le Monde suddenly returns to my addled heart. I pay for the paper and read the first few lines of the article, standing in the train station.

The story is by a woman who seems young. (Don't ask me how I know; I know, and that's another story.) Here is her opening sentence, remembered, I think, word for word, except possibly for the relevant month (it's not important):

“It's early April 2003; Iraqis are dragging armchairs from the National Theater into the street outside, encouraged by an American G.I.”

Stop right there!, I think. I was not in Baghdad, but I would bet thousands (again) that there was no such encouragement. The US military was under orders not to interfere with looters. That's what it did, not because it's perfect but because Americans under military discipline don't encourage looting by others. They don't, period. (Some members of the American military may engage in looting themselves when the occasion arises. That's another story entirely; greed differs from vandalism by proxy.) And there was no motivation for any single one of them to proffer such encouragement. There was no “encouragement,” I am sure.

With her opening sentence, the French reporter was accomplishing two things. First, she was setting the scene, as any good narrator does: we are in Baghdad. It's shortly after the US invasion. Disorder reigns. It looks like the Iraqi theater is irreversibly damaged. Second, she was establishing her credentials with her crowd at Le Monde and with the general Le Monde readership: I am one of you. That Americans are barbaric, uncouth bullies is a given. Whatever I am about to tell you about my visit to the Baghdad theater circles under American occupation; please remember that I am as anti-American as the next guy or gal. Nothing can change this basic fact. I am me. “Me” is sophisticated and therefore expects nothing but stupidity and gross behavior from Americans.

You must be thinking what I was thinking at the time, because the generous American habit of fairness is difficult to break: this is just one reporter, probably a young, inexperienced one. She has not had time to think things through. Besides, her anti-Americanism at this point, in Iraq, is no greater than that felt by many Americans, including leftists and quite a few libertarians. Hers is primitive anti-Americanism.

Reel forward 9 years.

I am watching something wonderful on TV5 that has no equivalent in the US media. It's the show “On n'est pas couché” (“We Are Not Asleep”). It's the kind of show I mark on my calendar to make sure I don't miss it, although it lasts for two or even three hours. It's frankly an intellectual show but not uniformly highbrow. And it's not mincing, if you know what I mean. I like its format and I like its content. The format is original: there is a general host who acts as an MC and also as a referee or a judge in an American court. He is an affable man, a comedian of no great intellectual weight but endowed with an excellent sense of à propos. (This expression is spelled right and used right here; take note!) He enjoys a good rapport with the general French television audience because of his fluency in the childish, empty, mindless slang that is the ordinary French language of the mainstream today.

The show is shot before a live audience; in France, it's also broadcast live. It presents authors of newly published books, small and big, low and high, film directors and stage directors, and often, film and stage actors, singers, dancers, some athletes, and pantomime artists. There was even a clown once, though one with a famous circus family name. Sometimes, the show bags a national-level politician for a no-holds barred interview.

Two reasonably well-groomed professional intellectuals who know how to act on television are at the heart of the show. They preview the films and the stage shows, and above all, they really read the books whose authors will sit on their hot seat. They actually give the books, deserving or not, a thorough reading. The authors, directors, and actors are grilled about their work and their lives, but all in a non-scandalous way. There is no attempt to find out who bedded whom, except 20 years or more in the past, where the answer may have historical interest. The interviewing is cordial for young actresses, but it is fierce grilling for famous people. The jury of two suspects many of them of using their celebrity to palm off mediocre works (memoirs in particular) on a busy and possibly naïve public. The jurors show no indulgence toward the powerful. One recently told a popular television personality that his autobiography was “nulle” (“hopelessly void”). Then he asked the author why he had written the book at all. The author did not cry but I would have, in his place.

I am guessing, only guessing, that one could even make Zemmour admit that American might is the last rampart against the violent jihadism he openly fears.

It's to the great honor of the show that the same juror was himself called “nul” a week later by a popular soap-opera director whose work he had criticized, perhaps on the wrong grounds. The lady director, a beautiful Muslim woman with striking black hair, and her two main actresses, also attractive Muslim women originating in North Africa, came close to lynching the critic right in the studio. (I know the tension was not staged because I have watched the Jerry Springer trash-show dozens of times, which makes me an expert on rigged fights.) In the end, the argument over a television soap generated so much heat that the irate director called the critic out. What I heard sounded ambiguous precisely because there was so much heat. It was not completely clear in the end whether she was offering to beat him to a pulp outside the studio or if she was threatening to have her way with his body.

This juror who was thus placed under bodily threat is called Eric Zemmour. He is a man I would have for dinner any day, and I would also be glad to drink either coffee or beer with him any time. I might even share my oldest Calvados with him, because I like him so much. He is a journalist and also the author of ten books. He is refined, immensely cultured yet humble, and devastatingly witty. Zemmour often demonstrates a solidly conservative temperament in his comments about others people's work. One of his own best books is about the feminization of society, which he deplores, of course. Another book was the initial public signal in France that multiculturalism had taken stupid and self-destructive forms. Zemmour's is one of the few public voices in the country to undermine the ambient misérabilisme by pointing out that the French welfare net is quite adequate. (“Misérabilisme” is a word that does not exist in English but should, in my estimation. It refers to the emotional and intellectual propensity to feast on the misery, real or imagined, of others in one's society or, often, in the world. It's one of the emotional foundations of leftism.)

Zemmour is quite able to say good things about American movies and about the American cinema in general. It's obvious he has read American authors. No primitive anti-Americanism for him. Yet, very often, and most often when confronted with any manifestation of American power at all, he displays reactions of intense dislike and dismissal. In such circumstances, he seems to become a little stupid. He sounds as if his IQ had dropped 30 points. Maybe “stupid” is too strong a word. He is still an intelligent man at those times, but just intelligent in an ordinary way, not brilliant. I mean by this that his comments do not differ in such moments from what you might hear in any caféclose enough to the Sorbonne.

Zemmour is Jewish. He and his parents are from Algeria. Had it not been for the massive exercise of American power in North Africa in November 1942, there is a fair chance the Vichy regime would have completed the job already started of turning over its Jews to the Nazis for disposal. Later, his family moved to France. This man is also old enough to know that, absent American power, the Soviet Union would have eaten Western Europe alive, as it did Eastern Europe. It's impossible to believe that he does not know that the US threatened the Soviet Union into staying put and that the threat was credible thanks to America's obvious and abundantly displayed power. And there is no doubt that he knows and recognizes that there was no critical show like his under any Communist regime. And he knows full well that to the extent that there were public intellectuals in Communist-ruled countries, their place was most often in prison or in the gulag. I am sure he has signed several letters in support of jailed Cuban intellectuals. I am guessing, only guessing, that one could even make Zemmour admit that American might is the last rampart against the violent jihadism he openly fears.

So, here we have it: this intelligent, cultured man, endowed with a superior critical sense, this man who daily demonstrates his independence of mind in his newspaper columns, often in his books, and weekly on television, cannot put two and two together: American power created and continues to create a sphere of freedom where the likes of him can perform their good work. There might be an alternative to American power, but there is not. There has not been one ever since he was born.

Zemmour appears to suffer from self-inflicted blindness, a kind of hysterical reaction to his macro-environment. The French intellectual context is so mindlessly leftist and anti-US that there are few people with enough resources of mind and character to confront it head on. We are social beings. When enveloped in a warm blanket of homogeneity, most of us will succumb, unless we are trained not to. We all need rocky seas, every so often, just to calibrate our compasses.

Some French people are well enough aware of the political dimension of intellectual homogeneity that there is a French expression for it: “la pensée unique.” There are exceptions to the rule of French intellectuals yielding to the attraction of homogeneity but they don't last. The philosopher Bernard Henry-Lévy, originally a little prince of the French Left, broke publicly with leftism and with the anti-Americanism of his milieu in the 80s. Then he became a publicity hound and a bad writer. I recommend warmly that you don't buy his 2005 tour of the US, In the Footsteps of De Tocqueville, where he grandiosely claimed to follow in De Tocqueville's intellectual footsteps, but definitely did not. French intellectuals who throw off the warm blanket of homogeneity just seem to get lost.

But here is my third and last story. It's so outlandish that I wouldn’t dare tell it if I were not reasonably sure there were archives that could back it up if necessary.

I am guilty of many sins but failing to make myself comfortable is not one of them. Everywhere I am, I nearly always manage to begin the day in the same way — a cup of coffee in one hand and a newspaper in the other. This comforting habit sometimes has to be reduced all the way down to instant coffee and reading up on the exploits of a local high-school basketball team in a language I can barely decipher, but the form, the ritual, at least, is respected.

The French intellectual context is so mindlessly leftist and anti-US that there are few people with enough resources of mind and character to confront it head on.

So, it's late June 1998. I am in Brittany to write something on the largely phony origins of Breton Celticism. (No merit there; I am just following in the footsteps of the English historian Trevor-Roper in his iconoclastic The Invention of Scotland.) I am beginning the day sitting outside a good caféin a pleasant coastal town. There is a cool breeze from the sea. A grand crème warms my hand. (There is no such thing as café-au-lait in French cafés. It's another case of phony Frenchism, among many others.) This is before I rejected Le Monde as a morning sacrament. So, I am unfolding yesterday night's issue.

A front page item immediately claims my attention. It's a long report on India's nuclear policy by Le Monde's “envoyé spécial” in New Delhi.

It's been a little over a month since India detonated nuclear devices with obvious weaponization potential. I start reading with unwavering attention. After about two or three minutes, a small warning bell starts tinkling in my brain. Something is wrong in what I am reading. Now, I don't know about other people's warning bells, but mine is not sophisticated. It does not have special timbres for “lies,” “inaccuracies,” or “involuntary misinformation.” It just says, “Something is wrong here.” So, I go back to the head of the article and I realize with stupor that I have been reading all along that India's national policy regarding nuclear weapons had been until then one of “nuclear disappointment."

The words did not describe a collective feeling among Indians or anything close to such an emotion, as you might be tempted to guess. The envoyé spécial clearlycoupled the word “déception” to the word for “nuclear” in connection with an official policy, a series of connected statements designed to guide state action. The juxtaposition of those two words makes absolutely no sense, of course. A brief explanation is in order (and, by the way, this was one of those times when it is useful to know English in order to understand French).

The French word déception means “disappointment.” The distinguished French journalist sent especially to India at significant expense to investigate momentous events went on and on for thousands of words developing the thesis that India's policy regarding the touchy topic of nuclear weapons was guided by disappointment! There was no trace in the article of the fact that the French correspondent had almost certainly been briefed by Indian colleagues. I can guess what they had told him, in English — for years, India's informational strategy regarding nuclear weapons was one of “deception”: “We have them; we don't have them; we may have more than you think; keep wondering.” Finally, with its public explosions, India had come out of the era of nuclear deception.

I bought Le Monde faithfully for three weeks afterwards and examined it carefully, expecting an author's self-correction or a Letter to the Editor denouncing the non-sense. Nothing, absolutely nothing!

The least interesting observation about this informational debacle is that the correspondent did not know English, although he was judged competent enough by his editors to be put in charge of an important investigation that would have to take place in English. Periodically, I find the same kind of impairment of perceptiveness about language proficiency in American newspapers. In fact, I could name names if I were as mean as I sometimes hope I am. There is a permanent Paris correspondent for several respected American periodicals who, I am certain, does not know much more than high-school French. I mean, enough to shop and to travel by the Metro but definitely not enough to read Le Monde, to take an example at random. I think she often sounds credible merely because she has developed good French sources. Occasionally, not often, her analyses appear both larded with clichés and way off the mark, as if she had tried to go it alone for once.

The main implication of the Indian story is that a highbrow French intellectual from Le Monde spouted utter nonsense for two long pages and never caught on to the evidence that he was spouting non-sense. Worse, in the vast, distinguished readership of Le Monde, there was no one to notice, or to be motivated enough to ask for a correction — or else the management of the paper received corrective communications and decided to bury them, because they knew could get away with it.

Here is the inescapable conclusion, it seems to me: the French intellectual class, and those who follow it, have been listening to abstruse, absurd logic for so long that they assume there are parallel philosophical universes. In those parallel universes, words can be linked together any which way, logic is variable, upside may be downside, and black is as likely to be green, or even white, as black. And above all, clarity of expression is vulgar.

This can only happen when a group prizes collective peace above all, when dissent about ideas is so severely punished that otherwise intelligent people practice unconscious self-censorship. I refer to unconscious self-censorship because France is undeniably a democratic country with no government censorship of any kind. In fact, French intellectuals sometimes point with glee to government censorship in this country. (They refer to local censorship in matters of sexual display, guided by the vague-sounding doctrine of “community standards.”)

The French example proves that intellectuals don't matter much as far as quality of life, or much of anything else, is concerned.

The unavoidable logical consequence of the French state of affairs for envious American intellectuals seems to me inescapable. France is a fairly well-run society where people don't normally die in the street. It maintains high standards of civility most of the time, in spite of the fact that a normal weekend sees several hundred cars burned by vandals. The French quality of life is high. In many respects it compares favorably to the American quality of life. And the demonstrated superior longevity of Frenchmen may just be due to their ancestral habit of drinking a little wine with each meal. The French system is fine but it's not sustainable, as we, I, used to say. After the 2008 US-originated financial, then economic, meltdown, it's more difficult to maintain the same view without grimacing, at least inwardly.

Similarly, there is much to object to in French foreign policy, but it's no more hypocritical, mendacious, supine, or irrational than the policies of its neighbors. Terrorists never won French elections and they never redirected national foreign policy as al Qaeda did in Spain in 2004. The French army is alongside US forces in Afghanistan, where it's more likely to be doing actual fighting than its German counterparts, for example. France is not as reliable an ally as the United Kingdom or Australia, but it acquits itself better than many others.

So, we see in France a reasonably good society, and a society that does not act especially erratically or shamefully on the international stage but whose cherished intellectuals are often blind and sometimes collectively insane, as my stories show. The inescapable conclusion: The French example proves that intellectuals don't matter much as far as quality of life, or much of anything else, is concerned.

Of course, there are some downsides to this blindness and insanity although they don't add up to poison. One is the propensity to invent madcap intellectual adventures under a serious mien, such as “déconstructionisme." Another is to produce with huge government support movies that no one understands and in which the action is too slow to be worth following. Yet another consequence is awarding the highest decoration in the land to Jerry Lewis. But it all amounts to nothing tragic.

P.S. There is little in this essay to disincline anyone, even intellectuals, from spending enjoyable time in France. You just need to be aware that if you are a rational person, the more French you know, the less restful, the less enjoyable your stay will be. My travel advice: See the sights; read guidebooks in English; don't listen to the radio; don't watch television; and, for Pete's sake, don't talk to anyone who is not working in a restaurant.




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Rising Star

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Liberty is always delighted to acclaim the artistic success of libertarians. Our delight is increased when they are Liberty’s own authors.

Today it is my pleasure to introduce a book by one of my own favorites, Garin Hovannisian. The book is Family of Shadows, it’s published by HarperCollins, and it’s causing a stir on several continents.

Family of Shadows is the story of Garin’s family — who were by no means vague or ghostly people. They were vivid presences, taking their part in some of the most interesting events of the 20th century, from the massacres in Armenia during the time of “the breaking of nations” to the destruction of the Soviet Union. The book is a story of survival, and of the individual freedom that makes survival worth the effort.

It’s also a story told with great style and insight. All historians deal with “shadows,” but a good historian makes them more substantial than the ostensibly real people who surround us daily. And a good historian, like a good novelist, makes us wiser as we read. While reading Family of Shadows, I kept thinking, “This is a very good novel.” But it’s not fiction, nor is it fictionalized. It’s an exhaustively researched history, free of the shallow assumptions, inane theorizing, and formulaic prose of normal historical writing.

Read it for yourself. You’ll find that you won’t be able to put it down. In the meantime, I thought you’d be interested in knowing more about the author. So I asked Alec Mouhibian, himself a writer for Liberty, to interview his friend Garin.

Here’s a look into the writer’s workshop.

 — Stephen Cox

***

AM: Stories ask to be told. But some stories prefer to be left alone. Why, and how, did this story call to you?

GH: It's strange; I can remember exactly when and where it happened. It was in the fall of 2007. I was all alone in a computer lab on the eighth floor of the Columbia University Graduate School of Journalism in New York. I was a student there, writing my master's thesis about a group of magicians who had been meeting in secret for generations. . . . I'm not sure that's important. But what happened to me that afternoon is, I think, what writers waste their lives waiting for, one of those cosmic events — when stars seem to align into a constellation. . . .

What I mean to say is that I discovered, suddenly and for the first time, that all the details and metaphors and meanings of my family history somehow belonged to a great narrative.

My great-grandfather Kaspar had survived the Armenian Genocide of 1915 and escaped to the vineyards of California's San Joaquin Valley. My grandfather Richard had left his father's farm to pioneer the field of Armenian Studies in the United States. My father Raffi had left his law firm, the American Dream itself, to repatriate to Soviet Armenia, where he went on to serve as the new republic's first foreign minister.

So I realized that the family story was about three men who left — individuals who cheated their destinies — but it was also about men who, unbeknownst to them, had been serving a pattern greater than themselves. A homeland lost, remembered, regained — it was a perfect circle!

Then I knew I would have to write Family of Shadows.

AM: You mentioned how this story hit you as you were wandering the world of magic. You're quite the magician yourself. What connection is there between your history with magic and the discovery that led to this book?

GH: My father gave me my first magic set when I was five, and I knew immediately that I would become a magician. I loved to make the impossible happen, to play at the border of reality and fantasy. Of course I also loved to watch the reactions of people — the astonishment spread upon the faces of strangers. Anyway, I long ago gave up the wand for the pen, but not, I think, the passions that run through both of them: mystery and vanity.

AM: Explain where you had to go to write this book, what you had to explore, and how this vastarray of settings get along with each other in the story and in your mind.

GH: I didn't know, when I decided to write the book, just how far I would have to travel. I couldn't imagine that I would have to spend countless hours at the National Archives in Washington or the Armenian academy called the Jemaran in Beirut or the National Library in Yerevan or the Tulare Historical Museum in the San Joaquin Valley of California. But I think it was that other kind of travel — not through space, but into lost time — that was the most exhilarating. I realized that if I were to tell my story straight, I would have to conduct some difficult interviews — to go deep into the minds and memories of my living characters, where so many details of my story had been trapped for decades.

AM: Your book is evenly divided between the histories ofthree men. Before we go further, explain your process for choosing what to include and what to leave out of their story, and the stories of the many characters surrounding them.

GH: The book, as I first wrote it, was about 450 pages long. The one you'll find in bookstores today is 300. You know very well that you were in part responsible for this. I remember the first time you read the manuscript. I was sitting across from you, minding my coffee, pretending not to notice your reactions. You were quiet, mostly, but every so often, you would emerge from silence to sing the blues, and I knew this wasn't a good sign.

AM: I never thought my rendition of "My Baby Ain't No Baby No More" could be so pregnant.

GH: Oh, it was — and actually it made me realize just how big my own book had become. The truth was that those 150 pages were important — they told so much history and gossip — but they weren't important for this book. So I began to cut. It was slow and deliberate and painful at first. But then you remember what happened to me? Suddenly, I was slashing away at my pages — reversing months of labor. I bet I lost a lot of good lines, too, but it was necessary and, ultimately, deeply liberating.

AM: Homeland. Patterns greater than self. These fall under the greater concept of "Armenia," toward which all the dream-roads in your book lead. Define Armenia — in your own terms — for those (including Armenians) who have no idea what it might mean.

GH: To begin with, Armenia is an actual land — stretching between the Black and Caspian seas — where the Armenian people have lived for thousands of years. We used to have our own empire, but for most of history we were content merely to survive the rise and fall of neighboring empires — the Roman, Persian, Byzantine, Arab. Armenia was where kings came to do battle. And so the blood, the ethos, the mythology of countless civilizations is in our soil.

Armenian history forever changed in 1915. Western Armenia was cleansed of all Armenians by the nationalist Young Turk regime of the Ottoman Empire; those who survived the genocide scattered to new diasporas across the world. Eastern Armenia, meanwhile, was absorbed into the Soviet Union as the smallest of the 15 socialist republics. That tiny sliver of land is the Armenia you'll find on modern maps.

But for much of the 20th century, Armenia existed mostly as a dream. My father and my grandfather before him spent their childhoods yearning for a "free, independent, united Armenia." Forgive me, I do have to be poetic, because the truth is that for us, the millions of Armenians living in exile and dispersion, Armenia had become something like a poem: a spiritual landscape blossoming with metaphor and mystery and apricot. It is there that Family of Shadows is set.

AM: Mmm, metaphor. That strangest and most bitter Armenian crop.

Let's talk about Liberty, and its own role in the soil. I've known you for years, but I never really wanted to know you until your byline appeared in this magazine at the tender age of 17. How does individual liberty figure in the Armenian-American dream? How does it contend with the shadows that haunt every corner of the real and imagined Armenia?

GH: You're testing me. "Let's talk about Liberty" — wasn't that the slogan of the Cato Institute conference we attended in San Diego ages ago? That's where we first met Stephen Cox — followed him into literature and then into Liberty. It was our breakthrough!

Now you know as well as I do that Family of Shadows isn't a libertarian manifesto. But it is, I've long secretly believed, a kind of allegory of individualism and rebellion. At its deepest level, it is the story of three men who were born into times and places where they did not belong, who defied the great forces of history, who defied destiny. My great-grandfather defied his destiny of death during the genocide of 1915. My grandfather rejected his destiny on his father's farm. My father abandoned his destiny in the American Dream.

Maybe that's not fair, though. For my father, I think, the American Dream was never about achieving and enjoying liberty for oneself, but about spreading liberty across countries and continents.

AM: Is there no tension between the spread of liberty and the participation in an ethnic-national heritage, which might be at odds with individualism? How can this be reconciled in Armenia?

GH: Governments don't have ethnicities. People do. So I confess not to feel the tension. I don't see why an individual, living in a free society, shouldn't feel free to seek his private solace or meaning or peace wherever he pleases — in philosophy, religion, even national heritage. You build yourself a free country, but then what? You still have private problems. You still have to deal with death and salvation.As the great poet sings, "you're still gonna have to serve somebody."

AM: Classic Milton. Always comes through. Now of course your book is a powerful human drama, and should therefore matter to anyone who ranks himself among the humans. But perhaps you can explain why Armenia should matter to America.

GH: After the genocide of 1915, an unprecedented human rights movement swept through the United States. American citizens collected more than a hundred million dollars to help the surviving refugees; kids who didn't finish their suppers were told to remember "the starving Armenians." The most important witnesses and chroniclers of the genocide had been American ambassadors and consuls, and now it was the president himself — Woodrow Wilson — who was proposing an American mandate to safeguard Armenia.

In those years, the American people invested their spirit in the Armenian struggle — and I think the mysterious logic of that investment has revealed itself slowly through time. It's been forgotten, but in February 1988, half a million Armenians gathered in Yerevan, the capital of Soviet Armenia, to launch the first successful mass movement against Communist rule. Independence followed in 1991. That's when my father, an American citizen, returned to Armenia. That's also about the time when a million Armenians left a newborn Armenia to seek more certain destinies in the United States.

The stories, the histories, the Armenian and the American Dreams, were in conversation long before I tried to capture that conversation in Family of Shadows.

AM: The Russians have a saying: “Every grandmother was once a girl.” Perhaps it can also be said that every answer was once a question. So...any questions before you go?

GH: You know, I have been wondering: who is John Galt?




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The Invisible Tribe

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People who say the Constitution is “living” or “invisible” usually don’t like what it says and don’t have the patience or the votes to amend it.

In February, the New York Times ran a piece by Laurence Tribe entitled "On Health Care, Justice Will Prevail," in which he argues that not only is the individual mandate in the new healthcare law constitutional, but it is both necessary and good. He also delivers what sounds like a series of short pregame pep-talks to the more conservative Supreme Court justices, seemingly trying to finagle them into joining the majority that he confidently predicts will uphold the constitutionality of the mandate.

Laurence Tribe is a professor of constitutional law at Harvard Law School and the Carl M. Loeb Professor at Harvard University. Widely considered to be the foremost current authority on the laws and Constitution of the United States, he has argued 34 cases before the Supreme Court, including Bush v.Gore, arguing for Mr. Gore. Among Tribe's former students and research assistants are Supreme Court Justice Elena Kagan, Chief Justice John Roberts, and President Barack Obama, whom he called “the best student I ever had” (The Concord Monitor, November 14, 2007).

Here I will examine four specific points in Tribe's essay in the Times: (1) an error in word choice, (2) a sentence that misleads through lack of clarity, (3) a conclusion built on a false premise, and (4) an answer that begs a question. The constitutionality of the mandate and its fate in the Court will be addressed only when they touch on these smaller points. The pep-talks will not be examined. The elusiveness of objectivity will be the subject of the conclusion.

The first and second points are in paragraph four:

"Many new provisions in the law, like the ban on discrimination based on pre-existing conditions, are also undeniably permissible. But they would be undermined if healthy or risk-prone individuals could opt out of insurance, which could lead to unacceptably high premiums for those remaining in the pool. For the system to work, all individuals — healthy and sick, risk-prone and risk-averse — must participate to the extent of their economic ability."

The first point is in second sentence, where Tribe asserts that, if “risk-prone individuals could opt out of insurance,” those remaining could be saddled with “unacceptably high premiums.” Using the same formula: If all drunks who ride motorcycles opted out of a health insurance pool, the premium paid by the people who remained would go sky-high.

It is as though Laurence Tribe has stood on a soapbox in Harvard Yard and shouted, albeit in bureaucratese, “The individual mandate is Marxist.”

This is nonsense. Only when risk-averse, not risk-prone, individuals drop out en masse do the premiums for those remaining rise. The wrong word was used. Using the corrected formula, the point that Tribe may have been trying to make can be illustrated with the same hypothetical: all teetotalers who do not ride motorcycles must be made to pay health insurance premiums high enough to cover not just their own modest health-related expenses, but also the astronomical medical bills of drunks on Harleys.

Now it makes sense; that is to say, the revised formula’s effect on the price of premiums makes sense, not the system that doesn’t permit sober people to opt out.

The second point is the wording of the final phrase, “for the system to work, all individuals . . . must participate to the extent of their economic ability.” This is the sort of vague language bureaucrats use to camouflage authoritarian unpleasantness.

If clarity had been the goal, it might have said: “Each person must be compelled to buy health insurance and to pay a price directly proportional to the amount of money he has so that medical care can be provided to each person according to his medical needs.” Sorry, that’s less clear, and too wordy. Try this: “From each according to his ability, to each according to his needs” (Marx, Karl, Critique of the Gotha Program).

If the reader pauses now, and dispassionately compares Tribe’s meaning with Marx’s, he will, if he is honest with himself, conclude that the two are, in fact, the same. It is as though Laurence Tribe has stood on a soapbox in Harvard Yard and shouted, albeit in bureaucratese, “The individual mandate is Marxist,” a term employed here not in any pejorative sense, but in an effort accurately to convey the meaning of the carefully crafted phrase “must participate to the extent of their economic ability.”

To make matters even more jarringly redistributive, equivalent amounts of medical care will not be provided under this steeply progressive pricing scheme. Because good health and wealth are positively correlated, “for the system to work,” those with the most modest medical bills will pay the most for the insurance and those with the most expensive bills will pay little or nothing. Tribe was probably trying to state this truth as plainly as he could without triggering the howls of the anticommunists among us.

Given his endorsement of the compulsory and redistributive nature of the mandate, however, it is unlikely that Tribe would deny the accuracy of the label “Marxist” or, for that matter, be offended by it. To expect either outcome would insult his intellectual honesty and integrity.

The annoying aspect of this second point is that, by cloaking the mandate’s naked Marxist core in vague language, Tribe may have been trying to strengthen his argument. A strong argument does not need camouflage.

The third point is in the last part of paragraph six, where Tribe neatly summarizes a set of premises and conclusions that is widely held to be true, but isn’t:

"Individuals who don’t purchase insurance they can afford have made a choice to take a free ride on the health care system. They know that if they need emergency-room care that they can’t pay for, the public will pick up the tab. This conscious choice carries serious economic consequences for the national health care market, which makes it a proper subject for federal regulation."

Consider the case of Mr. A, who has studied the actuarial tables and discovered that the only insurance he would be allowed to buy is priced according to the risk factors of people who almost certainly will have medical expenses many times as costly as his. He has saved enough money so he could afford to buy that insurance, if he wanted to, but he realized that actuarially it would be cheaper for him to pay his own medical bills out of pocket. In fact, he has saved enough money so he could afford to pay even catastrophic medical bills, if it came to that. Mr. A has chosen not to buy the insurance offered because, for him, it is not a good deal. He has chosen to self-insure.

So, while Mr. A did not purchase insurance he could afford, he has not “made a choice to take a free ride on the health care system.” Mr. A can and doespay for emergency room visits in full upon receipt of the bill. Unlike people covered by Medicaid, who really are taking a “free ride,” he has never asked the public or anyone else to pick up the tab, and never will. Mr. A’s “conscious choice” to self-insure carries “serious consequences for the national health care market” only to the extent that the government, having spent itself into a yawning sinkhole of debt, and finding voters reluctant to pay higher taxes, has passed a law that would strongarm Mr. A into picking up the tab not only for himself, as he has been all along, but for others as well.

That Tribe did not take into account those who choose to responsibly self-insure is odd. Surely he knows people who are successful, self-reliant, and self-insured. But whatever his reason, half-truths were used to reach a conclusion that as a result is, at best, 50% nonsense.

Fourth, and finally, in the seventh paragraph, Tribe tries to demonstrate that the constitutionality of the mandate does not depend on the commerce clause:

"Even if the interstate commerce clause did not suffice to uphold mandatory insurance, the even broader power of Congress to impose taxes would surely do so. After all, the individual mandate is enforced through taxation, even if supporters have been reluctant to point that out."

Let’s see. If the commerce clause, even in its broadest interpretation, fails to persuade a majority of the Court that the mandate is constitutional, the fact that the new healthcare law levies a fine on those who fail to comply with the mandate creates an opening. Because the law names the IRS as the collection agent for the fine, that fine takes on the coloration of taxation. Therefore (if therefore is not too strong a word in this line of reasoning), the Court can conclude that the individual mandate is constitutional because Congress is simply exercising its power to tax.

If all Congress has to do to make a law constitutional is to impose a fine for failure to comply and make the IRS the bill collector, then Congress can constitutionally make anyone do anything it wants.

Note that Tribe does not argue that the individual mandate itself is a form of taxation, but that it is “enforced through taxation.” He cannot claim that the mandate is a tax because the money is passed directly from the hands of the private citizen into the maw of the private insurance corporation. The government only oversees this unfunded individual mandate. So Tribe must be content to say that the fine itself is a tax.

Is it really that simple? If all Congress has to do to make a law constitutional is to impose a fine for failure to comply with that law, and make the IRS the bill collector so that the fine can be called a tax, then Congress can constitutionally make anyone do anything it wants by tacking a fine onto not doing it. That can’t be right.

Let us say that a law is passed that compels all obese people to lose a certain portion of their weight annually until a desirable target weight is achieved. Even though the massive weight-loss industry crosses state lines, and eliminating the scourge of obesity would benefit the national economy, an unimaginative Supreme Court stubbornly maintains that the government does not have the power to force people to lose weight. But then it is brought to the Court’s attention that the law imposes a small fine, payable to the IRS, on obese citizens who fail to meet their federally mandated weight-loss targets. Does the Court have no choice but meekly to acquiesce and uphold the law as constitutional?

Is there a legal philosopher’s stone that transmutes fines into taxes and through this magic transforms otherwise unconstitutional laws into models of constitutional compliance? Or is this an example of a more subtle proposition, “When I use a word, it means just what I choose it to mean, neither more nor less” (Dumpty, Humpty, Through the Looking Glass).

Even if either the mandate or the fine were a tax, the resulting legal axiom still wouldn’t pass the sniff test: “It is taxed, therefore, it is constitutional.” Deep in the penumbra of the Constitution that may not look like nonsense, but here on the sunny side, it certainly does. It sounds like the Red Queen channeling Descartes and Tribe simultaneously.

The fact that the Congress has the constitutional power to tax surely cannot mean that anything it chooses to tax is, as a result, constitutional. The argument begs the question. The fact that a fine is attached to the mandate does not make it constitutional.

The Times piece leaves the impression that Tribe has not given the problem of the individual mandate his full attention, which is understandable, given that his specialty is the law, not medicine, insurance, or economics. Besides, as a tenured professor at Harvard, he probably has essentially free healthcare for life as an untaxed benefit, making any concern that he has about the unfunded mandate entirely academic.

To say that “justice will prevail” if the Court upholds the mandate is easy for Tribe.He will not be asked to sacrifice anything at all, while others, many of more modest means, will be compelled to pay thousands of after-tax dollars per year to cover someone else’s higher risks.

To put this in another way, Laurence Tribe will not be picking up the tab when the Harley goes skittering across the freeway; others will.

And where is the justice in that?

***

In his 2008 book, The Invisible Constitution, Tribe explains the futility of relying on the text of the Constitution to resolve constitutional questions. He tells of what he calls the “dark matter” in the “shadow constitution” and the “ocean of ideas, propositions, recovered memories, and imagined experiences” that comprise the real mass of the “invisible” Constitution, which dwarfs the mere document. (One good review is: The Dark Matter of Our Cherished Document: What you see in the Constitution isn't what you get,Dahlia Lithwick, in Slate,Nov. 17, 2008)

If the written text of the Constitution, and its accompanying case law, which everyone can read and compare notes on, is but the tip of the iceberg, and the real mass is hidden below, in the ocean of collective consciousness, imagination, memory, or even the collective unconscious, then its truths can only be accurately interpreted by initiates specially trained to dive beneath the surface like cormorants to fathom and retrieve its complex meanings. Or, to switch metaphors, perhaps this Constitution is an ethereal entity whose cryptic messages can be divined only by oracles who breathe the heady air found in the realm above the clouds of partisanship and bring down to us the purity of its truths without relying on an old scrap of parchment.

On May 4, 2009, Laurence Tribe wrote a letter to his star pupil, assessing potential nominees to the Supreme Court. In it, he sized up Sonia Sotomayor, then a Court of Appeals judge, advising President Obama that, “Bluntly put, she’s not nearly as smart as she seems to think she is, and her reputation for being something of a bully could well make her liberal impulses backfire and simply add to the fire power of the Roberts/Alito/Scalia/Thomas wing of the Court . . .” Another of his former students, Ed Whalen, posted the letter on the website of the Ethics and Public Policy Center.

 

Perhaps this Constitution is an ethereal entity whose cryptic messages can be divined only by oracles who breathe the heady air found in the realm above the clouds of partisanship.

To interpret this letter, Sonia Sotomayor, who studied law at Yale, not Harvard, might want to take a page from The Invisible Constitution and acknowledge the futility of relying on the rows of tiny symbols strung haphazardly together that constitute the actual text. There is so much more dark matter between the lines and in the murky ocean upon which such a letter floats.

The now Associate Justice Sotomayor may be comforted if she peers into the dark waters and discerns the outline of a psychological defense mechanism, first proposed by Freud, and called projection. A person who uses this tool unconsciously denies his own negative attributes and projects them onto others. This reduces his anxiety by allowing the expression of unconscious fears and desires without letting the conscious mind recognize them as his own.

Some of the people who say that the Constitution is “living” or “invisible” become judges so they can creatively distort the parts they disagree with from the bench. They are judicial activists posing as unbiased judges. Others work from the sidelines to bend and twist those parts so that the Constitution may be forged into a weapon that adds fire power to liberal impulses in the ongoing ideological battle. These are not legal analysts; they are merely political actors striking unconvincing poses of objectivity.




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Is Greed the Problem with Capitalism?

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With the opening last fall of Money Never Sleeps, the sequel to Wall Street, Americans were again subjected to Hollywood’s version of how the economic system works: big business is evil, and greed is at the heart of our economic problems. The original Wall Street movie was released during the Reagan administration — aperiod that initiated significant economic expansion.Nonetheless, the movie offered a stern warning about what to expect from greed run rampant. The villain of the story was Gordon Gekko (Michael Douglas), the powerful head of a mergers and acquisitions firm. Toward the end of the movie Gekko makes a now-well-known speech about why “greed is good,” a speech that is meant to highlight the pro-capitalistarguments often made by businesses and free market advocates. Gekko tells a group of shareholders of a company he is trying to acquire that,

“Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, [for] knowledge has marked the upward surge of mankind.”

Of course, true to Hollywood form, in the end Gekko winds up implicated in a major fraud, thus revealing the true moral of the story, which is of course, that “greed is bad!”

Ironically, the current economic crisis has been an opportune time for Hollywood to make money by highlighting the immorality of greed (as in Money Never Sleeps). For many observers it was greed by the managers of financial institutions that led to easy loans with little to no down payments; greed by homeowners that led to purchases of houses they couldn’t afford; greed on Wall Street that led to the creation of such clever new financial instruments as mortgage-backed securities and credit default swaps; greed by CEOs that led to corporate extravagances and ridiculously high executive compensation packages; and greed by consumers that led to excessive use of credit cards to buy things now, rather than waiting till they earned the money to pay for it.

Tom D’Antoni in the Huffington Post declared that “the concept that ‘Greed is Good,’ is dead. It rose to its despicable zenith in tandem with the rise of Reagan, and has been the guiding principle of industry, finance and government ever since. . . . Greed brought us to this place . . . unregulated, untrammeled, vicious greed. Greed has no morals or ethics. Greed has no regard for others. Greed feeds only the greedy and feeds on every thing and everyone within grasping distance.” John Steele Gordon, author of a book on financial history, wrote, “There is no doubt at all about how we got into this mess. … Greed, as it periodically does when traders and bankers forget the lessons of the past, clouded judgments.”

 

Religion and greed

The world’s religions almost unanimously contend that greed is wrong. Although not explicitly proscribed in the Ten Commandments, greed is implicated in their command not to covet one’s neighbor’s property or spouse. The Bible contends that “the love of money is the root of all evil” (Timothy 6:10). In the year 590, Pope Gregory declared greed to be one of the seven deadly sins, along with lust, pride, gluttony, sloth, envy, and wrath. Among the seven, greed is often considered one of the worst, if not the worst, mostly because greed can inspire many of the other sins.

In almost every major religious tradition, greed is condemned unequivocally. The Qu’ran states, “Anyone who is protected from his own stinginess, these are the successful ones.” (64:16) The Tao Te Ching states, “When there is no desire, all things are at peace” (Chapter 37). In the Bhagavad Gita, Lord Krishna declares, “There are three gates leading to this hell — lust, anger and greed. Every sane man should give these up, for they lead to the degradation of the soul” (16:21). Sulak Sivaraksa, a leading Buddhist writer, states that “Buddhism condemns greed, which can easily lead to aggression and hatred.”

We do not appeal to other peoples’ humanity when we seek our sustenance, but rather to their self-interest, or in this case their greed.

Reacting to the recent economic crisis, Dr. John Sentamu, Archbishop of York, attacked exploitative moneylenders who pursued "ruthless gain"; he urged banks not to "enrich themselves at their poor neighbours' expense." Pope Benedict, in his 2008 Christmas message, said, “If people look only to their own interests, our world will certainly fall apart.” The Dalai Lama asked, “What is the real cause of this sort of economic crisis?” His answer: “Too much speculation and ultimately greed.”

 

Greed as a necessity

Greed is an easy target. It is not hard to convince most people that greed is the primary source of many of our economic woes. But is it really?

Stephen Pearlstein points out what many economists believe. He writes, “In a capitalist economy like ours, the basic premise is that everyone is motivated by a healthy dose of economic self-interest. . . . Without some measure of greed and the tension it brings to most economic transactions, capitalism wouldn't be as good as it is in allocating resources and spurring innovation.”

This is the central idea behind Adam Smith’s oft-quoted line about the butcher, the brewer, and the baker in The Wealth of Nations:

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” (Wealth of Nations, Book 1, Chapter 2)

Smith is arguing that the economic system provides for our wants and needs because, first and foremost, people are trying to help themselves, and they do so by producing and selling meat, beer, and bread to others. These market outcomes are not achieved because of charity. We do not appeal to other peoples’ humanity when we seek our sustenance, but rather to their self-interest, or in this case their greed.Nonetheless the modern economist’s acceptance of greed as a positive force in society has not been readily accepted, given centuries of moral teachings to the contrary.

 

Seeking a middle way

Is there a resolution to the greed paradox? Is greed evil? Is it a necessary evil? Is greed something that humankind should seek to eliminate, perhaps replacing it with altruism? Or is greed something so ingrained in the human psyche that there is no hope of eliminating it?

Perhaps we simply need to learn how to live with greed. Perhaps there is a middle way, a method of channeling greed in good rather than bad ways.

Aristotle argued that “virtue is concerned with passions and actions, in which excess is a form of failure, and so is defect, while the intermediate is praised and is a form of success” (Nicomachean Ethics, Book 2, Chapter 6). It is the middle way that is the goal. Indeed, dictionary definitions of greed highlight not only self-interest but an “intense, selfish desire” (New Oxford American) or “an excessive desire to acquire or possess more than one needs or deserves” (American Heritage). Greed is usually not implicated if someone’s desires are average or if one achieves a moderate standard of living.

Religious writings sometimes take account of this. Thus, one hadith, or saying of the prophet Muhammad, states, "Eat what you want and dress up as you desire, as long as extravagance and pride do not mislead you” (Hadith as reported by Abd’allah ibn Abbas, 1:645). In Judaism too, one Midrashic interpretation asserts, “Were it not for the yetzer hara [the evil urge], a man would not build a house, take a wife, beget children, or engage in commerce” (Bereishis Rabbah 9:7).

There is no community or society in the world that fails to benefit from the voluntary exchanges and market activities that occur in abundance in everyday life.

Returning to the issue of our current financial crisis, some observers recognize that greed cannot be eliminated. Michael Lewis and David Einhorn of the New York Times write, “ ‘Greed’ doesn’t cut it as a satisfying explanation for the current financial crisis. Greed was necessary but insufficient; in any case, we are as likely to eliminate greed from our national character, as we are lust and envy.” Robert Sidelsky writes that John Maynard Keynes “believed that material well being is a necessary condition of the good life, but that beyond a certain standard of comfort, its pursuit can produce corruption, both for the individual and for society.”

Steven Pearlstein suggests a different perspective, that greed may not be about the degree of desire, or how much one acquires, but about how one acquires wealth: “Even before they decided to give away most of their money, nobody seemed to begrudge Bill Gates or Warren Buffett their billions or criticize them for their ‘unbridled’ greed. That seems to have a lot to do with the fact that Gates and Buffett made their money on the basis of their own ingenuity, skill and hard work.”

 

Methods of satisfying greed

The American economist Henry George (1839–1897) is mostly famous for his theory of the Single Tax, but in his book Protection or Free Trade there is a passage that can help resolve some of the tension about greed and profit seeking: “Is it not true, as has been said, that the three great orders of society are ‘working-men, beggar-men, and thieves’?” (pp. 21–22).

Prima facie this passage may seem unremarkable, or at worst confusing: after all, what exactly is an “order of society?” But if we think about it carefully in light of the current discussion, it actually provides the seeds, or kernels, for understanding “greed.”

First, let’s recognize that what George has in mind are three primary ways in which people obtain benefits for themselves, or in other words “profit.” As I’ll argue, how a person ultimately judges profit-seeking activities and whether he views greed as good or bad will depend largely on which one of George’s “great orders” he believes to be most prominent in society. But first let’s discuss each of these profit acquisition methods, beginning with the last one, “thief.”

 

Thieves: involuntary transfers

One of the simplest methods a person can use to satisfy his greed for food, clothing, automobiles, cameras, computers, or the money to acquire these things is simply to take them away from someone else. Theft has been a part of life since the beginning of society, and it is likely to remain a part of society for a long time to come.

When the rightful owner of something has it stolen by another, the thief clearly benefits. He is now in possession of the valued item. The victim suffers a loss, since he does not possess and can no longer receive benefits from the product. The victim will surely feel that an injustice has occurred and will demand the return of the stolen property and the punishment of the perpetrator, if those responses are at all possible. But regardless of what happens afterward, theft involves a transfer of an item from a legitimate possessor to an illegitimate possessor, and the transfer always occurs involuntarily. Thus the term “involuntary transfer” offers a better moniker, especially because in many situations the transfers may technically not be considered theft, but will have similar characteristics.

Around the world societies evaluate outrighttheft in similar ways. It is generally considered bad, or wrong, or perhaps evil, with perhaps only a few exceptions tolerated. These exceptions are rare, and societies have put into place an elaborate system of laws that prohibit theft in a variety of situations while providing penalties for those found guilty of having violated these laws. Suffice to say that the acquisition of benefits by means of theft is unacceptable in all societies around the world. Although this is a seemingly obvious point, it forms the basis for most of the cry-outs about injustices around the world. In brief, people claim an injustice whenever they perceive that someone is getting “ripped off” in some way.

 

Beggar-men: voluntary transfers

The second of George’s orders of society — that is, another major way in which people acquire the goods and services that their greed desire — consists of those who are given the items voluntarily by someone else. A beggar stands on the street corner and solicits money from passersby. The money they give him represents a transfer of goods and services from the giver to the recipient. Although the giver loses, the money obtained by the beggar is not ill-gotten, in a traditional legal sense, because it has been given to him willingly; it is a voluntary transfer.

From the giver’s perspective this action is called charity and the action is held in high esteem in most societies in the world. Charity is not self-serving; it is in the service of others. It is not consideredharmful, but helpful. Charity is encouraged and promoted in all of the major religions. Some people, such as Mother Teresa, who have spent their lives giving to needy people, are respected or even beatified by their religious groups.

 

Working-men: voluntary exchange

The third order of society that George mentions is “working-men.” This is another method an individual can use to acquire the goods and services that his greed may inspire. Work generates an income that can be used to purchase consumption goods, but it is important to recognize the underlying process. Work in a commercial societyis an activity devoted to producing a good or service that someone else will wish to purchase; a product that is desirable. Through the free voluntary exchange of the product for money in the marketplace, a business generates the revenue that is used to pay its workers. That money, or income, is then used by the workers to purchase other goods and services produced by other workers. In the end, when you strip away the money part of the transactions, what is really taking place in market activity is the voluntary exchange of one good for another. And since both parties to a trade exchange their goods voluntarily, it must be that both benefit from the transaction, for if not, why trade?

Voluntary exchange is the cornerstone of the world’s economic prosperity. The very first lesson in Smith’s Wealth of Nations is the principle of the division of labor: productivity can increase as the production process becomes more specialized; that is, as labor or workers are divided into more specialized tasks. But the only way to take advantage of these benefits afterwards is through exchange. If you cannot exchange, there is no incentive for specialization.

We should never portray greed in general as good or bad, right or wrong, but as something that can be satisfied in either acceptable or unacceptable ways.

Based in part on this fundamental principle, economists have long supported the free market, which essentially means allowing free and voluntary exchanges, without social or governmental impediments. Indeed, societies everywhere generally accept and promote trade both within and beyond their borders. There is no community or society in the world that fails to benefit from the voluntary exchanges and market activities that occur in abundance in everyday life. To summarize: if greed inspires work that in turn inspires voluntary exchanges in the marketplace, then the outcome is mostly good for everyone involved.

 

Distinguishing “good” greed from “bad” greed

Greed can generate either good or bad outcomes, depending on which great order of society, or in other words which method, is involved in its satisfaction. If greed inspires a person to work long hours in a business providing valuable goods and services to others in order to satisfy the needs of himself and his family, then greed should be perfectly acceptable on pragmatic grounds. If greed inspires a person to innovate and create new products that others will desire in the market, then greed is good. In each of these cases greed is satisfied through voluntary exchange. However, if greed inspires a person to acquire what he desires by taking the rightful possessions of another person without that person’s consent, then greed is not good. In this case greed does not encourage useful behavior in the marketplace, but rather fear that one’s marketable goods will be appropriated by others. For similar reasons, greed is also wrong when it inspires someone to put roadblocks in the way of others who are trying to sell their products in the marketplace. In both these cases greed is satisfied by means of involuntary transfers and is rightly condemned. Yet if greed urges one to beg for food and clothing, or to seek the charitable contributions of others, and if those items are given voluntarily, then greed is satisfied in an acceptable manner; that is, a manner that has no deleterious effects on other people’s ability to benefit themselves by means of free exchange. The compassion of charitable people, helping those less fortunate, engaging in voluntary transfers, is clearly unobjectionable.

We should never portray greed in general as good or bad, right or wrong, but as something that can be satisfied in either acceptable or unacceptable ways. The distinguishing feature isn’t the presence of greed itself or even the intensity of the greed, but the way in which greed is satisfied. Following the suggestion of George’s great orders, the greed satisfied by a working man is commendable, the greed of a beggar-man is unfortunate but acceptable when necessary, and the greed satisfied by thievery is the primary source of injustice in the world.

 

Greed and the economic crisis

Many criticisms about greed’s role in the current economic crisis are really complaints about involuntary transfers. Hollywood and liberal Democrats look at the crisis and see injustice in the high salaries of CEOs, the comparativelylow wages paid to average workers, the excessive loans made to people who could not afford the homes they were buying, and the political clout of business insiders who got rules written on their behalf. But the reason people see injustice is mostly because they believe that someone is getting ripped off. It may be the consumer or the taxpayer or the low-paid worker at the company, but in any case, the perception is that one group is receiving less because someone else is receiving more.

Frequently these complaints are correct. Big business does sometimes engage in fraud. Consider the recent scandal involving Bernie Madoff. Madoff offered investors better than average returns largely by fabricating them in financial statements and by using the principal deposited by new investors to pay the returns of investors lucky enough to get out early. His setup was a classic Ponzi scheme that inevitably collapsed when too many people demanded their money back at the same time. Clearly Madoff was greedy — as were the investors who were looking for better returns than they had any reason to expect from an honest investment scheme. However, this case is a clear example of greed fueling involuntary transfers rather than valuable production and trade. The investors were led to believe that their money was wisely invested in companies making above average profit when in reality new investor money was transferred to exiting investors as needed. As long as deposits exceeded withdrawals the Ponzi scheme could continue.

Many other prominent examples of insider trading, accounting scams, and other shady dealings have been uncovered over the years and have resulted in prosecution and jail sentences. Yes, businesses may be exploitative. Cries of injustice by the general public rang out when huge bonuses were announced for executives at the financial firms that were bailed out by the government. After the billions of TARP dollars were transferred to these failing institutions, many of the banks were quickly out of trouble and the systemic crisis was averted. However, announcements that these same companies would pay millions of dollars in overdue bonuses to executives touched off a wave of indignation.

Many companies profit both by selling desirable goods and by taking advantage of involuntary transfers.

The source of the anger is obvious. In the midst of the crisis these institutions laid off a large portion of their work forces. Meanwhile, their overextended positions on loans, with effects multiplied by their own enormous size, contributed to the crisis. Since bonuses are typically made to reward good behavior, it seemed inappropriate for executives who were implicated in the crisis and were “saved” by a taxpayer-financed bailout to be able to walk away a few months later with hefty bonuses. Reward appeared to be disconnected from achievement. Most observers would contend that these companies were restored to profitability, not by the skill and hard work of executives producing a superior product for their customers, but by involuntary transfers from taxpayers. So again, there is a sense that involuntary transfers helped to satisfy the greed of a few individuals.

The key for high salaries to be viewed as equitable, or just, is that they are deserved. As mentioned earlier, relatively few people seem to begrudge the high salaries and enormous wealth of Bill Gates, or popular figures in sport. Their earnings are generally recognized as a result of the voluntary exchange process. These people earn money by providing valuable goods and services to others around the world.

Basketball stars seldom lobby to advance their interests, but big business often does, and this is a large source of complaints about greed. Robert Reich goes so far as to describe lobbying as political corruption:

“If we define political corruption as actions causing the public to lose confidence that politicians make decisions in the public's interest rather than in the special interest of those who give them financial support, the biggest corruption of our political process is entirely legal. It comes in the form of campaign contributions that would not be made were it not for implicit quid pro quos by politicians, bestowing favors of one sort or another on the contributors.”

But what sort of favors does he mean? He continues:

“The fights that actually preoccupy Congress day by day, which consume weeks or months of congressional staffers' time and which are often the most hotly contested by squadrons of Washington lobbyists and public-relations professionals, are typically contests between competing companies or competing sectors of an industry or, occasionally, competing industries. . . . Many of these battles (e.g. over health care reform) continue but have moved into the regulatory process, where different companies, sectors, and industries are seeking rules that advantage them and disadvantage their competitors.”

Reich is arguing that the business of government has become the provision of rules and regulations that favor some over others. In other words, he is describing a completely legal, but involuntary, transfer process promulgated by government. The winners are those who have the most clout among legislators. Often they are the ones (big business and big labor) who can offer the most in campaign contributions. The losers are either the less influential competitors, or the taxpayers who must provide funding for the subsidies provided, or the consumers who pay higher prices produced by taxes or regulations.

The same process of involuntary transfer appears in connection with financial sector reform. Again, greed is said to be the source of corruption, but it is just a smokescreen. People demand that something be done; they demand that government prevent financial crises, such as occurred in 2008. Unfortunately, no one quite knows how to do that. Nevertheless, lack of knowledge won’t prevent changes from being made. That’s because there are plenty of influential organizations standing in the wings with suggestions. While all of these suggestions will be presented as important to the national interest, the changes will be particularly helpful to the organizations themselves.

Even more likely is that good ideas for regulatory reform will be paired with ideas that serve particular corporate interests. This is one of the reasons that so many pieces of legislation are thousands of pages long these days: to buy political support, commonsensical reforms must be combined with favors for powerful interests. It is no wonder that, after decades of rule writing like this, our regulatory system is a twisted web that requires companies to hire huge teams of experts and consultants simply to untangle.

 

So is greed the problem with capitalism?

Liberal Democrats and conservative Republicans ought to find these examples of involuntary transfers equally objectionable. Confusion arises because of the focus on greed as the culprit. Critics of business and free markets see the greed that is satisfied through fraud and other involuntary transfers, and therefore condemn all efficientprofitseeking activities. But what about businesses that are making money and paying high salaries to their executives because of the desirable goods and services they are selling to their customers — doesn’t greed inspire their activities? And if we could stamp out greed from our psyches, wouldn’t we also be eliminating a motive that makes the modern economy work? Of course the answer is yes to those questions, which is why supporters of free markets are quick to condemn the “greed” arguments made by the Left.

One apparent problem is that many companies profit both by selling desirable goods and by taking advantage of involuntary transfers. The two activities are often confounded within the same business. For instance, executives at Enron perpetrated an accounting scam that prevented shareholders from knowing that the company was sinking deeply into the red, but at the same time the company provided valuable energy services to its customers. Although some portion of the riches made by Enron executives were fraudulent, some other portion was not. Similarly, some companies that use political influence to gain favorable regulatory treatment — treatment that effectively transfers money in their direction — simultaneously produce and sell legitimate products in the marketplace. Their high salaries and profits, no doubt sought and achieved by greed, are partly due to acceptable voluntary exchanges and partly due to objectionable involuntary transfers.

This confounding effect leads to many problems of interpretation. For example, high CEO salaries are often explained by using marginal productivity theory, according to which competition in the CEO market drives the prices for those positions to the levels observed. Under this interpretation, CEO salaries are the deserved share of production in a voluntary exchange market system and thus are acceptable. On the other hand, one could interpret high CEO salaries as the consequence of an exploitative process, in which CEOs are rewarded in the competitive market because they have effectively increased their companies’ shares of wealth by means of involuntary transfers from taxpayers or consumers. Since it is very difficult to measure which portion of a large company’s income is attributable to which kind of process, different interpretations are possible. However, here the disagreement is not about principle but about the interpretation of data.

 

Conclusion

Unfortunately, the right lessons about greed and capitalism are unlikely to be found either in recent Hollywood productions (which indiscriminately condemn all products of greed) or in recent economic theory. For theory, it may be best to revert to the old classics: read Smith’s Wealth of Nations and Theory of Moral Sentiments; read Frédéric Bastiat’s The Law; read Friedrich Hayek’s The Road to Serfdom; read Henry George’s Protection or Free Trade.

In movies, the classics are also best. I mean, for example, a movie from 1954 entitled Executive Suite (starring William Holden and Frederic March). The film explores two different approaches to business; one based on reverence for the bottom line no matter what methods are used to achieve it; the other based on hard work, innovation, and the production of superior goods that the workers themselves can be proud of. By the end of the movie, the moral superiority of one over the other is obvious. The greed that inspires work, innovation, and pride (voluntary exchange) wins out over the greed that inspires fraud, blackmail, and accounting tricks (involuntary transfers).

We need to resurrect this understanding of business. We need to remember how aspiration, inspiration, and greed, appropriately directed, can create a workplace filled with well-treated, well-motivated workers striving to produce a superior product for their customers. Indeed, Hollywood can show us a way out of the current economic crisis; only it is not today’s Hollywood.

 

Works Cited

D’Antoni, Tom, “Finally the Death of Greed,” online at The Huffington Post, Dec. 11, 2008.

George, Henry (1949), Protection or Free Trade, Robert Schalkenbach Foundation, New York.

Gordon, John Steele, “Greed, Stupidity, Delusion — and Some More Greed,” online at the New York Times, Sept. 22, 2008.

Lewis, Michael, and David Einhorn, “The End of the Financial World as We Know It,” New York Times, Jan. 3, 2009.

Pearlstein, Steven, “Greed Is Fine. It's Stupidity That Hurts,” Washington Post, Oct. 2, 2008.

Reich, Robert, “Everyday Corruption,” The American Prospect, June 21, 2010.

Sivaraksa, Sulak, “Buddhism Nationalism and Ethnic Conflict,” an interview conducted in July 1993, published in the Tamil Times. Online at http://federalidea.com/focus/archives/112.




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Behind the NPR Fiasco

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“You who think that you’re so great! You who judge humanity to be so small! You who wish to reform everything! Why don’t you reform yourselves?”

— Frédéric Bastiat

When a fundraising scandal recently ensnared National Pubic Radio, some opinion-makers rushed to revel at the arrogant organization’s woes. I resisted not because I’m a spoilsport but because, living all of my adult life on the West Coast, I’ve absorbed enough Zen philosophy to give wide berth to schadenfreude. It can be a prologue to one’s own misfortunes.

Some weeks have passed, now, and it’s safe to consider what happened. And why it matters.

The facts of the scandal are fairly straightforward. James O’Keefe — the right-wing media provocateur — had a couple of colleagues pose as members of a U.S. Islamic group interested in donating money to NPR. These representatives of the “Muslim Education Action Center” were put in touch with Ron Schiller, NPR’s head of fundraising, who arranged a lunch meeting. The fake Muslims came to the meeting equipped with hidden audio and video devices.

Over the course of the two-hour lunch, they said outrageous things about Israel, Republicans, and the Tea Party. Schiller, practiced in the obsequious manners of big-dollar fundraising toadyism, agreed and agreed. He agreed to some things that implied NPR has an anti-Israel bias and other things that indicated he and his colleagues are insecure strivers with naught but contempt for middle America.

For all his sucking up, Schiller didn’t get the $5 million check. The fake Muslims said they had a few things to think over first. And they hustled out with their material.

In a telephone call recorded after the lunch, the fake Muslims asked Schiller’s lieutenant (NPR’s “senior director of institutional giving”) whether she could have the $5 million donation treated as anonymous. The fake Muslims claimed that they were concerned about being audited by the government; she replied that this was possible and that she would do everything she could to obscure the gift’s provenance.

O’Keefe whittled the two hours of video into an 11-minute excerpt. And he released his excerpt to the internet and television news outlets, which repeated snippets of the NPR fundraiser sucking up to the Muslim Brotherhood and calling the Tea Party a collection of ignorant bigots.

Outrage — some genuine, some clearly manufactured — followed. And a couple of obsequious fundraisers weren’t going to satisfy the establishment Right’s partisan bloodlust. Besides, before his lunch with the fake Muslims, Schiller had already announced that he was leaving NPR to take a similar post with the left-leaning Aspen Institute. So, the Right turned its attention to a bigger target: NPR’s chief executive, a woman named Vivian Schiller (who is, as noted repeatedly, no relation to Ron Schiller).

Schiller’s boast that NPR didn’t need the government money that it normally receives played into the hands of NPR’s political adversaries.

Vivian Schiller had been an executive at the New York Times Company before moving to NPR and had been on the radar of establishment Republicans for some time. She rose to the top of their hit lists after firing NPR and Fox News commentator Juan Williams for . . . well, for splitting his time between NPR and Fox News.

On March 9, NPR released this statement from its Board of Directors’ Chairman Dave Edwards:

“It is with deep regret that I tell you that the NPR Board of Directors has accepted the resignation of Vivian Schiller as President and CEO of NPR, effective immediately. The Board accepted her resignation with understanding, genuine regret, and great respect for her leadership of NPR these past two years.”

Edwards said the decision to part ways with Vivian Schiller proved the Board’s “commitment to NPR’s standards.”

While the organizational elite talked about standards, NPR’s trench diggers made like the Ministry of Truth — rewriting history to justify throwing Vivian Schiller under the bus. According to NPR’s own media correspondent, David Folkenflik: “some at NPR found Vivian Schiller’s leadership under fire wanting.” And he quoted one longtime network employee saying “we have not been well served by recent management. Many of our managers are talented and solid, but others have not been and have exposed us to some terrible, terrible hits.”

All of this was petty distraction. The big issue looming behind the quibbles over O’Keefe’s video antics—one Schiller’s embarrassing comments and the other Schiller’s shaky management—was, of course, money. When the New York Times reported on Schiller and Schiller’s fumbling pas de deux, it tried to set the frame:

“In the midst of a brutal battle with Republican critics in Congress over federal subsidies, NPR has lost its chief executive after yet another politically charged embarrassment.”

One of Ron Schiller’s most embarrassing comments on the O’Keefe video was a boast that NPR didn’t need the government money that it normally receives. This played into the hands of NPR’s political adversaries.

For years, establishment Republicans have been calling for cuts in the federal funds given to NPR and its parent entity, the Corporation for Public Broadcasting. These calls have grown louder since control of the House of Representatives changed hands in 2010. And they’ve changed from “cut the government funding” to “eliminate the government funding.” The day that Vivian Schiller resigned, House Majority Leader Eric Cantor released the following statement:

“Our concern is not about any one person at NPR, rather it’s about millions of taxpayers. NPR has admitted that they don’t need taxpayer subsidies to thrive, and at a time when the government is borrowing 40 cents of every dollar that it spends, we certainly agree with them.”

NPR has long played Enron-like accounting games when explaining how much government money it receives each year.

Like most flimflam artists, its executives prefer to talk in percentages than absolute dollars. They say that NPR only gets 2 or 3% . . . or maybe 5% . . . of its operating budget in the form of direct government assistance. Well, sort of direct; the money goes to the Corporation for Public Broadcasting first and then to NPR. Strictly speaking, this explanation is true. But it’s also incomplete.

NPR counts more heavily on programming fees collected from its “member stations,” in most cases low-on-the-dial FM operations affiliated in some manner with colleges or universities around the country. These fees — which account for somewhere between 15 and 25% of NPR’s operating budget — are usually paid with federal government grants made to the local stations.

It’s easy to rationalize an earnest, middlebrow radio network as, well, maybe not the worst waste of $40 or $50 million in taxpayer money.

If establishment Republicans like Rep. Cantor have their way and eliminate the federal subsidies of NPR and its member stations, the network will lose as much as a third of its revenue base. Despite the tough talk, that would make a major dent in its business model. In absolute dollars, NPR’s annual budget has ranged between $150 and $170 million in recent years; so the cut would be something like $40 or $50 million from that.

Establishment Republicans have an intricately-wrought animosity to National Public Radio.

As several sharp media observers (most notably, Timothy Noah of the online magazine Slate.com) have pointed out, Republicans have been calling for cuts to NPR’s government subsidies for decades. The cuts rarely ever take effect. Instead, the politicians and network dance a kind of statist tango in which the two sides exchange insults, realize a mutual utility and then decide to coexist rather than taking action against one another.

To be sure, NPR has a left-wing bias. This bias is most evident in the network’s framing of topics in the news — the production-booth decisions about establishing the terms of debate on a particular topic, defining the parameters of coverage, formulating the questions asked of interview subjects. And, perhaps most important, determining which topics aren’t covered at all.

And NPR’s coverage of the present administration is a study in euphemism, rationalization, and justification. Every failure or setback is “unexpected,” any modest success is “profound” and “important.”

Despite this corporatism and institutional arrogance, NPR produces some good work. Its overall tone is generally earnest rather than partisan. And it puts on some damn good shows — including its weekend programming staples Car Talk and the documentary series This American Life. When you’ve listened to one of these — or a set of Ella Fitzgerald’s best work — it’s easy to rationalize an earnest, middlebrow radio network as, well, maybe not the worst waste of $40 or $50 million in taxpayer money.

Perhaps most important to establishment Republicans, the government subsidies give them influence with NPR. And its earnest, middlebrow listeners. As long as the network relies on government funds, it has to be “fair” to both establishment political parties. And, in this context, “fair” means perpetuating topics and coverage that serves the interests of the establishment parties.

So, why the difference this year? Why the executive resignations instead of another statist tango? Was the difference James O’Keefe? Or forces beyond his media trickery?

Probably the latter.

An NPR employee in a position to know told me that the organization elite worries that establishment Republicans aren’t interested in the tango this time around. Influenced by Tea Party activists, particularly in the House of Representatives, the GOP may actually cut NPR’s allowance significantly, if not completely. That’s why Ron Schiller’s boast about not needing government money and obsequious remarks about ignorant Tea Partiers were such a double-whammy. And why NPR’s Board wanted more than just the head of a middle-level executive who was already halfway out the door.

NPR’s institutional elite may still be as earnest and dedicated as the network itself; but it breeds monsters.

NPR fired Vivian Schiller to show true believers in the Congress that it’s still willing to dance the statist tango. Now, it waits to see if they’re impressed. We’ll find out this summer, when Speaker Boehner assembles his first budget.

One last point to consider, with regard to arrogance of institutions like NPR.

Here in the States, public radio is like your uncle, the charming communist who teaches sociology at the local community college. Earnest. Dedicated. Credentialed. Green. Reform-minded. Smart in a million minor ways. So, why do many of its employees make bone-headed decisions in the things they say and do?

Ron Schiller isn’t the only one who’s done something stupid. Last year, it came out that the publicity director for one of NPR’s larger member stations had posted to the left-wing Internet user group JournoList that she would “Laugh loudly like a maniac and watch his eyes bug out” if right-wing radio personality Rush Limbaugh were dying in front of her.

The publicity director, a woman with the Dickensian name Sarah Spitz, later issued a watery apology:

“I made poorly considered remarks about Rush Limbaugh to what I believed was a private email discussion group from my personal email account. …I apologize to anyone I may have offended and I regret these comments greatly; they do not reflect the values by which I conduct my life.”

That common weasel phrase “may have offended,” so fatal to the spirit of apology.

NPR took great pains to distance itself from Ms. Spitz. It emphasized that she had never been an employee of the network — although it had run a few pieces she’d submitted from her occasional on-air work at the local station where she was an employee.

The term “cognitive dissonance” applies here. Some small minds don’t like the confusion caused by holding conflicting or inconsistent ideas, so they flee to orthodoxy. Structure and agreement. Arrogant institutions offer these things; but decadent institutions (which can also be arrogant) aren’t able to manage their orthodoxy and structure. Counter-intuitively, they become more orthodox because they are institutionally decadent. So it is with NPR. Its institutional elite may still be as earnest and dedicated as the network itself; but it breeds monsters. Small minds that seek agreement instead of wisdom, tormented by insecurities that they barely perceive.

They can’t imagine anyone disagreeing with the institution’s orthodoxy. Just as they can’t imagine anyone voting for McCain. Or Barr. Or anyone other than the overwhelmed mediocrity now occupying the White House. This lack of imagination becomes a kind of mental defect; and the people become fruit ripe for plucking by someone like James O’Keefe.

I’d turn back to O’Keefe and tell him that such ripe fruit is also low fruit. But who am I to get between a man and his livelihood?

As for NPR, if it loses its government subsidies, the good programs it produces will find value in the open market. And value eventually finds a home.




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This Could Be the Start of Something Big

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The first battle of the 2012 campaign has just ended — and it doesn’t bode well for the Democrats, in the short run at the state level, or in the long run at the federal level.

The location was Wisconsin, historically a stronghold of organized labor, the Democratic Party, and the Left generally. But the state has been trending rightward in recent elections, and last year it elected a Republican, Scott Walker, as governor, and a majority of Republicans to the state legislature. Interestingly, however, these are not the sort of Republicans you would expect from a somewhat purple state — RINOs (or Republicans in Name Only) — but honest-to-God RCCs (Republicanos con Cojones).

Governor Scott Walker clearly has a pair. During his campaign, Walker made it clear that he was serious about reducing spending, especially the outrageous compensation packages that public employee unions had negotiated in sweetheart deals with past Democratic administrations. The pattern in Wisconsin was similar to what happened in most other states: a vicious cycle of crony unionism. Public employees unionize, use their massive dues to elect sympathetic politicians, then in bargaining with those politicians receive lavish compensation packages. This enables the unions to collect even more dues, elect even more sympathetic politicians, and get even more of the taxpayers’ dollars. It’s very convenient — for the unions.

In the 2008 election cycle, unions (now predominantly unions of government employees) gave about $400 million to Democratic campaigns, especially Obama’s. Heck, AFSCME (the American Federation of State, County and Municipal Employees, the biggest government workers’ union) alone gave the Dems $90 million during the last (i.e., 2010) election cycle.

The public choice tipping point occurs when the pain inflicted on citizens by the rentseekers who have captured a government agency becomes too great to ignore.

So the money that taxpayers pay in salaries to the public employees provides (in the form of union dues) the funds that elect politicians who will in turn raise taxes and give more money to the public employees (and hence their unions). The public, rationally ignorant — that is, having better things than state politics to worry about (such as earning an honest living) — are typically oblivious to the corruption, until the deficits and taxes become outrageously high. That point, which you might call “the public choice tipping point,” occurs when the pain inflicted on the citizens (in increased taxes, increased costs of compliance, or decreased liberty) by the rentseekers who have captured a government agency becomes too great to ignore.

Perhaps the classic illustration was the transition to the all-volunteer army. We kept the draft going from World War II through the Korean War, and long past. It took the debacle that was Vietnam and the student protests it aroused to get the government to change from conscription to a volunteer services model.

Governor Scott took office with the state deficit already at $137 million, but slated to rise to $3.6 billion in the next two years. As he promised during his campaign, he introduced legislation that requires the state employees to contribute more to their health and pension funds. Specifically, his law requires public workers to pay 12.6% of their healthcare insurance premiums from their pay, and contribute 5.8% of their pay to the pension system — an amount that is still quite low compared to similar amounts in private industry.

In so doing, he went to the heart of the state’s fiscal woes. The public sector unions had sweet compensation packages, ones that include not only high pay but also incredible perks (tenure, virtually free healthcare, and pension plans requiring little employee contribution). The average compensation for Wisconsin public school teachers is over $101,000 per year — for essentially eight months of work.

But Walker also proposed to eliminate the power of government workers (except firefighters and police officers) to bargain collectively for non-salary compensation, and eliminate the state’s role of “enforcer” in collecting dues from employees for the union. His legislation further required annual union elections, in which a majority (as opposed to a mere plurality) of workers must approve the union.

Here, Walker showed real understanding of the problem: if he just asked for increased employee contributions to their health and pension plans, the unions might have gone along this year, but the minute the public’s attention was diverted, they would just get those concessions rescinded, especially if union dues elected a Democratic governor. Government worker unions fully understand rational ignorance.

A recent report shows that fully two-thirds of eighth-grade students in Wisconsin’s public schools can’t read proficiently.

Initially, the unions fought all the provisions of the law, but as the public learned about the lavish compensation packages government workers receive, public sympathy evaporated. Also responsible for reducing taxpayer sympathy was the report that emerged, just as the controversy was getting intense, that fully two-thirds of eighth-grade students in Wisconsin’s public schools can’t read proficiently. According to the US Department of Education, in last year’s National Assessment of Educational Progress tests only 2% of Wisconsin eighth-graders scored as “advanced” in reading, and only 32% as “proficient.” The remaining 66% were below proficient (44% rated “basic,” 22% “below basic”).

The taxpayers of Wisconsin have paid exorbitantly for this laughably lousy quality of education. They pay more per public-school student than any other Midwestern state.

So the unions modified their demands. They said they would agree to increased contributions to the healthcare and pension plans; they claimed that they objected only to the loss of collective bargaining “rights” — allegedly “natural rights” as fundamental as free speech. And with their PR plan in place, they went to war.

The unions employed all their classic tactics. Of course, teachers called in sick en masse, cancelling classes and snarling the schools. There were weeks of massive demonstrations, with as many as 100,000 demonstrators on the streets of Madison, occasionally closing the capitol down, with the usual chanting, screaming and pushing, all aimed at intimidating Walker and the Republicans into submission. Many of the demonstrators were paid for and bused in by the unions in a classic display of “astroturfing.” The protestors were egged on by the usual repellent, aged leftist icons, from Jesse Jackson to Michael Moore to Susan Sarandon. And the unions paid for endless ads aimed at demonizing Walker and the Republicans in the legislature.

In the meantime, the Democratic state senators left the state, in order to deny the Republicans a quorum for considering the governor’s legislation.

Also in the fight — while of course pretending to be above it all — was President Obama. He clearly viewed Wisconsin as the first battle in his reelection campaign, and promptly accused Walker of “assaulting” workers’ rights.

Against this formidable array of foes and this well-strategized campaign, Walker stood firm. After an extended period of what seemed like stalemate, the Republicans figured out how to separate the essential restrictions on unions and make them legislation not requiring a special quorum. They passed the legislation, and Walker signed it into law. The deed was done.

Walker took a major hit in his poll numbers, yet his victory should worry the Dems about the next election, and elections thereafter, at least at the state level.

One cause for worry is the fact that in the battle of Wisconsin the unions had to expend a lot of money — for ads, for demonstrations, for agitprop in general — cash that now isn’t available for the 2012 election cycle. Second, they face a loss of membership. Average yearly union dues are in the range of $700 to $1,000 in Wisconsin, and now that the government won’t be deducting those dues, members may decide they no longer want to pay. One suspects that fear of lost members and members’ dues is what really drove the unions to fight so furiously.

Many of the demonstrators in Madison were paid for and bused in by the unions in a classic display of “astroturfing.”

If similar battles occur in other states, such losses will bite the unions hard. And it may well happen. After all, if the economy in Wisconsin responds well to Walker’s actions, he will rise again in the polls, and that would encourage other governors to follow his lead. Indeed, similar battles have already been going on elsewhere. In Ohio, Republican Governor Kasich is trying to limit public employee bargaining “rights” and is facing demonstrations because of it. In Indiana, Republican legislators have introduced right-to-work legislation that will apply to all unions, and they also saw their Democratic colleagues walk out the door. (While Republican Governor Mitch Daniels doesn’t support this right-to-work movement by his colleagues in the legislature, he did manage to get a law restricting the right of public employee unions to bargain collectively back in 2005).

Republican leaders at the state level — in the face of burgeoning state budget deficits now totaling about $125 billion for the 50 states — seem to appreciate the urgent need for measures that limit the power of unions to game the system. The three most effective measures appear to be laws limiting the collective bargaining privileges of public employee unions, right-to-work laws allowing all workers the right not to be forced to support their unions, and paycheck protection laws that require unions to get the explicit consent of workers before using their union dues for political purposes. These types of laws are kryptonite to the unions.

All of this raises an interesting question. Why are Republican leaders suddenly so bold at the state level, but still so timid at the federal level? Why are some state Republicans willing to address growing deficits in their states, even at the cost of taking on the special interest behemoths that are the unions, while Republicans in Washington seem reluctant to address the federal deficit, which dwarfs into insignificance the state deficits?

A number of reasons explain the disparity. First, the 2010 Republican electoral triumph was manifested more on the state than the federal level. Yes, the GOP took back the House of Representatives, but (because of some unwise voter choices in the primaries, and the large numerical advantage that the Democrats had enjoyed in the Senate before the election) failed to get even a tie in the upper house. You can’t stop a devoutly leftist president — one willing to use the formidable power of the executive branch to keep increasing the size and regulatory scope of the federal government — when you don’t control Congress.

Second, most state constitutions require budgets to be balanced, whereas the federal constitution has no such requirement. This means that to handle the rapidly rising costs of public employee salaries, healthcare expenses, and pension payouts, most states can only raise taxes or float bonds. But taxpayers are already financially stretched to the limit, and bonds are costing more as investors find out how shaky state and municipal finances really are. The recent revelations that states and municipalities already have taken on $3 trillion in bonded indebtedness, and are about $3.5 trillion underfunded in pension and healthcare liabilities, have really hurt the market for muni bonds.

The federal government has a seductive option not open to the states: just print more money. This is of course precisely what the Fed is doing right now.

Add to this the possibility — dare I say the likelihood? — of a bankruptcy in a big city (my favorite candidate is my hometown, Los Angeles). In that event, or the event that a state defaults on its bonds (my favorite candidate is my home state, California), the market for muni bonds would dry up immediately, and with it the ability of states to borrow money at reasonable rates.

The third major difference between the challenges confronting state-level and federal-level Republican leaders has to do with competition. If the politicians in a state jack up taxes to solve a budget shortfall, the productive people (aka taxpayers) and businesses can and will move elsewhere.

This has already had an effect even in such historically high-tax states as New Jersey and New York, where there is now a broad awareness of how many of their productive people and businesses have fled to low-tax havens such as Florida and Texas. The old phrase “Gone to Texas” is now a frightening motto now to the high-tax states.

But the federal government faces no such competition. If I leave California for Florida, the cultural adjustment is minor. To move from America to another nation takes a major adjustment, one far too expensive for most people to make. And most other nations where American might otherwise want to live have equally statist governments.

The fourth major difference lies in the power to print money. Faced with deficits, states have only three options: borrow money, cut spending, or raise taxes. But the federal government has a seductive fourth option: just print more money. This is of course precisely what the Fed is doing right now. It allows all politicians at the federal level to avoid cutting programs and thereby incurring the wrath of special interests.

There is a fifth difference, and it is the most important. On the state level, the Republicans are moving to cut lavish government worker benefits, which are the major cause of the state budget problems, because most citizens are not themselves government workers. The other major choices — raising taxes and cutting programs — are politically unpalatable. Try convincing the average voter that we need to eliminate half the firefighters so that the few who are left can get lavish pay and retire at age 50 on a $250,000 pension for life.

But on the federal level, the programs most responsible for bankrupting this nation are Social Security, Medicare, and Medicaid, not federal employee compensation (or defense spending or discretionary spending in general). Those programs are still popular among Americans, even Tea Party members. A recent poll reported in Policy Review is telling on this point. If you ask Americans where we should cut, the results are dismal. On Social Security, only 9% of the respondent’s would cut it, compared to 84% who would rather increase it or keep it the same. Medicare? Only 12% would cut it, compared to 82% who want to increase it or keep it the same. Medicaid gets only 15% support for cutting, versus 78% who want to increase it or keep it the same. About the only federal project that Americans want to cut is foreign aid.

So in the short term, it is doubtful that Republicans will step up to cut these programs, and if they did, they would probably be hurt politically. But long term, the fiscal crisis that many states are now facing will hit the federal government. The three programs I identified are estimated to face long-term underfunding to the tune of over $100 trillion. As each year passes, their deficits will only balloon. At some point, rational ignorance concerning them will tip into rational knowledge — to the grave damage of the political party that created, expanded, and repeatedly campaigned on them.




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The Tail Slapping the Dog

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I grew up in a blue-collar world listening to jokes and snide remarks about government workers. They were uttered frequently by my father, and the fathers of most of my friends, especially during tax season. I came to perceive that government, at all levels, was riddled with chumps, lackeys, and dullards — people who couldn’t make it in the private sector but found a home in the lackadaisical workplace of government.

It was tacitly assumed that public employees earned less money than their private sector counterparts and that “psychic income” explained their willingness to do so. Psychic income has been defined as “something apart from money that you get from your job, and which gives you emotional satisfaction such as a feeling of being powerful or important.” Anyone who has dealt with government bureaucrats (from IRS agents to building inspectors and DMV clerks) can attest to its allure. My father probably would have described psychic income as a negative salary differential that gave this army of self-important, insecure underachievers a pass. That is, as long as they made less money, their shoddy (good enough for government) work could be tolerated.

That was back in the late 1960s. The Great Society was shifting into high gear. Big government was booming, and the demand for government workers was exploding. In those auspicious days, the job of many public servants was to invent jobs for more public servants. As government revenues continued (1969 to the present) to grow more than 15 times faster than median income, additional public servants were needed just to spend the extra tax money.

During the recession, when nongovernment workers were losing jobs and taking pay cuts, the government was hiring and giving out raises.

But my father’s suspicions about the negative salary differential were partly wrong. Federal civil servants were already making more money than their private sector brethren. And they, as well as state and local public servants, were on track to make much more. I didn’t have the heart to tell my father that the lower salary — the only redeeming characteristic of the shiftless and slothful government workforce — was an illusion. And the grudging tolerance of his generation was being augmented by the unwitting generosity of mine to unleash relentless public sector growth. My generation rewarded public sector workers with unprecedented income — both real (salary and benefits) and psychic (power and importance), sweetening the deal with unprecedentedjob security. The tail began wagging the dog.

Today, the average federal civilian worker earns twice as much in wages and benefits as the average worker in the private sector ($123,049 vs $61,051, annually). The benefits (healthcare, sick days, vacation time, retirement plans, etc.) are profligately generous, as are the taxpayer contributions that pay for them. For example, in 2007, state and local governments paid an average of $3.04 an hour toward each employee's retirement; private employers paid only $0.92/hour. And, in recent years, the pace (of both hiring and wage increases) has accelerated. For example, when the recession started, the Department of Transportation had only one person with a salary of $170,000 or more. That number has now reached 1,690. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009.

We are told (by President Obama and many others) that such obscenely generous compensation is required for attracting the best and the brightest to run government programs. Just think of the mess that Social Security, Medicare, Medicaid, the Postal Service, Amtrak, public housing, education, etc. would be in if managed by less competent professionals. And who could do a better job fighting the wars against poverty, drugs, cancer, AIDS, etc. than the people presently employed? With successes such as these, no wonder they have moved on to protecting us against such menaces as trans fats, sugar, secondhand smoke, bicycles, and toys (the lead-painted ones from China and the obesity-inducing ones from McDonald’s).

And since we must be regulated in both good times and bad, public service is a recession-proof industry. During the recent recession, the federal government added 192,700 jobs (+ 9.8%). State and local governments added a paltry 33,000 (+ 0.2%), but the private sector lost 7.3 million (-6.3%). The average federal government salary increased 6.6%; the average state and local government salary increased 3.9%. To summarize, during the recession, when nongovernment workers were losing jobs and taking pay cuts, the government was hiring and giving out raises.

It has reached a point where even big-government advocates have become appalled. For example, Mort Zuckerman, billionaire businessman and generous contributor to the Obama campaign, has recently discovered that “public workers have become a privileged class — an elite who live better than their private-sector counterparts. Public servants have become the public's masters."

It is of no small significance that the big gainers in the government hiring binge are regulators, lawyers, and public health and safety experts. They are the most annoying of public servants. Operating as social engineers, and under the assumption that without their guidance we (individuals, families, and businesses of all types and sizes) will make bad decisions, they serve two principal purposes: (A) ensuring that we obey every silly law with childlike compliance, and (B) writing more silly laws. This is the tail slapping the dog.

Feckless public servants lavished enormous retirement benefits on themselves, used taxpayer money for payroll contributions, managed to come up $7 trillion short, and now expect taxpayers to foot the bill.

Much of the sting from the slap comes from their colossal ineptitude. They are simply terrible at what they do. The vigilant financial regulators who protected us from the subprime mortgage debacle are a case in point. They include the elite that was running HUD, Fannie Mae, Freddie Mac, and the SEC (whose crack securities experts were downloading porn while credit default swaps and Bernie Madoff ran amok). Their predecessors were equally inadequate in preventing the S&L crisis, the junk bond fiasco, the Enron and WorldCom scandals, and the dotcom bubble.

It should be no great surprise, therefore, that our public masters running government pension funds have reached no higher level of competence. According to a recent report from the Employee Benefit Research Institute, federal pension plans now have unfunded liabilities exceeding $1.6 trillion. Unfunded state and local pension liabilities are estimated at $3.6 trillion. With healthcare benefits added in, state and local government unfunded retirement liabilities could be as large as $5.2 trillion. Consequently, our children face a huge future slap in the form of a tax bill approaching $7 trillion. To summarize: feckless public servants lavished enormous retirement benefits on themselves, used taxpayer money for payroll contributions (at a rate three times that of theprivate sector), managed to come up $7 trillion short, and, instead of going to jail, now expect taxpayers to foot the bill.

Then there is Public Service Recognition Week (PSRW), a nationwide campaign honoring public servants and educating citizens about the sacrifices they make while serving the nation. Federal, state and local public servants spend the first week of every May honoring themselves and bragging about the terrific jobs they are doing. They have exhibits showcasing “the innovative and quality work performed by public employees.” They even have parades “recognizing and thanking their unsung heroes.” This is the tail slapping the dog with disdain.

Public servants have come a long way from the banal, ambitionless, unproductive horde of my father's generation.They are now grossly overpaid, insidiously more powerful, and routinely unaccountable for bad, often abysmal, performance. No doubt most are good people with good intentions, some making legitimate sacrifices. I would go to a parade honoring most policemen, firefighters, teachers, and emergency workers. But there should also be a parade ridiculing those whose malfeasance, indolence, or avarice has failed the public and contaminated the perception of civil service. Regrettably, such a parade could not be held; it would last well over the week allotted.

Today there are simply too many public servants — even good ones. With staggering deficits and staggering public debt, we can no longer afford them. Public resentment deepens the more their compensation is scrutinized, as all levels of government begin trying to cut their budgets. Most are overpaid, especially at the federal level. And today's administrators, regulators, inspectors, social engineers, and the like have painted a disturbing "public masters" portrait of themselves. Furthermore, psychic income as a reward for sacrifice is a thing of the past. As public sector payrolls expand during private sector contraction, it's difficult for taxpayers to see the sacrifice. Public servants have become the "haves," and taxpayers, who pay their salaries, have become the "have-nots." Psychic cost — the economic burden of the government workforce — is a more realistic concept.

From 1787 through the 1920s, federal government spending didn’t exceed 4% of GDP, except in wartime. It has now reached 25% of GDP. Combined federal, state, and local government spending has reached 43% of GDP, and the average taxpayer has to work from January 1 to the middle of each April to pay for this largesse. But even that is not enough. In recent years, federal spending has exceeded tax revenue. It has taken an unprecedented leap since 2008, producing today's massive annual budget deficit of $1.5 trillion. To pay off this deficit, the average taxpayer would have to work until mid-May —and consequently have to miss the Public Service Recognition Week parades.




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