Revisiting the 20th Century

The world’s history book is speckled with experiments that failed, though generally not much is remembered about them.  Etruscan civilization had many appealing features, but Rome almost managed to wipe its memory entirely from the history books.   From the lost colony of Roanoke to the state of Franklin, America has its own set of vague recollections about things that might have been, but just didn't pan out.    Now it appears that the whole 20^th century is being reexamined to determine whether it was a success or failure, and either way, who deserves the credit and who the blame.  In a December speech to the Russian parliament, Vladimir Putin tried to depict the 20^th century as a temporary triumph of Western barren and neutered “so-called” tolerance that was nothing but a slide into immorality.  He proclaimed Russia’s role as a bulwark against such tolerance and a model for “the organic life of different people living together within the framework of a single state.”  In such a view, Western “anything goes” tolerance, liberty and democracy are merely paths to inevitable decline.  One could imagine a similar speech being given in ancient Sparta about the inevitable failure of Athenian democracy.

One way of examining the 20^th century is to see it as an enactment of the democratic ideals proposed in the 19^th by thinkers such as Mill and Arnold, and the struggle of those ideals against the traditional ideals of governance by elites, whether they be a nobility, a plutocracy or a Communist party.  The fall of the Soviet Union is seen in this light as the final great victory over elite governance as an ideal.  Not so fast.  The current critique by Putin is a renewed attack on democracy itself as lacking the order, aesthetic values and moral values provided by the imposition of elite ideals.  An unwitting ally of Putin is George Will, who recently created a small flurry in the Washington Post letters to the editor by attacking democracy from the other direction, arguing that democracy is the enemy of liberty.  To Will and his gang of fellow libertarians, unrestricted personal liberty is the basic promise of the Declaration of Independence and the Constitution – though the Preamble to the Constitution only mentions liberty in its final clause as providing blessings which must be secured.  Instead, the Preamble to the Constitution refers to the collective ideals of forming a more perfect union, providing for the common defense, promoting the general welfare and securing those blessings. 

That is consistent with the idea stated later by J.S. Mill that true liberty is a collective value requiring responsible participation by all.  To Mill, liberty without responsibility is simply another name for anarchy.  He criticized the libertarians of his time for desiring a purposeless individual liberty with only negative value.  And his idea itself was an echo of the earlier ideas of Hobbes, a thinker well known to the founding fathers, who regarded the limitless and irresponsible liberty available outside civilization as accompanying a life “nasty, brutish and short.” 

Hobbes, and Mills to some extent, were arguing for civilized, collective behavior, not necessarily against elite governance.  They were, after all, living in a monarchy.  It was Matthew Arnold who pointed out that society consists of groups and social classes with differing visions and values who must act together to make society work.  That requires some shared values and a lot of compromise.  Arnold’s vehicle for making that happen was the English public school system, which he had a major hand in founding.

 In America, Jefferson had held the same educational vision later espoused by Arnold in England.  Jefferson felt that a good education was a cornerstone of liberty.  And that is where our democracy needs work today.  There was some truth about what Putin said regarding “Western tolerance” sliding into immorality.  We have only to read the papers or watch TV to confirm it.  A democracy where “everything goes” and everyone is following their own bliss without regard to the needs of others is not a pretty sight.  The dystopia depicted in the movie “Her” is not a pleasant prospect.  Putin’s solution was regulation by elites, the Communist Party and the KGB.  The 20^th century has already proved that doesn't work.  A better approach is to go back to Jefferson, Mills and Arnold and teach our children the requirements and responsibilities of liberty.  A common literary canon used to help tie us together, but has fallen victim to divisive arguments about which reading is most, or least, important.  Restoring a core canon of readings on liberty should be a goal of the public education process.  Responsible behavior and respect for others – including the need for avoiding unnecessary offence, conflict management and the other arts of democracy, ought to be a part of every curriculum.  That is not necessarily the responsibility of our schools only.  A public service requirement for all, like that found in other countries, would be of great benefit.  A citizenship test for high schoolers like that administered to applicants for citizenship would be a good approach.  There’s no reason any citizen should know less about our government than those newly admitted.  Responsible citizens open to each other and to the future should be the norm, not the exception.  And there is no reason our society should merely copy the anarchy or oppressions of the past.  We have learned from the 20^th century enough not to repeat it.

Profitable Aid

Oh dear, the U.S., among other rich nations, is under pressure to aid poor countries facing starvation and drought and flooding from the effects of the climate change induced by the rich nations’ profligate use of fossil fuels.  The latest UN report in late March had the World Bank report of the need for $100 billion annual aid to ameliorate climate change effects in poor countries removed from its executive summary, though still contained in its body, because of fears from rich countries that such language would force a doubling of their foreign aid during a time of depression.  Let’s see, that would mean for the U.S. an increase in foreign aid from .19 percent of GDP to .38 percent of GDP. What excessive generosity!  Why that’s the current percentage level of foreign aid giving of France or Germany, though it would be somewhat made up for by the fact that much of foreign aid will really be spent in the U.S. itself..  And it’s almost one-fifth of the annual growth in global soft drink consumption, which, by the way, also contributes to starvation by raising the global price of corn.  How dare anyone suggest such an idea!  The prognosticators are not giving increased aid by the U.S. much chance for success.

Sorry for the sarcasm. But it’s hard to avoid when such attitudes prevail in the face of a common crisis.  And that’s what the latest UN report highlights, that climate change is rapidly involving all nations, from Mediterranean droughts to melting Himalayan glaciers to sinking Polynesian islands.  There’s increasing likelihood of food shortages, which means the poor will, as usual, suffer most from the rising costs.  It is also increasingly likely that temperatures will soar above prior determined dangerous limits.  That’s why the focus of the report is on the need for immediate action.  Meanwhile, the “not my SUV crowd” is making it an article of faith that such warnings should be ignored, because they are bad for business.  According to them, the thousands of scientists who compiled the report can indeed be wrong, and are probably secret conspirators anyway.  Has anyone attended a scientific conference lately?

As for the unpleasantness of foreign aid, longer memories than most rampant libertarians seem to possess would recall that 90 percent of the original Marshall Plan aid money was actually spent on things built in the U.S., and helped boost the U.S. economic recovery from WW II as much as Europe’s.  The roaring times of the late 40s and early 50s were in part due to that.  Other contributors to a booming economy, by the way, were that big-government infrastructure boondoggle the interstate highway system and big government at its worst, the G.I. Bill.  Even libertarians don’t even have to feel generous to appreciate that.

Tuesday, Justin Lin, the Chief Economist for the World Bank, warned of the danger of the whole world falling into economic stagnation and depression because of faltering global demand.  He called for a world-wide Marshall Plan for $2 trillion from rich nations to be spent over five years to prevent that, noting that stimulus of poor countries will produce faster, stronger results than stimulus in less consumption-intensive rich countries.  Poor economies don’t just stash away cash in Swiss bank accounts; they go out and spend, creating multiplier effects. Lin suggests things like building new roads, bridges and ports to facilitate trade,  But what better things to spend stimulus money on than ways to handle climate change?  Numerous businesses around the world are already discovering that battling or adapting to climate change can actually be profitable.  It is in fact good for business.  The twin focuses of the new plan could be both trade and climate change.

I've mentioned before that the better way to deal with all the conflicts around the world (including the rich vs. poor nation type) is to treat them not as zero-sum games where one side must lose for the other to win.  Instead, the real winning approach to a better world is to treat the process like a jigsaw puzzle, where differing pieces are gradually put together to create a winning big picture for all.  Sometimes, looked at that way, putting together two problems creates a solution. This rich versus poor controversy could be a classic example.  Instead of fighting each other over a dwindling pot, we need to find ways to help each other and benefit at the same time. The new Marshall Plan proposed by Lin with an additional focus on climate issues is just the sort of project that could benefit all. 

The Future of Plutocracy

What strange bedfellows History makes.  It turns out that Joe Stiglitz, Aristotle and, eventually, Sir Isaac Newton are congenial companions after all.  A new study by a Paris-based economist Thomas Piketty and Emmanuel Saez, an economist at Berkeley, examines the growth of capital through history in various countries and concludes that it leads inevitably to excess concentration of wealth - plutocracy - correctable only by political means.  Piketty essentially argues that at certain levels of accumulation, capital growth detaches itself from the GDP growth of the surrounding economy.   Wealth grows as a function of inheritance or financial instruments rather than through production of goods and services. The concentration of capital away from production causes stagnation of the middle class, whose income is based on production, and the GDP growth of a national economy lags more and more below growth of the capital assets of the wealthy . Historically, this wealth accumulation outpaces growth in production until major technology change, crises or political means correct the imbalance.  In Europe, historical growth of invested wealth has been about 3 to 4 percent annually while growth in national GDPs has averaged 1 percent.

Capitalism per se lacks an internal mechanism to correct its own problem, and must always be corrected from “outside the system.”  Moral restraint by capitalists just doesn't seem to do the job.  Piketty and Saez argue for example that the vigorous growth of the American middle class in the 1950s was stimulated by the negative impact of World War II on the concentration of wealth and its positive impact on production of goods.  So also was the “Downton Abby” lifestyle described by Jane Austin curtailed by the Industrial Revolution and the Ancient Regime of France destroyed by the French Revolution.

Nobel Laureate Joe Stiglitz’s prior analysis of the modern American economy had already led him to that conclusion.  Stiglitz’s conclusions are based on the gradual accretion of small non-competitive advantages, “rents” in the language of economists, acquired through manipulation of, among other things, the political process to provide things like favorable legislation or regulation. The heaping up of small advantages eventually produces enormous imbalances that destroy the market. That is, wealth is accumulated not through superior production but through manipulation of non-market advantages.  Stiglitz, like Piketty, sees the result as eventual decay and decline of the economy, starting with decline of the middle class. History shows that the plutocracy that emerges is always corrected eventually by social revolution or societal transformation.  

Interestingly, Aristotle saw the same kinds of processes, though couched in considerably different terms, about 2500 years ago.  First, he saw the middle class as the key to the health of the nation; in fact, he invented the term ”middle class.”  He essentially saw the middle class as enabling political stability along with its economic role. Second, he warned against wealth not tied to the production of goods.  In his language, money was naturally barren, and the increase of it not tied to the fair value of the production of goods and services was an unnatural evil.  He seems more right all the time, though he lacked the tools of modern political economics to put his ideas into a comprehensive framework.

And Isaac Newton continues to remind us that “for every action there is an equal and opposite reaction.”  One can extend that to political economics as well as physics.  The continuing efforts of plutocrats to create economic “rents”, uncontainable within an already broken market system, inevitably produce backlash through the political system.  The stamp act, navigation acts and tea tax, “rents” for the British plutocracy, which set off the American Revolution are just one example.

I realize it’s ridiculous in a modern scientific sense to apply physics and classical philosophy to political economics, and I have made angry companions in arms of both physicists and economists (philosophers are a calmer breed.)  That’s partly what creates the problem.  We sit in our modern intellectual cubbyholes optimizing ROI without thinking about how the world really fits together and what our actions are doing to it.  Eventually the weight of our accumulated wealth collapses the floor (or climate, or middle class) beneath us, and there are no carpenters left to fix it.  There’s a sizable group of plutocrats these days who need to take a harder look at the future they are creating.

Five Old Men

Traditionally, American political parties have had a congressional wing and a political wing, often at odds with each other over priorities.  Now it appears the Republican Party has added a judicial wing, with only 5 members in it, but totally in harmony with the rest of the party.  Unfortunately, that constitutes a majority of the court, a legacy of the Gore/Bush decision.  And that could be the ruination of the rest of the country, for the “five old men” of this Supreme Court, like the “nine old men” of the 1930s Court, seem intent on wrecking any attempts at controlling the excesses of the radical conservatives.  Their decision today to give big money unlimited sway over elections is itself another nail in the coffin of the individual liberty they purport to defend.  Their solution to all the issues of our 21^st century world is to close their eyes and wish they were back in 1910 Kansas where all decisions were in the hands of wise old bankers and Rotarians.  And like their 1930s counterparts, the “five old men” seem divorced from understanding the actual lives of real people.  I’ve previously characterized that problem, in my post on Ernie’s Mannequin, as carrying around two centuries of archaic decisions like a dummy, believing the dummy is alive.

Franklin Roosevelt dealt with that problem in the 1930s by threatening to raise the membership of the Court until it was ”packed” with sufficient justices still in contact with reality to accept progress.  It was amazing how quickly some of the justices thought better of their prior positions.  That’s how the Social Security Act got accepted as constitutional.  Packing the Court is unrealistic today without prior Congressional reforms, but it surely is tempting.

It’s interesting that the “five old men” are, in fact, all men, while three of the four progressives on the Court are women.  The inclusion of women into positions of power has been a hallmark of progress throughout society in the last 50 years.  And the age of the justices means they lived much of their formative years in the era before that became a significant part of our lives.  Perhaps the “five old men” are a better portrayal of the world of “Madmen” than what’s on TV.

However the situation came to be as it is, it’s time for a change.  A court mired in the past, and fiercely defensive of it, cannot deal with the issues of the 21^st century.  Five old men cannot continue to deny progress to an increasingly restless and diverse citizenry without disaster.    The elections this autumn could be a major pivot point, forward or back.  This version of “Madmen” should get no reruns.