Liberty & Power: Group Blog
Jonathan J. Bean
As Frederick Douglass put it,
"Power concedes nothing without a demand. It never did and it never will."
Roderick T. Long
[cross-posted at Austro-Athenian Empire]
My colleague Kelly Jolley is the subject of a write-up in this past weekends New York Times Magazine. Ive often described Auburn as the coolest philosophy department in the world; this article will give you a glimpse of Kellys central role in the story of how it became that way.
In other news, my fourth AOTP post went up on Friday: Those Who Control the Past Control the Future.
The government’s proposal was originally aimed at aiding commercial and investment banks, ostensibly to relieve the so-called credit crunch. Other plutocrats resented being left out, however, and they have quickly marshalled their political forces to gain a piece of the action. As the New York Times reports today, “nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.”
So, the Times reports, the Financial Services Roundtable is urging that “a wide variety of institutions should be able to take advantage of the bailout, and that these companies should be able to sell off any investments linked to mortgages.” And why, pray tell, “should” they have such a privilege? Why, simply because the booty is there for the taking, and no one should get it while others go without!
Already the scope of the government’s proposal has been widened to allow the Treasury to buy not only mortgage-related paper, but “any other financial instrument.” After all, why be stingy, especially considering that it’s not the Treasury officials’ own money they’ll be spending, but yours and mine, dear taxpayer?
Small banks want the government to buy “loans they made to home builders and commercial developers.” Big banks want certain accounting rules suspended “to avoid taking big losses on the assets they sell to Treasury.” I want a maid, a gardener, a valet, and a cook, along with a few billion dollars to tide me over until my next mistake.
Other bankers are pushing to include municipal securities in the plundering free-for-all, “as part of a broader effort to restore investor confidence in money market funds”–and, by the way, to save their own rear ends.
Big financial firms are angling, too, to become the government’s agents in handling all the “securities” it is about the acquire with the $700 billion (or–don’t be surprised–more) it will spend to carry out this travesty of saving civilization.
Not to be outdone, the Democrats, ever the friends of the Little Man, are bleating for a broadening of the bailout to reach distressed homeowners directly. So, the Treasury should not simply absorb the mortgages and other rotten paper in the lenders’ possession, but also should suspend the contractual obligations of John Q. Deadbeat, who took on a mortgage he could not afford to pay off under the assumption that house prices would rise forever and, if they didn’t, he would simply walk away from his promise to pay, having no equity in his house anyway.
I hold in my sweaty hands a news release from “leading consumer, labor and civil rights groups” that advocates: “bailout must include relief for homeowners facing foreclosure, not just Wall Street.” This manifesto, which is addressed to “Dear Member of Congress,” states:
The undersigned organizations strongly urge you to include court-supervised mortgage restructuring for American homeowners to allow them to save their homes in any legislation that would use our tax dollars to bail out the financial services industry from its self-imposed crisis. Purchasing subprime and Alt A private securities will not provide the government with any legal ability to modify loans and keep families in their homes, which is necessary to stop the crisis. We cannot support legislation that fails to help the millions of families in danger of losing their homes, while spending hundreds of billions of dollars of taxpayer money to bail out those who caused the problem.
In other words, the government’s humongous bailout for fat cats is a looming disaster; the only way to make it acceptable is to multiply its disastrousness by a factor of two or three. As for the taxpayers, let them eat cake.
This letter/press release is signed by the usual suspects on the left, including the AFL-CIO, Consumer Federation of America, NAACP, National Council of La Raza, Rainbow Push Coalition, U.S PIRG, and the National Fair Housing Alliance. It’s an almost complete list of the groups that faithfully support the Democrat in every election, no matter who or what he or she may be in addition to being the Democrat–a set of groups, in other words, for whom the currently sitting president has never shed a single tear.
No matter. At times such as the present, when politicians and well-connected interest groups are attempting to stampede the public into acquiescing quietly as it is being plundered mercilessly, everybody with any political clout is a potential looter. Come one, come all.
While I would not quarrel with what you say about public housing in New York, there is also a crisis with respect to single family homes, in fact, in the epicenter of the sub-prime mess. Habitat for Humanity, using what might be called 18th century Amish barn raising technologies has provided some homes, built by volunteers for those who qualify. This is, however, a drop in the bucket!
America was once known for its self-help, can-do attitude.
Professional builders might not like it, but the US Forest Service has developed a very simple Frame Truss technology which enables several people to"dry-in" a 1,200 sq. ft home in about a week. Coupled with a"temporary final" from a city or country, this would enable a couple or family to move in and complete the house for about the total price of a mid-size car.
The Marina-Huerta Educ. Foundation built a community center in Guatemala recently employing this technology and using several women.
We now have a plan pending with the VA to help homeless veterans, one of the real scandals of America's wars from Vietnam to the Middle East and South Asia. We are now redoing our web site to include that information, but a CAD and some plans are already there: www.m-hfoundation.org Some cities are beginning to think about housing as a way to retain good teachers, firemen, etc. We believe this technology is the best way to achieve that goal in such a way that the home owners gain a tremendous incentive and financial advantage by having done the work themselves.'
The Case of The Jewel of Medina
Philosopher Carlin Romano has an interesting and very sensible discussion of the case of the novel, The Jewel of Medina, which is gaining notoriety even before it is published. (Hat tip to Arts and Letters Daily.) British philosophy blogger Stephen Law has weighed in on it as well.
Briefly, the facts, as they have been reported above and in the opinion piece in the Wall Street Journal that originally broke the story, are these...
Over a period of about five years, Sherry Jones researched and wrote a historical novel about A'isha, the third wife of Muhammad, the Prophet of Islam. This project included, among other things, studying Arabic. Random House signed a contract to publish the book and organized an eight-city book tour.
Meanwhile, they sent the galleys of the book to Denise Spellberg, an associate professor of history at the University of Texas at Austin and a specialist in the period in which the novel is set. They asked if she would be willing to write a positive blurb for the book's jacket. Publishers routinely do this as part of their efforts to win favor and sell copies of the book. In this case, it had, to put it mildly, the opposite sort of effect. Spellberg, who later described the novel as "very ugly, stupid piece of work" immediately "warned" (her word, apparently) Random that publishing the book would expose their building and staff to very serious danger, calling it "'a declaration of war … explosive stuff … a national-security issue." At about the same time, she alerted the editor of a Muslim web site about the book and her view that it ""made fun of Muslims and their history." This led eventually to message to an email list and eventually to a wave of angry blogging about this "new attempt to slander the Prophet of Islam."
Random canceled plans to publish the book, apparently breaching their $100,000 contract with Jones.
I see a fascinating ambiguity in the reported facts about Prof. Spellberg's behavior in this case. They seem to be more or less consistent with at least three radically different scenarios:
1. She was genuinely concerned about the danger to Random and was offering them her (unsolicited) professional opinion on this matter in order to be helpful. This would be perfectly unobjectionable, of course. She was not trying to violate another person's freedom of expression, she was only exercising her own. One thing that stands in the way of this interpretation, at least for the moment, is the fact that none of the quotations from the book that have come to light so far seem at all insulting or, to a rational person, morally offensive. From all accounts (except Prof. Spellberg's) it sounds like this book was not meant to be insulting or even critical of Islam or its prophet. We are not talking about The Satanic Verses here. More important, this scenario is not easy to square with the fact that, at the same time that she was helpfully warning Random, she was apparently trying to get that web site editor upset and alarmed about the book. Couldn't she foresee that this could indirectly trigger the very sorts of events that she was supposedly trying to help Random to avoid?
2. Stephen Law suggests that, perhaps, she was fearful of her own safety and made that hard-to-square phone call in order to dissociate herself from the book. Here once again the odd thing is that she seemed to be actively trying to get others upset about the book. That would seem to mean, on this interpretation of the facts, that she was in effect trying to sic the dogs on someone else for the sole purpose of keeping them from biting herself.
3. Yet another possibility is that she detested the book herself and was using the hypothetical violent behavior of others in order to get its publication suppressed. This raises a very interesting ethical issue. We all know what to think of hooligans who break into a newspaper office and destroy its presses because they print things that the hooligans don't like. What, on the other hand, should we think of someone who uses their behavior, and for the very same ends -- to suppress words that they don't like? Suppose that these other people would never do anything violent themselves, and have always deplored such thuggery.
Usually, thugs of this sort don't chop up printing presses with axes simply because they enjoy doing so. Such behavior is a means to an end: they want to silence someone else. If the mere threat of doing this is sufficient to silence these others, so much the better. Thus someone who uses their behavior in order to achieve their ends -- by deliberately communicating and facilitating the threat -- is functioning as an essential working part of the same system of oppression. The fact that they would never dirty their own hands with violence might make their guilt the less, but their shame is more.
In the public controversy about this case, Salman Rushdie deplored the incident as "censorship by fear." On the other hand, Stanley Fish, in his blog, denied that this is censorship at all. Fish holds the theory that the word "censorship" properly speaking can only be applied to governmental suppression. I have never been entirely sure what to think about this sort of issue. But I do know what the present status of Jones' book is: its publication has been picked up by a British publisher, more obscure and with fewer assets than Random, but with much more courage.
Thus the book has been shunted into a more marginal area of the publishing world, where it is apt to get less attention and be less upsetting of the rest of us. This is what usually happens in cases of semi-quasi-censorship. No blood is shed, no property is destroyed, but it is easier to ignore what we don't want to hear.
"President George W. Bush, Fed chairman Ben Bernanke and treasury secretary Hank Paulson all declare their preference for free-market solutions and a desire to minimise moral hazard. But they sound like François Mitterrand in mid-1983 when he abandoned his socialist 'programme commun' in the face of capital flight and a collapsing franc, all the while proclaiming his devotion to socialism."
"By the time the situation calms and memories fade, there is unlikely to be enough capital in the economy to fund a restoration. Right now, the oldest baby boomers are 63. The ratio of earners to dependents has been at an all-time high. A vast earner generation is about to begin its transformation into a dependent generation. Probably a more dependent one than anticipated."
"One doesn't have to be an economics expert in order for several facts to be crystal clear:
"First, the fact that Democrats are on board with this scheme means absolutely nothing. When it comes to things the Bush administration wants, Congressional Democrats don't say"no" to anything. They say"yes" to everything. That's what they're for."
"Second, whatever else is true, the events of the last week are the most momentous events of the Bush era in terms of defining what kind of country we are and how we function -- and before this week, the last eight years have been quite momentous, so that is saying a lot. Again, regardless of whether this nationalization/bailout scheme is"necessary" or makes utilitarian sense, it is a crime of the highest order -- not a" crime" in the legal sense but in a more meaningful sense."
"Third, what's probably most amazing of all is the contrast between how gargantuan all of this is and the complete absence of debate or disagreement over what's taking place."
"[W]hat I do know is that an injustice so grave and extreme that it defies words is taking place; that the greatest beneficiaries are those who are most culpable; and that the same hopelessly broken and deeply rotted institutions and elite class that gave rise to all of this (and so much more) are the very ones that are -- yet again -- being blindly entrusted to solve this."
I spent yesterday morning attending a memorial service for the mother of a colleague here at SLU. One element of the SLU campus is that we have a large (for our size) and vibrant gay and lesbian community within the faculty, of which the colleague in question is a member. Watching her long-time partner grip her hand as they walked in and watching one member of a gay faculty couple with his arm around his long-time partner during the service (not to mention another long-time lesbian couple two rows behind me) got me thinking about the same-sex marriage issue.
We all share a common humanity when it comes to death, especially of those close to us. We turn to the people we've built and shared a life with for comfort and consolation in those times. We share that same humanity in times of great joy - at the weddings or births or anniversaries of our friends and family. And we want to share those moments with the person with whom we've shared the journey of our lives.
Sitting there watching those three couples and thinking about how they can never fully share those times of sorrow and joy without thinking twice about where they are and who might be watching, and without the full protection of the law if it was their own partner who was being mourned, not to mention whether some of their own families and friends might have rejected the very relationships that sustain them in such times, welled up my political anger and sense of injustice, of both the thin and thick libertarian variety.
Libertarians can disagree in good faith about what the relationship should be between marriage and the state. In the first-best world, many of us agree that marriage should be freed from the state. I certainly do. And in the second-best world we can and do disagree about whether the state should treat same-sex couples equally when it comes to marriage. As a matter of justice and equality under the law (a classical liberal idea that unfortunately gets short shrift in the modern libertarian emphasis on reducing the size and scope of the state), my own view is that libertarians should support measures to legalize same-sex marriage, including judicial ones. That said, there are certainly cogent libertarian arguments in the other direction, weaker though they may be.
As my wife and I celebrate our 20th anniversary this coming Thursday, I simply cannot imagine having to engage in the fancy footwork about our relationship that gays and lesbians do about theirs, nor wondering and worrying about how the law would treat either of us if something happened to the other. These concerns about our common humanity and treating equally the relationships so many of us rely on in times of sorrow and joy should, in my view, be part of a thicker libertarianism that is more than just politically tolerant or neutral about such relationships, but instead is positively supportive of them as part of a larger vision of a world in which individuals are free to create meaning out of the voluntary relationships they construct in their lives.
To be clear: I'm not suggesting any role for the state in this (beyond treating such relationships as equal to heterosexual ones as a second-best solution), nor am I suggesting that it is "unlibertarian" to simply dislike such relationships. What I am saying is that I wish more libertarians would get past thin approaches that treat the marriage issue no differently than the issue of, say, whether municipal power companies are inefficient.
The marriage question is more than an abstract exercise in political philosophy; it goes to the very core of who we are as human beings and what it means to live a life of dignity. How someone committed to individual liberty can be anything less than supportive of the desire of gays and lesbians to be treated equally, both under the law and in the eyes of others, when it comes to how we face the common sorrows and joys of human existence remains a very frustrating puzzle to me.
On a related note, will folks on the Left attack the Paulson bailout plan for the naked violation of the rule of law that it is? From the proposal:
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
This abrogation of the rule of law, after all, is precisely what the Left has correctly opposed about the Administration's conduct in the"war on terror," so why not continue the same opposition here? Anyone want to take a guess at the odds of that happening?
Cross-posted at The Austrian Economists.
"The decisions that will be made this weekend matter not just to the prospects of the U.S. economy in the year to come; they will shape the type of capitalism we will live in for the next fifty years. Do we want to live in a system where profits are private, but losses are socialized? Where taxpayer money is used to prop up failed firms? Or do we want to live in a system where people are held responsible for their decisions, where imprudent behavior is penalized and prudent behavior rewarded? For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists."
"An extraordinary week in Wall Street history drew to a close with one of the biggest two-day rallies on record.
"Financials, whose violent movements have consistently led the wider market over the week, gained the most from the prospect of a vast government intervention attempting to ease anxiety over near unprecedented turmoil in the financial system."
"Morgan Stanley and Goldman Sachs, whose analysts advised clients to buy each other’s shares on Friday, jumped 20.7 per cent to $27.21 and 20.2 per cent to $129.80, respectively. That pared their losses over the week to 29.4 per cent and 17.7 per cent.
"The later remained in talks with China Investment Corp and Wachovia, which climbed 29.3 per cent to $18.75.
"Meanwhile, Washington Mutual – particularly hard hit in recent sessions and which was continuing on Friday its search for a buyer – soared 42.1 per cent to $3.75.
"Over the week, it has gained 55.7 per cent."
Jane S. Shaw
"Government to the rescue" -- what an absurd idea. But just about everyone's buying it.
Not folksy local columnist Dan Barkin of the Raleigh News and Observer, however. He recalls how the federal government promoted home-buying in the mid-1990s:
"The federal government leaned heavily on banks to loosen up lending and eliminate 'red-lining,' the withholding of mortgages from entire neighborhoods. Down payments were reduced. Mortgages were available with low initial interest rates. The government and the big mortgage purchasers -- Fannie Mae and Freddie Mac -- pushed hard to streamline the underwriting process."
He recalls the movie"It's a Wonderful Life," which condemns Henry F. Potter, the mean-spirited banker who hated to lend money. Barkin even suggests that when the movie is shown again at Christmas"maybe we'll realize that Henry Potter got a bad rap." Potter actually worried about"whether people could make the payments."
Cross posted on The Trebach Report
David T. Beito
In this short clip from the notorious, pro-Stalin film from 1943, "Mission to Moscow," Walter Huston, playing the American ambassador, Joseph E. Davies, smears pre-war non-interventionists, defends the Soviet invasion of Finland, and depicts the Soviets as peace-loving.
Apparently, Davies was not a typical fellow traveler. According to Soviet archives, he purchased art at discount prices that had been confiscated from purge victims.
Other stock markets also rose tremendously: on Friday the S&P 500 closed up more than 49 points, or about 4 percent; the Nasdaq closed up almost 75 points, or 3.4 percent.
Exactly what the government will do remains to be determined. Officials from the Treasury and the Fed and members of Congress intend to spend the weekend hammering out the details. Be afraid, be very afraid. The impending measures come close on the heels of a series of wrong-headed actions undertaken by the government, including the bailout/takeover of Fannie, Freddie, and AIG; massive injections of new credit by the Fed and other major central banks; and the SEC’s prohibition of short-selling for almost 800 financial-company stocks. If, as anticipated, the Treasury moves next to assume the rotten paper currently being held by banks and other lenders (presumably mortgages and related securities, for the most part), then it is fair to conclude that the government has given up entirely on the free market and has decided to occupy the wasteland where outright socialism and economic fascism meet.
Of course, everyone engaged in this hysterical flailing will assert that the objective is only to save capitalism in a crisis. Such government saviors always make that claim, oblivious to its absurdity. Franklin D. Roosevelt and his gang claimed to be saving capitalism, too, but look at what was left of it when they had finished their work.
Likewise, the emergency policies the government is currently concocting will certainly have extensive ramifications, many of the unanticipated, for years to come. The encouragement to moral hazard now being given to financial institutions promises to make them more reckless than the biggest plunger in Las Vegas. After all, any profit will go into their pockets, but any big losses, they will reasonably expect, will be sloughed off onto the taxpayers. Yes, indeed, that image shimmering on the horizon is Casino Capitalism. Henry Paulson, Ben Bernanke, and the rest of these statist saviors are making a mighty contribution to this country’s economic ruin.
Notice, however, that the investors love every bit of it, just as they did after Nixon audaciously displaced the broadcast of Bonanza to announce his New Economic Policy to the nation on Sunday evening, August 15, 1971. The people loved it, even those with money at stake. As Stein observed, “[t]he Dow-Jones Average rose 32.9 points on Monday after the President’s tgare two dates matched in history: August 16, 1971, and September 19, 2008. On those days, investors demonstrated that they were willing to sell the soul of capitalism for a shabby promise of temporary government salvation. What Stein wrote about the 1971 episode in his book Presidential Economics might with equal validity be written about today’s events: “This reaction is important to the history of economic policy in America. It shows how shallow was the general support in principle for the basic characteristics of a free market economy.”
How shallow it was; how shallow it remains. The question is, How many times can the government race its emergency bailout vehicle toward the cliff without dragging the entire economy irretrievably into the abyss of outright socialism or full-fledged, Mussolini-style economic fascism?
I thought immediately of this idea today as I read the Washington Post’s report of the Fed’s loan/takeover of the insurance giant AIG. Having heard preliminary discussions of the possibility of such a takeover, I had wondered about the government’s authority for such an action. The Post’s report answered my question as follows: “The Fed is using the emergency authority it was granted during the Great Depression. By law, the Fed can lend money to any individual, partnership or corporation in unusual and exigent circumstances, when the borrower cannot access funds in other ways. The power had not been exercised until March, when the Fed used it to rescue Bear Stearns.” I confess that I had not known about this particular Fed authority until today.
So, here we are in the year 2008, witnessing the use of a power that had lain dormant in the government’s arsenal for more than 70 years, a power whose existence, I am confident, few people were aware of. Beware, all ye who would endow the state with amplified powers. It may refrain from using those powers for a very long time. Yet, there they lie, sleeping peacefully, but capable of being awakened and used with highly consequential (and, as in this case, extremely unfortunate) effect.
We could use an updated version of RA Brady's, Business as a System of Power (1943), a favorite of C. Wright Mills, which candidly described in the midst of WWII, the political economies of all of the major powers. Corporatism is now clearly the big winner, and will have a harder time disguising itself as any kind of Capitalism.
David T. Beito
Barney Frank, 2003. See here.