Of Victory and Peace

June 6, 2022 Leave a comment

Photo by Mikhail Volkov on Unsplash

If it ever had any, the Russian government has no hope of victory in its war against the people of Ukraine.  When the Russian invasion first began, I wrote in wonder about what the people of Russia gain from this war.  So far, for them it has been all loss, and the prospect is not brighter. 

Thousands of soldiers dead and more wounded, thousands of civilians dead and more hurt and suffering, the Russian army, air force, and navy weakened, the economy rattled, decades of efforts of goodwill with neighbors squandered—no one comfortable sharing a border with Russia—what does all this do for the people of Russia?

British war historian and scholar—arguably with the greatest insight of any 20th century student of military affairs—B.H. Liddell Hart wrote this in his classic work, Strategy:

“Victory in the true sense implies that the state of peace, and of one’s people, is better after the war than before.  Victory in this sense is only possible if a quick result can be gained or if a long effort can be economically proportioned to the national resources.”  (B.H. Liddell Hart, Strategy, 1967 edition, p.357)

A “quick result,” perhaps once envisioned, quickly disappeared.  The loss of national resources is already disproportionate to any chance of economic gain from the war.  The current question is, how long can the Russian economy endure the ongoing costs?  Genuine victory for the government of Russia and the people for whom that government has responsibility is no longer on the table.  As we once saw written on the side panel of a home repair truck, “Your Satisfaction Is Not an Option”.

Hart offered a rational next step for just such a situation:

“Peace through stalemate, based on a coincident recognition by each side of the opponent’s strength, is at least preferable to peace through common exhaustion—and has often provided a better foundation for lasting peace.”  (Strategy, p.357)

For the Russian government, that may not match its hopes for victory, but chances for victory are gone.  For the people on both sides of the border—soldiers and civilians—the current stalemate offers possibilities for peace.  For leadership made wiser by the war, peace—indeed, a foundation for a lasting peace—may be within reach.  Is further plumbing of the prospects for mutual exhaustion necessary to get there?

Hart’s studies offer this hope:

“. . . past experience leads to the conclusion that nations might often have come nearer to their object by taking advantage of a lull in the struggle to discuss a settlement than by pursuing the war with the aim of ‘victory’.”  (Strategy, p.358)

This is not a game where there must be a winner.  This is life and death.  May the people of Russia and Ukraine be allowed to return to the tasks of living.

Filed under international relations, leadership, peace, Russia, statism, Ukraine, war Tagged with , , , , , ,

Of Hostile Invasions and Their Burdens

February 25, 2022 1 Comment

Photo by Nadiia Ganzhyi on Unsplash

It is hard to see what Russians gain from their government’s invasion of its neighbors.  Certainly neither Russian nor Ukrainian soldiers benefit.  That, however, is also true of the people of both nations, now and in the days to come.  How are the leaders of Russia, by recourse to bloody war, serving the people whom they govern?

Vladimir Putin apparently forgot why a prior Russian President, Boris Yeltsin, took Russia out of the Union of Soviet Socialist Republics.  Yeltsin knew, as even Soviet boss Mikhail Gorbachev knew, that the rest of the USSR was a burden and economic drain on Russia.  Supporting and controlling the other Socialist Republics cost more than they returned.  So Yeltsin did what had been until then unthinkable (or unspeakable)—until he did it.  As President of the Russian Soviet Federative Socialist Republic, Yeltsin considered what was best for the people of Russia and exercised the nation’s right under the Soviet Constitution to withdraw from the USSR.  It did not take Gorbachev long to recognize that he could do little about it.  Friendless and no longer fed by Russia, the USSR peacefully dissolved.

Today’s Russian economy is noticeably better than the heavy Soviet socialism.  Yet it continues to strain under weighty government control, corruption, and crony favoritism.  Ask the people in far eastern Ukraine—the part dominated by Russia for the last several years—how well Russian economic policies and promises are working for them?  They will not tell you, because they are not allowed to say.  Ask their neighboring Russians how much they have benefited from Russian control of those eastern provinces.  Take your answer from the looks on their faces.

Are those eastern Ukrainian provinces, with their boarded up windows, idle workplaces, unrepaired buildings and streets, and shortages of much of everything, a model for what Putin intends for the rest of Ukraine?  Ukraine has its economic troubles and corruption and cronyism, too, but the Ukrainians who have voted with their feet show why they have been leaving the Russian “liberated zones” and moving west.

Whatever the Russian government may declare to be success by its invasion, I cannot but think that it will be for naught.  Any bloody ground they seize, any unwilling people they capture, will be a constant drain on Russia, indeed the more the worse.  That is the hostile invaders’ burden and curse. 

After so many are killed and so much is destroyed, how long will Russians think that their government’s adventure was worth it?  What weights will Putin’s escapade be laying upon his people to carry? The longer it goes on, the worse it gets for all concerned.  From the perspective of the people of Russia and Ukraine, I do not see how this ends well.

Filed under international relations, leadership, Russia, socialism, Soviet Union, statism, Ukraine, war Tagged with , , , , , , ,

Of Warming Planets and Cooling Economies

May 31, 2015 Leave a comment

Did you notice when the Obama Administration paused in its ballyhooing about global warming? President Obama and his officials had been busily hustling the warming of the planet and its attendant disasters—which they insist can only be fixed by increasing government control of our lives, from birthing to breathing. The President was in Florida, blaming the future hurricane season—which has not yet happened—on global warming. “The best climate scientists in the world are telling us that extreme weather events like hurricanes are likely to become more powerful.” What President Obama did not mention—anywhere in his speech at the National Hurricane Center in Miami—was that the scientists predicted a “below-normal” hurricane season for 2015. Was that mercy because of or in spite of global warming?

Perhaps we should not blame the President for leaving that little item of information out, since for each of the last several years the cited “best climate scientists” (whoever they are) had predicted extraordinarily active and destructive hurricane seasons. Since each season turned out to be unusually mild, the official forecasters have now changed their tune, putting themselves solidly in-sync with recent trends. Do not put yourself at risk with a long investment on it either way.

As for global warming, however, the President and those who say they agree with him insist that the debate is over (in either science or a free nation can the debate ever really be over?), meaning that it is unacceptable to disagree with them. If you can’t say something calamitous, then don’t say anything at all.

Then, suddenly and quite unexpectedly, the global warming talk stopped. There was a mercifully, if brief, moratorium on warming warnings. Instead of predicted calamity, a real calamity was at hand that required some ‘splaining. The most recent report on the nation’s economic growth was announced. Not only had growth slowed, as measured by government number crunchers, the economy had actually declined in the first 3 months of 2015. That seemed to come as a surprise to no one who is either without a job or working in a job that is something less than the job held before 2009. But it was unwelcome news to the Administration that has been working on economic revival for going on seven years.

Instead of global warming, the Administration needed cold weather to blame for the decline in economic activity during January, February, and March. The lead official White House explanative was, “harsh winter weather”. I did not make this up, and you are not supposed to notice how convenient White House excuses are. It was better that global warming talk was cooled for a moment lest people recognize the contradictions in the official propaganda and begin to wonder whether White House policies were working.

Winter weather is not a novel excuse for failed government programs. The old Soviet Union blamed repeated crop failures on harsh winters (in Russia? Who knew?). The similarity in excuses used by the Obama White House and the Soviet Politburo is not accidental. Central planners can survive only if they have at the ready a list of excuses of things beyond their control. The list could be a long one, since in the end there is not very much about the economy that central planners can control, if control means making things go they way intended. To quote the character Jayne Cobb, in Serenity, “what you plan and what takes place ain’t ever been exactly similar.”

Filed under Barack Obama, communism, demagoguery, economic growth, economics, environmentalism, free speech, freedom, future, global warming, government, jobs, recession, Russia, science, socialism, Soviet Union, statism Tagged with , , , , , , , , , , , , , ,

Of Lessons of History and Preventing Wars

May 24, 2015 Leave a comment

History does not repeat itself, not precisely. Humans, though, have been doing similar things for thousands of years. History offers patterns from which we can learn. That is to say, that there is nothing new that is wholly new.

There is too much for comfort in the current international situation—and the U.S. response to it—that feels like the 1930s. The republics of the West, focused inward, struggle with economic traumas and work hard to make them worse in the name of making things better. National leaders even when aware of storm clouds on the global horizons ignore them if they can, and minimize the dangers if they cannot, applying symbolic but ineffective remedies where action is unavoidable. Aggressive second rate powers strive for recognition as though first rate powers, conspiring to disrupt the international equilibrium and the peace that rests on it to get what they want. While potential enemies rapidly rearm, the West disarms in the name of peace, heedless of the wars and conflicts that fill the vacuums of their military retreats. Again, I am talking about today, not the 1930s, but the parallels are disquieting.

The United States has gotten into unwanted conflicts, especially in the 20th Century, when adversaries miscalculated our nation’s willingness to sacrifice to defend crucial interests. Weak-kneed, pusillanimous, or just unwise national executives invited war by giving enemies many reasons to doubt our will and resolve: unprepared armed forces, verbal warnings enforced with bluster, shirked fulfillment of pledges to help endangered friends. The Japanese thought that isolationist and poorly armed America would seek a negotiated settlement after Pearl Harbor, the North Koreans were confident that we were too war-weary to defend the South, Saddam Hussein—twice—believed that we would not want to fight a war in the sands of Iraq. Our responses to frequent goading did little to dissuade them. Logically following our miscues they each went too far at last. They all could have been stopped by a determined show of strength early while war remained avoidable, when we could have corrected their calculations at lesser cost to us and to them.

The communist leaders of China are by nature cautious. You survive the palace intrigues of the Forbidden City by avoiding mistakes, not by making them. But the Chinese leaders also have big plans, increasingly marked on a global map. The leaders of the regime in power are the heirs of their founder, Mao, who liked to refer to the United States as a paper tiger. For a time Nixon and Reagan disabused them of that notion, but they seem to be reconvincing themselves of Mao’s insights. Where is the recent evidence to the contrary?

At first, Chinese forays were camouflaged by equipping and supporting the adventures of the proxy North Koreans. Lately, the Chinese military itself has repeatedly hacked into U.S. civilian and military computer systems, with efforts ranging from nuisances to theft of military and technology secrets. The rapidly expanding Chinese navy is now building aircraft carriers, though it has no overseas enemies. In a related effort, the Chinese are dredging up artificial islands in the South China Sea, a thousand miles from their shores, closer to the Philippines, Malaysia, and Vietnam than to the southern coast of China. With naval stations and air strips on the islands, the Chinese are asserting a dramatic expansion of territorial waters measured from these militarized sandbars. Connecting the dots from new island to new island (there are some half dozen or more of these land-creation projects underway), the Chinese navy alleges control of sea lanes and airspace, demanding that planes or ships not pass their theoretical net without Beijing’s permission. The U.S. has made protests, recently backed up by a reconnaissance plane flying across what has been international waters and free airspace since before and after World War II. At least for the moment the Chinese only fired words, eight times (according to a CNN story) warning the U.S. plane to stay away. “This is the Chinese navy. You go.”

This is a minor disturbance in a major geopolitical struggle. Busy trade lanes cross the South China Sea. In the context of Beijing’s acquisition of an offensive, MIRVed nuclear missile arsenal now approaching the size of Russian and U.S. nuclear forces (the U.S. being the only one developing plans to reduce its stockpile), the risks are becoming very high.

China has big domestic problems. The economy is slowing, if not already in recession. That will make it even harder for Beijing to keep quiescent a population only half of which has experienced extraction from grinding communist poverty. An aging population will be difficult for the declining workforce to support in coming years. And then there is the legacy of China’s one-child policy, more than 100 million males with no possibility of marriage and family. What to do with those restless men?

Throughout history, China’s biggest dangers have usually been from Chinese, vulnerabilities from the outside attracted only when there was weakness caused by internal struggles. Might the heirs of Mao seek to distract internal discontent with international adventurism? A lesson from history is that the more autocratic the regime, the more likely it is to resort to this gambit.

We need a foreign policy that convinces the Chinese leaders how dangerous and unrewarding such moves would be. That becomes harder to do the more we allow the Chinese to fool themselves that it might be otherwise. That was a pattern of disaster for Tojo, Hitler, and others—and for us.

Filed under America, China, communism, economics, exceptionalism, Franklin D. Roosevelt, international relations, military, national defense, national security, peace, republics, Ronald Reagan, Russia, war Tagged with , , , , , , , , , , , , ,

Of Presidents and Training for the Job, 2015

March 22, 2015 Leave a comment

More and more I have been struggling for the words to express my concern over the frightening incompetence of the current President of the United States. Barack Obama’s economic blunders deepened and prolonged the recession and bequeathed to us the most anemic recovery of modern times. Most of us have been seriously harmed by those policies, some more than others. Unfortunately, the extent of his economic errors are obscured by the benighted economic management in Europe, which amazingly is managing even to underperform ours.

President Obama’s politics have yielded the opposite of what he publicly promised: division in place of unity, secrecy and deception in place of open government, exclusion of those who disagree with him in place of inclusive embrace of open debate, privilege for the few in place of opportunity for the many, racial bigotry for political gain in place of a “post racial” society, rule by breaking laws and ignoring the Constitution in place of rule of law. I am sure that you could easily lengthen the list. Again, these perfidies have been to some degree obscured by congressional Democrat leaders far too willing to compromise their duties of office and the rights of the legislative branch of government, all to cover up and support the Obama Administration’s outrages on the nation and the political institutions of the Republic.

Most frightful of all, however, is President Obama’s dangerously bungling foreign policy. No friend of the United States is safe from this Administration’s blunders. Vladimir Putin, the boss of a second rate economic and military power—albeit one with a formidable nuclear arsenal—has been able to engage in 19th Century military adventures of invasion, conquest, and territorial acquisition against little more than vacuous bully talk from Obama, the emptiness of which has produced similarly pitiful responses from the leading Powers of Western Europe, derision from Moscow, and fear among America’s friends only recently escaped from the Soviet Union. China commits aggression against India and the Philippines, threatens Japan, and toys with close relations with Russia to isolate the United States, while openly engaging in cyber attacks on the U.S. government and American industry. Islamist barbarians increasingly brutalize Muslims, Jews, Christians, and humanists alike, undeterred by inchoate responses from Obama, who asserts leadership while failing to lead, other than with his transparent policies of pusillanimity and indecision. American allies in the Middle East feel abandoned or betrayed, while enemies are emboldened; the best counter strategy that Barack Obama is able to envision is a plan that might delay but will not prevent the nuclear arming of the mullahs of Iran—committed to the incineration of Israel, the more Jews killed the better. Each day seems to extend the list of foreign policy failures.

While considering the consequences of an amateur in the Oval Office, I came across a brief note I wrote during the 2008 presidential campaign. It might be immodest for me to point out how correct my warnings proved. I can make no claims to perspicacity, as all of this was rather obvious. No self congratulations are in order. It is too dangerous a world to trust the Presidency of the United States to one whose inexperience is only matched by his hubris. This is what I penned August 25, 2008, just before Barack Obama received the nomination of the Democrats:

There are some jobs you just cannot safely do without proper training and experience. Flying an airplane is one that comes to mind. Driving a bus is another. I would put being President of the United States in the Twenty-First Century on the list, too.

President of the United States was a tough job in the days of George Washington. It was even a challenge in the days of Millard Fillmore. It has not become any easier in recent years, and next year it will be a very big job. Considering the global responsibilities of the United States, with several irresponsible oil-drunk regimes threatening peace and freedom (ours and other’s) around the world, can we afford to enroll our new President in a foreign policy on-the-job-training program?

Economically as well, there is little room for error. So far we have gone through a year and a half of the housing market bust without falling into a recession. But our economic growth is anemic. A small false step or two can put us into a full-blown economic decline, exploding banking and financial markets that will then take years to recover. It is important that economic policy next year be led by someone who understands economic growth and how to promote it. The formula for growth—low taxes and steady prices—is well known to those who have learned the lesson; we do not need a novice who does not have enough experience to know that you cannot tax and spend your way to prosperity. We cannot afford his experiments with our jobs and livelihood.

That is why it is breathtaking that a major political party is on the verge of nominating for President someone so inexperienced as Barack Obama. I am unable to recall a single nominee for President, by any major party, less prepared for the office than Barack Obama. Really, there is the challenge for you. Name a nominee—Republican, Democrat, Whig, Federalist—less prepared than Obama.

Barack Obama likes to liken himself to Abraham Lincoln. I cannot claim to have known Abraham Lincoln or assert that he was a friend of mine, but I do say, Barack Obama is no Abraham Lincoln. Even liberal exaggerations of Obama’s undistinguished career cannot make it compare favorably with the long and grueling life experiences that schooled Lincoln for the White House.

In short, Obama does not have the training for the job. It may be that the Democrats’ talent pool is so thin that he will be nominated. But the job of President is too important—to all of us—to be extended to someone so unready.

Filed under banking, Barack Obama, bubbles, China, Congress, Constitution, deficit spending, economic depression, economic growth, elections, European Union, hubris, inflation, interest rates, international relations, Iran, Islamists, Israel, jobs, law, Middle East, national security, politics, racism, recession, rule of law, Russia, Soviet Union, taxes, Ukraine Tagged with , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Of the Soviet Union and the European Union

April 8, 2014 Leave a comment

Do you remember when the Soviet Union disappeared? Do you recall how and why? I hope that Vladimir Putin does. An accompanying question that needs to be considered is, why is Ukraine so attracted to the European Union?

To answer the first question briefly, we have to turn our attention to the final days of the old USSR, then led by Michael Gorbachev. Russia, the largest member of the 15 “Republics,” was led by Boris Yeltsin. Under Yeltsin’s leadership, Russia chose to withdraw from the Soviet Union. He said that Russia was weary of carrying the burden—economic, military, and otherwise—for the others. Russia just left, and after a brief try there was nothing that Gorbachev could do to make Russia stay. Without Russia, there was not much left to the Soviet Union, and the other members said “enough,” too. The Soviet Union was gone with hardly a whimper and little lamented except by the class of privileged communist leaders.

The word is that current Russian President, Vladimir Putin, wants to put the band back together, that he wants to reassemble the old Soviet Union, with the coercive influence of the Russian military as his chief tool. Not that he wishes to recreate the communist paradise of Lenin and Stalin. His vision reportedly reaches back to the great days of the czars—though presumably without the trappings of monarchy and royalty. Putin is through and through a Russian, so he wants to recreate a Russian Empire. Continuing along the path that he has set out, the path of creating an empire of the czars after the mode of the Caesars, he is unlikely to succeed. Been there. Tried that. Did not work.

It is hard to understand why Putin would choose that model. Why would he want to deal himself and the Russian people a losing hand? The Russian-dominated Soviet Union, assembled by the Red Army, failed. It did not fail because the Soviet leadership did not try hard enough, or was stingy in expending resources, or showed too little military muscle, to hold it together. It failed because—as Yeltsin recognized—it was costing too much to hold it together, draining too much life from Russia. The USSR was a bankrupt model (morally and financially) for building an empire, especially for keeping an empire. There were not enough hands to hold on tight to everything and everyone.

Perhaps Putin figures that without the burden of communism a strong Russian government could hold and control successfully where the commissars could not. In other words, he would reject the model of Soviet communism and embrace the model of a modern non-communist authoritarian regime, like the Third Reich. That one did not work so well, either.

There is a model available, tried and tested, that would work. It would unleash the power and greatness of the Russian people and at last make the most of the amazing resources of the Russian land. The results would exceed by far even the exaggerated dreams of czars and commissars. Does Putin have the vision?

I refer to the model of freedom, only briefly known to the Russian people, only occasionally offered in limited experiments, experiments that were always wildly successful, surprising only to the governmental leaders who tried them and then abandoned them, frightened by the successes. Applied boldly, we would see a Russian miracle that would change not only Russia but the world—all for the better. Free men and women, operating in free markets, protected by the rule of law enshrining individual rights, erected on the foundation of a constitutionally limited government, would be a model offering limitless growth and prosperity. Moreover, the variety of peoples and cultures in a land as vast as Russia could be recognized and accommodated, attracted and joined together, within a strong but genuine federation, united by the ties of thriving national markets, reassured by the rule of law supported by a just and independent judicial system to safeguard fundamental rights.

A dream? Perhaps it is, but a realistic one. This offers the answer to the second question. Why is Ukraine attracted to the European Union? Does not the European Union offer just such an option? Is not the economic prosperity and individual freedom—and room for national expression—found in the European Union obviously different from the offering of today’s Russia and the memory of the old empire? Is it not fear of the specter of the czars and commissars that haunts Ukrainians?

Was not the creation of the European Union once just such an impossible dream as a truly free and just Russian federation? For hundreds of years the fathers and mothers of the peoples of the European Union made war, large and small, upon each other, French against Germans, Germans against Austrians, Austrians against Poles, Poles against Germans, and round and round again. Today such wars among these same people are unthinkable.

Assembling such a federation takes time, patience, and skill. It may be too tempting for an impatient Putin to rely on his military muscle to make an empire. Perhaps for a brief time he could succeed by force to reassemble much of the old Soviet Union as a greater Russia. The greater challenge, the one that has proven impossible, is to hold such an empire together by force.

Such empire of force would very soon prove ungovernable, with rebellions large and small flaring up constantly. The brutality exerted to try to hold it all together would make the task of unity even harder and progress nigh impossible. It would drain away, once again, Russia’s strength in an unending effort, just as it eroded the strength of the USSR. Maintaining greater Russia by force has always proven a burden far greater than its worth, in the long run a losing effort that has collapsed in a weaker and vulnerable Russia. World War I was one example, the end of the Cold War yet another.

The people of Russia—along with its neighbors—can have a better and brighter future. A Russia built on individual freedom, free markets, free peoples, would unleash a new era of prosperity. Russia would become a beacon of wealth and success, with all Russians participating. Instead of Russians leaving to find their future, they would return to their homeland. If Japan can prosper on islands scarce in natural resources, imagine what free Russia could do, rich in resources, harnessed efficiently by the discipline of the markets.

Instead of an empire of force, a free and flourishing Russia would draw its neighbors to it as the European Union beckons to them today. No longer facing Russian fists, neighboring nations will come knocking at the door, eager to associate with Russia voluntarily, attracted by opportunities for betterment.

Of course, that is the theory. In practice, the more that Russia seeks the path of freedom and abandons the chimerical lure of military conquest, it will succeed. Russia would then achieve its real greatness in the world, the only way that it ever really could.

Filed under communism, economic growth, European Union, federalism, freedom, markets, military, prosperity, rule of law, Russia, socialism, statism, Ukraine

Of the Rule of Law and the Separation of Powers

March 27, 2014 2 Comments

In the 1990s I was part of a congressional delegation to Argentina. At that time the Argentine economy was growing strongly and steadily, inflation was low, the currency was pegged to the dollar, convertible 1-for-1. Trade barriers were being lowered, commerce was booming. I recall asking Argentines what could possibly darken what seemed to be a very bright future. They were quick to reply: “Here in Argentina we have no rule of law. You can have no confidence in getting justice from the courts.”

That reminded me of Washington Irving’s observation on a European judge, from his famous work, The Alhambra:

It could not be denied, however, that he set a high value upon justice, for he sold it at its weight in gold.

Not long after that visit, the politics of income redistribution and confiscation threw the Argentine economy into turmoil, where it has remained.

I recently spoke with an economist friend of mine, who was waxing eloquent about the attractive monetary and tax policies in Bulgaria. I remarked that this would probably invite foreign investment. He replied, “No, there is no rule of law there.”

The point is that good economic policy cannot long survive inadequate legal safeguards. Many businesses that made major investments in China, attracted by a market of a billion people, have learned that the lack of a reliable legal and justice system in China has undermined much of the business value they thought to find. A similar story has been holding back investment and economic development in Russia.

Bringing that home, I would venture that concern for changing rules (or even lack of rules)—the substitution of arbitrary bureaucratic powers in Washington over objective rule of law—has been inhibiting more robust investment in the United States, a major cause for our current anemic economic recovery.

An ancient king in the Western Hemisphere, named Mosiah, warned, “because all men are not just it is not expedient that ye should have a king or kings to rule over you.” (Mosiah 29:16) Because men are not consistently just, freedom has historically rested upon rule by law rather than rule by men.

Fundamentally, that was the very reason for the American Revolution. Our revolution was based on the rule of law, an assertion of the rule of law, a response to violations of the rule of law by the English king and parliament. Most of the Declaration of Independence is a lengthy litany of violations of law by the English rulers. The Revolution was designed to take power away from man and men and rest it upon laws and rights, soon to be secured by a written supreme law embodied in the Constitution. Any erosion in the force and effect of the Constitution is an erosion of the rule of law and of the freedoms that rely upon law for their defense.

The Progressive Movement that thrived about a century ago, and found a major advocate in the federal government in President Woodrow Wilson, aggressively proposed an alternative to the rule of law. This program was the Rule of Experts. Their new view—and it really was a very old view though they dressed it up in modern-sounding rhetoric—was that there are Benign People, Experts, who know the process of modern government better than most people do, to whom we can safely yield governing authorities.

It sounds akin to the ancient theory of Divine Right of Kings, that the monarchs of the world are chosen by God and endowed with greater wisdom and perspective than the average man and woman. To their benign expertise and fatherly care was to be entrusted the governance of the rest of us.

The modern Rule of Experts people have much the same view, that these experts were endowed by their universities and other sources of expertise with ability far above that of most, and it would be wise to trust ourselves to their benign care. Not very democratic, and in fact these Benign Experts make no secret of their impatience with the Congress and other constitutional brakes on arbitrary authority.

As King Mosiah wisely pointed out that men are not always just, it is also appropriate to recognize that putting men in government does not make them any more reliably wise than the rest of us. The American Founders thought to address this problem by dividing political power among not only three branches in the Federal Government but also by embracing the federal system of dividing government with the States.

The current regulatory structure and program of the United States rest heavily on the idea that Benign Experts should be entrusted with authority for many of the big questions facing Americans and for many of the much smaller questions, too. That is certainly the structure of the Dodd-Frank Act, to offer one recent, prominent example among many.

Charles Calomiris, of the Columbia University business school, described the theory of the Dodd-Frank Act and related regulations this way:

The implicit theory behind these sorts of initiatives, to the extent that there is a theory, is that the recent crisis happened because regulatory standards were not quite complex enough, because the extensive discretionary authority of bank supervisors was not great enough, and because rules and regulations prohibiting or discouraging specific practices were not sufficiently extensive.
(Charles W. Calomiris, “Meaningful Banking Reform and Why it Is so Unlikely,” VoxEU, January 8, 2013)

This program of federal regulation has been imposed increasingly in contravention of the basic constitutional principle of separation of powers, by merging legislative, executive, and judicial authority in “independent” regulatory agencies. The unelected federal regulator today decides the details and specifics of binding mandates, identifies violators of those regulations, assesses guilt, and applies penalties.

Taken together our current regulatory system, by merging rather than maintaining the separation of powers of the Constitution, is eroding the rule of law. It is returning us to the age old practice of rule by men, with all of the potential for abuse of rights and freedoms, abuses that fill up most of the sadder pages of human history.

During the debate over the creation of the new financial consumer Bureau, Senate Banking Committee Chairman Dodd boasted that with this new agency people would no longer have to come to Congress for the enactment of new consumer laws. The Bureau would take care of all that.

There are serious operational flaws—too often overlooked—in the program of governance by Benign Experts. First, the regulators are not dispassionate umpires, limited to calling the balls and strikes. These umpires are also players in the game, the federal agencies each having their own set of particular interests and incentives that they take care of first.

Second, reliance on Benign Experts assumes an unproven, undemonstrated level of knowledge, insight, and forecasting skills. AEI President Arthur Brooks, in his book, The Battle, provides one of many examples of this flaw:

Federal Reserve economists were still forecasting significant positive growth and moderate unemployment in May and June 2008. They believed that economic growth in 2009 would be 2.4 percent, and unemployment would be 5.5 percent. What we experienced instead was negative growth, double-digit unemployment, and the destruction of at least $50 trillion in worldwide wealth. No one can get the numbers exactly right, to be sure. But getting them this much wrong certainly lends a whole new meaning to the expression ‘margin of error.’
(Arthur C. Brooks, The Battle, p.46)

It is not that regulators are dumber than the rest of the population, but they are no smarter either. The regulatory problems are increasingly too great for any designated group of humans to solve.

Third flaw, mission creep: power attracts power. Even if the tasks are too great, require too much knowledge, insight, foresight, and other skills in unachievable degree, the regulators still take them on, especially if the task increases the reach and influence of the agency.

I offer two examples from an example-rich environment.

Basel III capital rules started from a simple idea, that banks all around the world should be subject to the same capital standards. Capital (the financial cushion a bank carries against losses) is one of the three key elements of sound banking, the other two being liquidity and earnings. These international rules did not remain simple. Developed by an international team of experts from around the world, who labored on them for years, the rules number hundreds of pages, affecting the entire financial structure and business model of a bank, any bank. Congress was not involved and has no particular role in approving the rules. When exposed to public review they attracted thousands of comment letters expressing dismay that they are a bad fit for the U.S. economy. In the end, though, the regulators can go ahead with what they alone think is best.

A second example would be the Federal Reserve. One hundred years ago this year the Fed was created with a specific, identifiable, and rather narrow purpose, to provide liquidity for the banking system in times of financial stress. Before long, the Federal Reserve gained control of monetary policy and built up the practice of controlling interest rates. Later, it was given the task of promoting maximum employment. Under Dodd-Frank the Federal Reserve’s role in supervising banks and bank holding companies was expanded to supervising any financial business considered to be significant for financial stability. Each of these powers has drawn the Federal Reserve away from its narrow, objective task, to broad fields of subjective authority.

Perversely, this expansion of authority into more judgmental areas is eroding the independence of the Federal Reserve, making it yet one more political player in Washington, with responsibilities that far exceed human ability to fulfill, but which reach to every business and every home. The Fed’s prolonged policy of keeping short-term interest rates at or about zero has penalized all who save and live off of their savings, transferring trillions of dollars from savers to borrowers, the biggest borrower being the Federal Government, a policy decided by a small group of Washington experts.

I offer a partial but simple solution to point us back toward strengthening the rule of law and reducing our exposure to the rule of man and men, however expert they might be. Return the lawmaking and the policy decisions to the elected representatives. It is a messy process, but exactly the messy process that the Founders intended to preserve freedom from the encroachment of arbitrary and oppressive government. The regulators, which are theoretically part of the executive branch, should be left with the duty of implementing the laws and policy decisions that the elected and accountable representatives make.

If Congress were required to write the rules and mandates and delegate to the executive agencies only the execution, the mandates of government would be circumscribed by the limitations of a legislative body forced to be directly accountable for what it has wrought. It is easy for legislators to complain about bad regulatory decisions, when all too often these are decisions that Congress never should have delegated to regulators in the first place.

We would still have laws and regulations, but the laws might be more direct and specific, and perhaps fewer and surely smaller. We would probably not have Dodd-Frank Acts that number thousands of pages read by no congressman or Senator, containing a cacophony of half-baked ideas and multiple solutions to the same problem, all left for the regulators to sort out.

And legislators might recall this caution, from Thomas Paine:

Laws difficult to be executed cannot be generally good.
(Thomas Paine, The Rights of Man)

(First published February 17, 2013)

Filed under Argentina, banking, bureaucracy, Congress, Constitution, Dodd-Frank Act, Federal Reserve, federalism, freedom, government, interest rates, knowledge, law, progressives, rights, rule of law, Russia, statism, systemic risk, tyranny, Woodrow Wilson

Of Self Determination and Carving Up the World

March 24, 2014 Leave a comment

Woodrow Wilson unleashed some nasty asps of public policy on the world, the venom of which continues to work its misery on mankind. Professor Wilson as President pushed into practice the idea that American governance should be shifted from the people who elect Senators and representatives and entrusted instead to a cadre of wise men in the executive branch. Experts like himself, elite college professors and their best students, would know better how to manage the affairs of others than would the teaming masses of the nation left to make their own decisions.

Today, thousands of regulations, uncounted yards of red tape, and millions of bureaucrats later, we all live within a shrinking sphere of personal liberty, with diminishing control of our lives, permitted to make few decisions without someone we do not know having a major say in so much of what we have and do. Increasing numbers of our neighbors have effectively been rendered wards of the state, unable to manage their own lives without dependence upon a myriad of government programs that punish individual initiative and grind up families. Today, the most reliable predictor of poverty in America is being a single mother. Lured into the web of sweet-sounding sticky federal, state, and even local programs that promise help, these government victims are rarely delivered from poverty, and neither are their children or their grandchildren. This is surely not what Woodrow Wilson intended, but it is surely what his model of governance by experts has delivered. Obamacare is one of the most recent and obvious examples of this machinery of misery.

Yet it can be argued that nothing that Woodrow Wilson bequeathed has worked more harm than the destructive principle of “self determination,” imposed by Wilson and his international experimenters at the negotiations to rearrange the world after World War I. Of course, he did not act alone, but Wilson did much to make the world safe for World War II. Self determination worked its evil by institutionalizing perpetual turmoil in eastern Europe and the Balkans, as bickering and unstable micro-states created a power vacuum tempting for fuehrers and commissars to fill.

The concept of self determination can seem appealing as long as you do not pause long enough to consider how it might actually play out in practice and over time. The basic idea—and it does not go very far past this basic idea—is that every group of people has the right to find its own place in the sun, either with its own government or subject to another, whichever the group might wish.

It was this idea that Russian boss Vladimir Putin invoked to cloak his grab of Crimea. The people of Crimea had a vote (carefully monitored by Russian troops) in which over 95% said that they wanted to break away from Ukraine. And then they decided, almost the next day, that they wanted to become a part of Russia. According to the Russian Government, this was all very legal and in keeping with international law. It was self determination. Who could object? It was more than faintly reminiscent of the nearly unanimous votes in the nations of eastern Europe a generation ago—when occupied by the Red Army—in favor of communist regimes closely allied with the old Soviet Union. More self determination.

I wonder whether Professor/President Woodrow Wilson thought of how his principle of self determination would have worked in American history? What if Wilson instead of Lincoln had been President in 1861? Did self determination apply to the people of the southern states who wished to leave the Union?

I also wonder how dedicated Vladimir Putin really is to the principle of self determination? If it applies to Crimea, does it also apply to the people of Chechnya, who seem to be eager to be out of Russia? Are there other minority populations in Russia yearning to breathe free?

How about elsewhere in the world? Is self determination a universal principle worthy of universal application? Are Turkey, Syria, Iraq, and Iran ready to let the Kurdish minorities carve up their countries and realize their dream of a new Kurdistan? How about Muslim minorities in southern islands of the Philippines? The Tamil populated northern Sri Lanka? The Sunni-majority communities in Shiite majority Iraq? The multitude of tribal groupings in virtually every country of sub-Saharan Africa? Are all of the many minorities of China content with being governed by Beijing?

When would the bloodletting of self determination ever end? It has not ended yet, whether used as a justification for aggression or as a means of sustaining discontent. It is a ponderous legacy.

Filed under Abraham Lincoln, academia, Civil War, communism, freedom, healthcare, progressives, Russia, self determination, statism, Woodrow Wilson