Political moment

I turned this blog nonpolitical after my posts on politics generated too much acrimonious debate. I intend to maintain this policy. However, with the presidential election a month away and emotions in some neighborhoods of the blogosphere running high, I'd like to take a moment - just a moment - to touch on a political issue in a somewhat nonpolitical way.

If that's possible.

First, it's my impression that most of my readers are political liberals who support Barack Obama. At least this appears to be the case if I can judge by the comments I've gotten.

I'm a political conservative who agrees with Thomas Paine's famous prescription, "That government is best which governs least." Or I should say, I agree with it for the most part, though there are instances where strong government action is certainly warranted. In any event, I'm voting for McCain.

Right now it appears likely that Obama will win. This could change, but the current economic uncertainties seem to have pushed previously undecided voters into the Obama camp. Unless  a lot of voters change their minds, Barack Obama will be elected in November.

What I want to say is aimed at people, like me, who are a bit nervous about the prospect of an Obama presidency. As I said, probably most people who read this blog are not nervous about it, but some may be.

On conservative political blogs I've read some rather silly things lately. As the reality of a President Obama working with a heavily Democratic Congress becomes more plausible, some on the right are losing their bearings, as did some on the left during the Bush years.

Darkly pessimistic comments crop up on those blog threads - comments made by conservatives who fear that Obama, in concert with Nancy Pelosi and Harry Reid, will remake America as a European-style social democracy - that Obama's election will mark the end of the distinctively American experiment in limited government and free enterprise, and will lead inevitably and swiftly to a new USA that resembles Germany or France, a social welfare state with massive taxation and limited scope for economic freedom. No doubt there are some on the left who devoutly wish that Obama could effect this result, and even some who expect him to do so.

Whether or not this transformation of the United States is desirable is not a point I want to debate here. Instead, I simply want to say, to any conservatives or worried moderates who may be reading, that such predictions are most unlikely to come to pass.

Remember, first of all, that the American system of government was intentionally designed to frustrate attempts at radical, wholesale change. Even when one political party controls the executive and legislative branches, gridlock is more common than cooperation. Members of Congress - all 535 of them - have their own agendas and are answerable to their own constituencies. Even though majorities in both houses will be Democratic, many of the individual members represent districts and states that remain distrustful of big government. We saw a measure of that distrust when the public resisted the so-called bailout of our financial system.

When Bill Clinton came to office in 1993, he worked with a Democratic Congress, yet he was unable to enact the comprehensive health-care legislation spearheaded by his wife. It was Democrats who ultimately blocked that bill, because their constituents wouldn't swallow it.

Similarly, George W. Bush, working with a Republican Congress in the beginning of his term of office, was unable to pass controversial measures generally favored by his party, such as Social Security reform.

The point is that it is extraordinarily difficult to enact sweeping change even when a president and Congress are seemingly on the same page. The system itself thwarts most such efforts - as it was meant to do.

Another thing to remember is that the social-welfare approach took hold so quickly in Europe because Europe has little tradition of individualism. For better or worse, Europe has always been predominantly collectivist and statist in its impulses. America has a very different set of traditions, and while those traditions may have eroded somewhat over the past few decades, they have by no means been completely discarded. In Europe, people tend to see government as the solution. In America, people - or at least a great many people - tend to see government as the problem. This is a crucial difference, one that will not be erased simply by one election.

It's also worth noting that even Europe seems to have realized that the heyday of the social-welfare state is over. Both France and Germany have elected relatively conservative leaders who advocate major reforms aimed at reining in excessive government regulation and paring back the sometimes smothering social safety net. The long-term economic prospects of European countries are probably more worrisome than those of the US; France, for instance, seems to be stuck with endemic double-digit unemployment rates, and so far is is having little success in assimilating a huge influx of immigrants from the Middle East.

In a global economy, no nation can afford to be uncompetitive. Regardless of who is running the government of the United States, certain realities will have to be faced if the country is to remain a player in world markets. Excessively high taxation, smothering regulation, and counterproductive social-welfare policies are luxuries that even France and Germany have begun to realize they cannot afford. It is highly doubtful that America will adopt such policies at the very time when Europe is beginning to shrug them off.

Fears about a magical, overnight metamorpohosis of the USA into France are far from the worst of what I've seen. Some of the wildest, most unhinged comments are from panicked conservatives and libertarians who fear that Obama, if elected, will suspend the Constitution and declare himself president for life. "This could be the last free election in American history," they declaim. I would remind those folks that some on the left voiced similarly dire predictions about George W. Bush. Decades ago, a book was written called The Paranoid Style in American Politics. It concerned the McCarthy Era, but the paranoid style is still with us, on both ends of the political spectrum.

I do not think there is any likelihood that Obama (or Bush) would try to stage a palace coup. And if any president ever did try such a thing, there would be immediate resistance from both the citizenry and the military. The offending president would probably end up before a military tribunal in short order. Normalcy would be restored, and life would go on.

Some people like to imagine that we are living in the last days of ancient Rome or the waning months of the Weimar Republic. These analogies are overwrought. The differences between ancient Rome or pre-Hitler Germany and modern America are far greater than the similarities. Julius Caesar came to power only after all normal processes of democratic government had broken down; Hitler achieved high office after Germany lost a world war, underwent a crushing hyperinflation, and saw an almost total collapse of social order. People who think that America is on the brink need to read more history; they don't know what the brink looks like. Most of us still have it pretty good, and we will continue to enjoy a life of comfort and freedom that our ancestors could never have dreamed possible.

The blogosphere is a great source of information and opinion, but unfortunately the loudest and most hysterical voices are often the ones that receive the most attention. My point in writing this post is simply to suggest, to those on my side of the political debate, that it's a good idea to keep things in perspective. While I disagree with most of Obama's policies and think he is likely to be a rather poor president if elected, it is nothing but wild exaggeration to say that he represents a threat to the continued existence of America as a free country, or that the elections of 2008 may be Americans' last chance ever to cast a ballot.

I even read one blog commenter who said, in apparent seriousness, that he plans to kill himself if Obama wins, because he does not want to suffer through the prolonged death throes of Western civilization which would inevitably follow. He rattled off a litany of disasters and concluded that he would prefer to put a bullet in his head than to face such horrors. I doubt he'll go through with it, but you never know. This is the kind of overreaction (to put it mildly) that irresponsible and extremist bloggers sometimes encourage. By painting everything as a crisis, they scare people into thinking the end is nigh.

I do not believe the end is nigh. This is only an election. In two years - a very short time - there will be another series of elections and a whole new chance to change the direction of the country. Regardless of what happens this November, the consequences are likely to be temporary, and to be much less severe than the scare stories cooked up by our imaginations and given free run in some of the more shadowy corners of the Web.

This has been a long and tiring election season, with overheated rhetoric on all sides. People need to kick back, cool off, and chill out. And perhaps they could bear in mind Rudyard Kipling's wise advice:

If you can keep your head when all about you
Are losing theirs and blaming it on you ...

Comments

[Pete]

Remember, first of all, that the American system of government was intentionally designed to frustrate attempts at radical, wholesale change.

I would have said that after the credit crunch, change will be forced upon us. And if the system is designed not to be adaptable, it will break. Economic Darwinism, Lesson One.

[Øst!]

What exactly, is even so bad about a socialism? Look at Norway - the cost of living there is so high, but many middle-class people make over a thousand kroner (about 160 USD) a day that they, after they pay taxes, still have quite a healthy sum in the bank on which to spend money on luxury items, and have to save for less time to buy expensive foreign items or go on vacations.

There's a bunch of reasons why Norway is #1 on the HDI.

[william]

Oh boy politics this should get interesting.

“And if the system is designed not to be adaptable, it will break. Economic Darwinism, Lesson One.”

If the system is not designed to be in line with spiritual laws and lacks understanding of human nature it will self-destruct. Universal law 101. Ok maybe Universal law 701

We are presently in a condition called “Can’t see the forest for the trees” phenomenon.

Nationalism, patriotism, political ideologies, religious beliefs, societal and parental conditioning can overwhelm the rational mind. Granted they may be needed at this stage of our human evolutionary process but this does not mean they do not have interesting side effects.

Here is a web site that allows the reader to read in English what other countries are saying about the USA. I find much of the reading interesting.

http://watchingamerica.com/News/#newssources

The recent SNL skit was political humor at its best at least I found it humorous. I have watched it four times and managed to laugh out loud all four times. Since these “debates” began I have heard SNL ratings have really improved.

http://www.nbc.com/Saturday_Night_Live/video/clips/vp-debate-open-palin-biden/727421/

[Teri]

"There's a bunch of reasons why Norway is #1 on the HDI."

Yes Ost, but isn't that partly because Norway is culturally homogenous and universally well educated?

[Ben]

If you can keep your head when all about you
Are losing theirs and blaming it on you ...

How amusing! I've just read on Robert Peston's BBC Blog:

"If you are keeping your head while all about you are losing theirs;
you probably haven't grasped the seriousness of the situation!"

What a game this is!

[Zerdini]

Hi Ben

I like Robert Peston's blog as Business Editor for the BBC.

On the BBC news he comes across as very articulate and knowledgeable.

He seems to be ahead of the field when it comes to 'Breaking News' on the economic situation.

[Ben]

He seems to be ahead of the field when it comes to 'Breaking News' on the economic situation.

He does, Zerdini; I think he must have very good contacts. But is he as far ahead of the field as off-gridders like Michael H who must have seen all this coming a while back?

[Tony S]

Another thing to keep in mind that the Clinton taxes and healthcare plan are what caused the Democrats to lose control of Congress in 1994.

So if Obama tries to go hard left, we can look at a similar result in 2010. The current congress already enjoys record-low approval ratings of 9% or so.

[Ulysses]

>> I'm a political conservative who agrees with Thomas Paine's famous prescription "That government is best which governs least.".

I'm that kind of conservative, too, MP. So, for sure not all your readers are political liberals, although perhaps we ars not so vocals.

[patrick prescott]

We may disagree on who we're voting for, but I'm in total agreement with what you said about the doomsday bloggers on both left and right. As long as we keep our system of checks and balances everything eventually runs to the center.

[Michael H]

I'm not familiar with Peston, but Jon Marman's columns at MSN over the past year appear pretty prescient at the moment. Especially this piece from September of '07, in which he shared the observations of Australian credit derivatives expert Satyajit Das:

Das is pretty droll for a math whiz, but his message is dead serious. He thinks we're on the verge of a bear market of epic proportions.

The cause: Massive levels of debt underlying the world economy system are about to unwind in a profound and persistent way.

Rather than joining the crowd that blames the mess on American slobs who took on more mortgage debt than they could afford and have endangered the world by stiffing lenders, he points a finger at three parties: regulators who stood by as U.S. banks developed ingenious but dangerous ways of shifting trillions of dollars of credit risk off their balance sheets and into the hands of unsophisticated foreign investors; hedge and pension fund managers who gorged on high-yield debt instruments they didn't understand; and financial engineers who built towers of "securitized" debt with math models that were fundamentally flawed.

"Defaulting middle-class U.S. homeowners are blamed, but they are merely a pawn in the game," he says. "Those loans were invented so that hedge funds would have high-yield debt to buy."

This is all off-topic, though. MP's point is that the sky will not fall if Obama wins the presidency. I agree, and have also read several articles in traditionally conservative rags that actually think that Obama might be a positive choice.

I'm also wary of a single party controlling the executive and congressional branches of the government, but I have a suspicion that those most disappointed with an Obama administration will be the leftists who envision massive federal expansion. If he wins, I'd expect a much more centrist approach than Pelosi and Reid envision.

That's a big "if", though. I don't like to make this observation, but I don't trust any polling in this election at all. There are significant numbers of voters here who will not vote for Obama under any circumstances. The race issue is very real.

With the McCain camp about to embark on 30 days of increasingly personal attacks, and the real economic consequences of the ongoing financial meltdown still months away, I won't be surprised at all to see a McCain victory in the Electoral College, while Obama wins the overall popular vote due to overwhelming routs in states like New York and California.

Time will tell, but I doubt that either outcome will result in the broad, sweeping, catastrophic consequences the respective opponents imagine. People freak themselves out with their own ideas, and rarely notice when their fears don't materialize.

[Tony M]

A friend of mine works for Angela Merkel, Germany's Chancellor, in a fairly high capacity. She is a Christian Democrats, the right of center party in Germany. I asked him if the Christian Democrats were a US political party, where they would fit in. His answer? To the left of the Democratic Party.

Yes, to the left.

My point is that American politics is skewed vastly to the right and is out of touch with most of our Western Industrialized allies. Can Obama changes that? Does he even want to? I doubt it.

But if he did, what would we be "sacrificing"? Our Western Industrialized Allies, with fewer resources at their disposal, have on average longer lives, higher literacy, less crime. Yes, they pay higher taxes - but in return for that, they do NOT go bankrupt in their old age paying for medical bills. They DO get more vacation time and longer leave after pregnancies. They do NOT get murdered at the rate we do. The list could go on...

The "freedoms" we are protecting enable a few people to get super wealthy - leaving the majority of us at risk, living a balancing act where an illness or the need to pay for college or a dozen other different exposures can send us into financial despair.

Is this a reasonable trade off? I'm sure you can guess my opinion...

[william]

“The "freedoms" we are protecting enable a few people to get super wealthy - leaving the majority of us at risk, living a balancing act where an illness or the need to pay for college or a dozen other different exposures can send us into financial despair.”

I remember reading somewhere that 50% of the bankruptcies filed last year were due to major medical costs. This occurs in no other industrialized country that I know of. I suspect that most of those people were very conservative in their views about universal health care until it hit them in their pocket book and put them in financial despair. It appears most humans have to personally experience the results of their decisions to fully understand the impact of them.

The really sad part of a privatized system is that insurance companies can put a clause in your contract that will not pay for pre existing conditions the very reason one needs insurance. From my point of view a privatized health care system will bankrupt a country. Wait and see.

Also I wonder about those so-called freedoms that allow one per cent of the population to have more wealth than the bottom 90% of its citizens. If our privatized health care system was ranked number one in the world that may be a sound debate, but ranked behind every other industrialized country with health care for its citizens.

One-sixth of a country’s citizens without health care reveals a lot about the spiritual maturity of a country.

[Pete]

Well said, Tony M. Why is there such a fear of social democracy? Are people afraid some of the poor may get a fair crack of the whip?

[Filip Van Droogenbroeck]

Okey this really requires some comments from somebody living in Europe in Belgium, one of those apparently scary social-welfare states.

Michael said:
"It's also worth noting that even Europe seems to have realized that the heyday of the social-welfare state is over. Both France and Germany have elected relatively conservative leaders who advocate major reforms aimed at reining in excessive government regulation and paring back the sometimes smothering social safety net."

I think you should read newspapers from europe these days, it is full with the following things: "the hyper capitalistic, unlimited free market thinking, clearly failed as the recent credit crisis shows. This is the FINAL blow to the americanisation of our economic and social system." It is true there was a trend to Americanisation for the last decade and I was quite surprised but pretty happy myself to read this in almost every newspaper and see it on tv. The free market system caused this crisis because of a lack of governmental control. If you let greed play and expect the market system to take care of everything magically you create this mess! If people still defend the blind profit hunger and over competitiveness which sacrifices basic social standards than I don't know what kind of a crisis, not to mention the effects on third world countries, to see that it just doesn't work exept for a few. So economic analysts, government people, the media in Europe are all saying that Americanisation of our economy is not the way and the unrestricted free market system created this crisis. So you could put this the other way Michael. "Maybe the USA is realising that the heyday of an unregulated free market system that brings its own ethics through an invisible hand is an illusion and urgently calls for something else if we want to prevent a crisis like this in the future."

It is so obvious that there is truth in the american way: individualism but also in the old soviet way: collectivism.
Europe tries to provide a middle way. Mixing individual freedom with collective protection.

I'm really amazed at: "Darkly pessimistic comments crop up on those blog threads - comments made by conservatives who fear that Obama, in concert with Nancy Pelosi and Harry Reid, will remake America as a European-style social democracy"
So darkly pessimistic, so scary, what is so scary about all people having health insurance, having higher minimum wages, don't need 3 jobs to be able to pay for a basic life, free education, a strong social security behind you. What is so scary about the government taking care of that. I just don't get the resistance towards it except for reasons of greed and fear of personal loss which isn't very world centric.
And a middle way is really possible, it doesn't imply all people not working and just profiting from the welfare system.

Communism blew itself up a few decades ago and now the hyper capitalist system of the USA blows itself up because of its greed and its inability to manage itself which is normal, there are people, human beings, behind the financial system that are led by profit, as fast as possible, a government could put rules with a focus on people or with more of a focus on people. Not blind profit but profit with a social dimension. The financial system needs regulation, that's one thing that this crisis shows.

Taxes aren't necessarily, inherently bad, they can really be used for good things. You already use taxes for many things, wars, roads, but oh my god if it would be used to help all people in the country to miminum social standards. This doesn't mean red communists at your door limiting your personal freedom or press coverage. For europeans this is a basic idea, it's not even considered extreme left! What you call left is for us center right! So republicans can lighten up, you're very far from a European system and apparently a lot of people would like to keep it that way.

greets,
Filip

[Larry Boy]

Michael Prescott wrote:

> In a global economy, no nation can afford to be uncompetitive. Regardless of who is running the government of the United States, certain realities will have to be faced if the country is to remain a player in world markets. Excessively high taxation, smothering regulation, and counterproductive social-welfare policies are luxuries that even France and Germany have begun to realize they cannot afford. It is highly doubtful that America will adopt such policies at the very time when Europe is beginning to shrug them off.

This statement seems higly contradictive. You're saying that the most competitive economy in the world, that of the U.S., needs to get even more competitive in order to avoid yet another crisis, when this one was brought about by its system's very competitiveness??

Also I can't understand your comments about the imperfectnesses of the European economies, when it is the American system that has gone haywire! Also remember what William pointed out, that the social benefits of the U.S. economy is limited to a small minority, the rest facing serious troubles in getting decent helathcare and living, whereas in most other Western countries as well as Japan, the welfare is more evenly spread across the population.

[Matt]

I have some questions for the dualists

If brain function could be shown to precede the manifestation of mind then that would support the brain causing mind and refute the transmitter hypothesis.

It is quite simple. If a predictable brain activity always precedes the same predictable mental activity, it is plain and clear that either brain activity IS mental activity, or brain activity CAUSES mental activity. There is no way around it. If I have a bicycle and every time I push the pedals the wheels turn, you can tell me what you want, but the fact is that my pedaling turns the wheels. Cause and effect.

Let's suppose the dualist's are right, and the brain is just a receiver for the mind. Then we would expect the following sequence of events to happen in the following order:
1) The mind is aware of having taken a decision
2) The mind transmits the decision to the brain
3) Brain activity is registered by the fMRI

But that is not what happens. What we see instead is
1) Brain activity, which is registered by the fMRI
2) Subject consciously aware of the decision

This is consistent with the brain being the cause (initiating the activity) and the mind going for a ride (being the product of that activity), not the way around.

Brain activity preceded the conscious perception of the subject about those thoughts. What else would it mean? If you detect current running through a light bulb, and shortly after the light bulb turns on, and this chain of events is always the same (current first, light after).

[Filip Van Droogenbroeck]

Matt so far the only thing neurological science has done is showing that certain brain activity arises with certain mental activity.
But correlation does not mean causation! You say it precedes it, well this isn't proven. Causation is one thing that has not been shown or else the consciousness problem wouldn't be such a big problem.

There is a problem with trying to grab a pure subjective state through objective means.
A fmri scan will never show a sad thought just like introspection will never show you a brain scan. Irreducible mind and the taboo of subjectivity are 2 very nice books about this subject. And in the end, with the available evidence the materialist hypothesis and the dualist hypothesis are both possible.

greets,
Filip

[Filip Van Droogenbroeck]

Another thing, isn't it such hypocrisy that the free market system which stands on its no intervention from the government idea, that it will fix itself without problems, that letting the free market play its own rules will fix everything, that system is in trouble now and runs to the government to fix everything cause they made a mess out of things.
That just shows how silly and how unstable it is and how a bunch of hypocrisy this ideological system is about.
Things go bad, the despised government is needed.

[Mark Alexander (the other Mark)]

The flaw of citing any European country as an example of successful Socialism is the simple fact that American Capitalism is the foundation for their experiments.

American taxpayers have paid for European defense for many decades, not to mention all kinds of foreign aid.

And as Socialism continues to take hold in the U.S., that support will continue to erode.

I'm of the Thomas Paine persuasion as well...

[Tony S]

Why must America adopt a Europe-style system?

If a person has a strong preference for a Europe-style or American-style system, they are always free to move to a country that more closely matches their ideals if they don't like the one they are living in.

Also the current crisis was not caused purely by free-market approaches. The government had plenty to do with it.

The GSEs (Fannie Mae and Freddie Mac) were the largest players in the US mortgage market. They were created by the US govt, but acted as though they were private entities. They guaranteed the loans they sold so the buyers believed them to be less risky then they truly were. It was also believed that there was an implicit guarantee by the US govt to keep the GSEs solvent (which there was, see the recent nationalization of these entities)

In a purely free-market, it would have been much harder to sell many of those mortgages b/c the kind of guarantee Fannie/Freddy offered would not exist, and therefore those loans wouldn't have been written.

[Tony S]

Mark,

I agree, if the US drastically reduced its defense spending, Europe would have to pick up the slack, especially given re-emergant threats from the likes of Russia and other troubled areas of the world. This would likely cause the funding of many of the Euro-social programs to be slashed.

[Zetetic_chick]

If brain function could be shown to precede the manifestation of mind then that would support the brain causing mind and refute the transmitter hypothesis

I disagree. That comment implies that precedence is the same that causality. But they aren't the same. In school, I consistently arrived to it 1 hour before my friend Andrea: Does it implies that I caused Andrea's arriving 1 hour after me?

Neurological studies have demostrated that conscious decision is preceded by brain function. But it doens't imply that brain function is previous to other mental functions (e.g. unconscious functioning). Not all the mental functioning consists in conscious decisions. And many mental factors (like memories, prejudices, etc.) are previous, but determine or influence, concious decisions.

If a predictable brain activity always precedes the same predictable mental activity, it is plain and clear that either brain activity IS mental activity, or brain activity CAUSES mental activity

I think it's a non sequitur: 1)If a brain activity precedes a mental activity, it doens't follow that a brain activity IS mental activity (because how could the same thing precedes itself?)

2)"Or brain causes mental activity". It don't follow either, because causation isn't an observavle phenomena, but a theoretical concept.

A previous brain activation is also consistent with the idea that brain permits the consciousness manifest itself. A window needs to open before air can pass through it, but it doens't entail that windows produces air. It only produce or cause its pass through it.

Let's suppose the dualist's are right, and the brain is just a receiver for the mind. Then we would expect the following sequence of events to happen in the following order:
1) The mind is aware of having taken a decision
2) The mind transmits the decision to the brain
3) Brain activity is registered by the fMRI

It doesn't neccesarily follows from a dualist perspective.

Regarding 1: the mind isn't limited to taking decisions. Before you take a concious decision, there are other non-conscious mental actitivity that are correlative and even previous to brain process.

For example, my childhood experiences, prejudices and academic learning can determine, in part, my actual decision. Brain activation precedes that specific conscious decision, but my personal previous experiences, memories and education (all of them factors to my actual decision) are previous to that brain activation (and to my decision).

Regarding 2: many dualists don't claims that conciousness trasmits decisions to the brain. What's trasmitted is conciousness as a whole (and it include both conscious and unconscious mental processes)

But that is not what happens. What we see instead is
1) Brain activity, which is registered by the fMRI
2) Subject consciously aware of the decision

Yes, but you're leaving out other manifestations of consciousness previous to brain activity preceding decicions (e.g. old memories, unconscious processes, etc.)

This is consistent with the brain being the cause (initiating the activity) and the mind going for a ride (being the product of that activity), not the way around

Only if you decide to leave out unconscious process and memory (that also are previous to conscious decisions).You're limiting the mind only to conscious decisions.

I agree with you that standard neurological evidence is consistent with materialism. Also it's consistent with dualism.

But afterlife evidence is consistent with dualism, but not with materialism. And if afterlife evidence is true, materialism is false.

Sorry for if my english a little bit broken.

ZC

[Zerdini]

ZC wrote: "And if afterlife evidence is true, materialism is false."

It IS true therefore materialism is false.

QED

[Jess]

Very cool post. I am a huge Obama supporter, but I think if we all came to the civility and clear headed nature of your post, there would be a lot less stress on both sides.

[Michael H]

The free market system caused this crisis because of a lack of governmental control. If you let greed play and expect the market system to take care of everything magically you create this mess!

I can't understand your comments about the imperfectnesses of the European economies, when it is the American system that has gone haywire!

Blaming Wall Street greed may sell newspapers, but it ignores the question of exactly who it was that was chasing the profits promised by securitized debt instruments (that maybe less than ten people in the global financial community even understand), and then decided that it was a good idea to leverage up further to maximize margins. The majority of the buyers in this game were exhibiting greed alright, but the greed is global , not concentrated in the US or Europe. Where do people think the mountains of cash generated over the past decade in China and India were invested? And it's not as if the US banks were in this game alone, as evidenced by the recent banking train wrecks in Europe. It will almost certainly spread from there. This is a global issue.

One of the few who do appear to understand the derivatives market is Das. On page two of my earlier link is this observation:

When you add it all up, according to Das' research, a single dollar of "real" capital supports $20 to $30 of loans. This spiral of borrowing on an increasingly thin base of real assets, writ large and in nearly infinite variety, ultimately created a world in which derivatives outstanding earlier this year stood at $485 trillion -- or eight times total global gross domestic product of $60 trillion.

To put this into perspective, it's as if someone who owns a $200,000 home has borrowed $1.6 million against that home, (in some instances as much as $8 million). They managed to find a tenant who was making their loan payment and providing a rate of return to boot, but now the tenant has moved out.

Oops. There's still a loan payment to make, but no new tenants to be found. Anywhere. And every homeowner on the global block is in the same predicament.

I'm probably oversimplifying, but it seems to me that the only way out of this involves returning to a focus on increasing the production of real capital. (It's pretty clear at this point that highly leverage instruments that rely on math models to project paper profits have nothing to do with real capital). And which economic system has historically been the most efficient at creating real capital?

It may be less than spiritually satisfying to acknowledge, but human beings tend to be motivated more by their own self-interest than by having a gun held to their heads.

By the way, Tony S, the Times had an interesting piece this Sunday on the role Congress played in encouraging Freddie and Fannie to assume riskier loans. The road to hell is paved with good intentions - in this case the idea was to expand homeownership in lower income demographics.

[william]

“If a person has a strong preference for a Europe-style or American-style system, they are always free to move to a country that more closely matches their ideals if they don't like the one they are living in.”

Your way or the highway; right Tony. Heard those views during the Vietnam War and went something like this. “America love it or leave it”. Hearing those same views today but in a different format.

As citizens of a republic with a constitution that supports those citizens right to voice and vote for those representatives that support their views and their best interest. Which usually means their pocket book.

The universe has an interesting way of providing feedback to a country if it benefits the few at the expense of the many.

With communism man exploits man with capitalism it is the other way around. Finding that delicate balance between these two ideologies or the middle road appears to be a challenge for any country. It appears that some do it better than others.

[Larry Boy]

Mark Alexander wrote:

> The flaw of citing any European country as an example of successful Socialism is the simple fact that American Capitalism is the foundation for their experiments.

> American taxpayers have paid for European defense for many decades, not to mention all kinds of foreign aid.

You're contradicting yourself:

"American _capitalism_ is the foundation for their experiments"

"American _taxpayers_ have paid for European defense for many decades"

How can [I]capitalism[/I] be the foundation for socialistic experiments if the foundation upon which these experiments are done is based on [I]governmental activities[/I]?!

[Zetetic_chick]

I tend to be agnostic regarding political ideologies, but I've studied a little bit the philosophy of Austrian economics (that support libertarianism).

One of the key figures of that group is Ludwig von Mises. In the 20s, he wrote an article arguing that economic calculus in socialism is impossible. As consequence, socialism (as a method of social organization based on public property of means of production) can't work efficiently. According to Mises, it's the basic weakness of any socialist system.

You can read his paper here:

http://mises.org/pdf/econcalc.pdf

That paper caused a lot of scientific controversy between marxists and non-marxists. Some marxists left their position, and agreed with Mises. Other marxists accept partially the thesis of Mises, but even embraced some form of socialism.

Many marxists and socialists today ignore Mises' economic argument; but I think a good socialist should know it and address it, because it could (in case of being sound) destroy the economic possibility of socialism.

Currently, I'm reading a a book by Franz Himkelammert, a german scholar of socialism (who teach in Mexico), and who's one of the best current critics of libertarianism.

I hope to decide, in a few months, who won the theoretical battle... if Mises or Himkelammert.

ZC

[Larry Boy]

Sorry, I may have been guilty of a misunderstanding in my last post. You may argue that a capitalistic nation is able to defend itself precisely because it can spend tax money on the army and let the free market handle the social issues. However, is it really necessary to "defend" yourself by invading oil producing nations?

[Larry Boy]

If Bush spent 10% of the Iraq money on social issues, would that have made American "defense" globally impossible?

[Larry Boy]

Zetetic Chick: Isn't Mises's critique aimed at pure socialism (i.e. communism), rather than social democracy, which is what is in use in large parts of Europe?

[Zetetic_chick]

Yes, Larry Boy. Mises' critique is aimed at pure socialism or communism. However, some latin america countries (Bolivia, etc.) are embracing a progressive neo-communist system (very different of social democracy of Europe)

In this sense, Mises' thesis is pertinent today (even if less pertinent than when he wrote his thesis).

The criticism of Mises against social democracy and mixed economies is contained in a book of him titled "Interventionism".

ZC

[Zetetic_chick]

Yes, Larry Boy. Mises' critique is aimed at pure socialism or communism. However, some latin america countries (Bolivia, etc.) are embracing a progressive neo-communist system (very different of social democracy of Europe)

In this sense, Mises' thesis is pertinent today (even if less pertinent than when he wrote his thesis).

The criticism of Mises against social democracy and mixed economies is contained in a book of him titled "Interventionism".

ZC

[Zetetic_chick]

Yes, Larry Boy. Mises' critique is aimed at pure socialism or communism. However, some latin america countries (Bolivia, etc.) are embracing a progressive neo-communist system (very different of social democracy of Europe)

In this sense, Mises' thesis is pertinent today (even if less pertinent than when he wrote his thesis).

The criticism of Mises against social democracy and mixed economies is contained in a book of him titled "Interventionism".

ZC

[Zetetic_chick]

Sorry for the involuntary repetition... I had a problem with my pc.

[Henry]

Michael,

Thanks for a nicely balanced post. I have found myself getting a bit wrapped up in the hysteria over the prospects of an Obama victory. Some of it is motivated by my indignation for the free pass he has received from the main stream media who obviously are doing what they can to help elect him. But after witnessing the market melt down over Bush's "bailout" plan it's hard to imagine Obama doing even more damage! I'm hoping what is left of the American individualist sense of life will help temper whatever he and his cohorts try to foist upon us.

Zetetic

Regarding 1: the mind isn't limited to taking decisions. Before you take a concious decision, there are other non-conscious mental actitivity that are correlative and even previous to brain process.

For example, my childhood experiences, prejudices and academic learning can determine, in part, my actual decision. Brain activation precedes that specific conscious decision, but my personal previous experiences, memories and education (all of them factors to my actual decision) are previous to that brain activation (and to my decision).
Ok so you are saying that something like this happens:
1) I am asked to take a decision
2) The mind interrogates the brain for data needed to make the decision, which causes the brain activity we see in the fMRI
3) The brain sends the data back to the mind, which makes its decision, causing the subject to be aware of having taken the decision.

Matt- Well, that's an interesting concept, and I thank you for presenting it. But I do see a problem with this. If the brain activity we see is just the mind accessing the brain for information that it will use to make a decision, then we wouldn't be able to tell what the decision will be. I mean, think of the experiment we are talking about, where given 2 numbers, you need to decide to add or subtract them. I can see the mind accessing the brain to check what "adding" and "subtracting" mean, or "the last time, did I add them or subtract them?". But if this was all, we wouldn't be able to tell the decision just from the brain activity. Except, we can!! So what we see isn't just accessory activity, it is the decision itself!

Quote:
Regarding 2: many dualists don't claims that conciousness trasmits decisions to the brain. What's trasmitted is conciousness as a whole (and it include both conscious and unconscious mental processes)
How does this differ from the above? It sounds like the mind is "wearing" the brain like a costume or something? In this scenario, what does the brain activity represent?

Quote:
Only if you decide to leave out unconscious process and memory (that also are previous to conscious decisions).You're limiting the mind only to conscious decisions.

Matt- I am not limiting it, I am trying to understand. There seems to be a very fine line between what the brain does and what the mind does, and sometimes I need to make sure where that line is.

[Roger Knights]

"What exactly, is even so bad about a socialism? Look at Norway - the cost of living there is so high, but many middle-class people make over a thousand kroner (about 160 USD) a day ..."

Norway has massive oil income, which enables it to afford lots of goodies. It is too atypical to cite as an argument for socialism.

I propose a win/win solution that will please all Americans: Devolve all the "general welfare" powers of the national government, plus the scope of the Supreme Court in most matters, back to those states that choose to de-couple themselves from Washington on those topics and chart their own course. (As regards Social Security, health care, firearms, 55 mph speed limit, abortion, etc., etc.)

In practice, this would be rolled out a few states at a time, paired by their left/right leanings. E.g., certain states would in effect become free to enact an unbridled "blue state" agenda, and certain states would enact a red state agenda. An agency would be set up to facilitate the logistics of swapping out-of-state would-be immigrants with in-state would-be emigrants. After five or ten years no resident would feel that he is living in an un-simpatico madhouse. No one would be a victim, no one would be an oppressor. And each camp would provide oodles of entertainment and object lessons for the other.

[Roger Knights]

PS: Conservatives adopted the wrong policy when they fell in line with W.F. Buckley's mission statement that the duty of conservatism is to stand athwart history shouting Stop. The mentor they should have listened to was Joseph DeMaistre, whose advice regarding the forces of Progress was the exact opposite: "Let them have everything." That's judo-istic--and allowing the blue-staters to do their thing is what is needed to discredit them and their policies.

Regarding our ongoing credit catastrophe: James Grant, editor of Grant's Interest Rate Observer, has been critiquing Greenspan's easy-money policies, and warning of the dangers of derivatives, for about ten years. You won't find his periodical at your nearby checkout stand, but he's collected his columns into a $15 book that's just been issued,
Mr. Market Miscalculates: The Bubble Years and Beyond. Here's the Amazon page: http://www.amazon.com/Mr-Market-Miscalculates-Bubble-Beyond/dp/1604190086/ref=sr_1_1?ie=UTF8&s=books&qid=1223429502&sr=1-1

[Shrewsbury]

I am a devotee of your weblog, but I fear you underestimate the destructive potential of an Obamanation Administration. There is a real, creepy totalitarian strain in him, his louche allies (Ayers, Dohrn, Wright, Pfleger, Rezko), and his pathetic, delusional minions. The entire Obama campaign shows a myoclonic reflex toward shutting up anyone who disagrees with them, as well as clandestine funding for all sorts of shady agitators and organized scam outfits, such as the evil ACORN. An Obamanation Administration would have us looking back to the days of Jimmy Carter with fond nostalgia. One of the first things he will do on his America-bustin' mission will be essentially to throw open the borders, legalize all illegals, invite in their family members, etc. You know what a minority-white American country is called? It's called Brazil. His administration cannot be other than an utter disaster, but once he has "supplemented" the population with another 50 million third-worlders, it will not be possible to vote him out of office. We will have Obama-like Democrats forever. This is an historical hinge moment like 1933 in Germany, and anyone who feels no sense of the most profound crisis just isn't paying enough attention.

[Larry Boy]

"Norway has massive oil income, which enables it to afford lots of goodies. It is too atypical to cite as an argument for socialism."

Mixed economy has worked well in countries without excessive incomes from natural resources as well, notably Japan.

[The Major]

Hi Shrewsbury, would you care to back up your comments with some evidence or actual quotes?

[Ben]

You know what a minority-white American country is called? It's called Brazil.

Have you heard of the experiment in Curitiba, Brazil which transformed a third world city into a first world one - it was probably the best ever modern experiment in social democracy. Proof of its success came from a survey in the 1990s, when over 90% of the inhabitants said they wouldn't want to live anywhere else (as against 40% in New York). Check it out.

[Teabinge]

I'm from Sweden. I do not feel like a prisoner.

There are investigations about perceived "happiness" or "quality-of-life" and Denmark uses to "win" thes. USA are way down the list.

It seem to me your freedom-principles comes first and human beings second.

If that's so (I might be wrong) - what are they good for? The euphoria of the winning few?

[Teri]

“Which economic system has historically been the most efficient at creating real capital?” –Michael H

“The genius of contemporary capitalism is not simply that it gives consumers what they want but that it makes them want what it has to give. It's that core logic of ever-expanding desires that is unsustainable on a global scale.” -Timothy Garton Ash

We should be thankful for this reality check. It gives us pause for thought. And if it brings in Obama, who is at least aware of this (I don’t think McCain is), then how can that be bad?

[Teabinge]

Another question:

"The metaphysical" is quite a lot about inter-connectivity and inter-dependency. No man is an island, we are branches to the same tree etc.

My impression of the republican or right-wing philosophy is the contrary: Every man for himself, we are all individuals and some (the stronger ones) are more individuals than others. Every man is an island. It's about your own ego and nothing beyond that - oh yes, I forgot a certain kind of inflated collective ego, the flag and all that. As long as it is a part of the great "ME".

One thing Albert Einstein said: To be mature is to realise that other beings needs are as real to them as my needs are real to me.

I simply do not understand how someone open to the fundamental interconnectivity of things can belong to the right wing of politics.

[Larry Boy]

“Which economic system has historically been the most efficient at creating real capital?” –Michael H

Japan, with a markedly mixed economy, and practically no natural resources at all, has had bigger annual growth than the U.S. for long periods. Americans like to think of their economy as unique or something, but that's just arrogant.

[Tony S]

> Japan, with a markedly mixed economy, and
> practically no natural resources at all,
> has had bigger annual growth than the U.S.
> for long periods. Americans like to think
> of their economy as unique or something,
> but that's just arrogant.

And a recent decade-long period of economic stagnation in Japan. Don't forget that aspect.

[Pete]

I simply do not understand how someone open to the fundamental interconnectivity of things can belong to the right wing of politics. -Teabinge.

I'm not right wing, but the answer that supporters of the capitalist ethic give is: Wealth-creation means the greatest good for the greatest number. The argument is that otherwise, we would have medieval economies, no modern medicines and comforts and luxuries, etc, etc. Historically this has been true, but always at the expense of Natural Resources. As Teri says, this growth and expansion thinking is not a long-term option. I suggest you try reincarnating in a hundred years or so to discover the new solution.

[Michael H]

I simply do not understand how someone open to the fundamental interconnectivity of things can belong to the right wing of politics.

From my perspective, which is decidedly on the libertarian side of the spectrum, it's all about individuals having the freedom to experience the consequences of their choices and actions. To that end, Roger Knights' earlier recollection of DeMaistre's observation is probably correct: "Let them have everything."

What I don't understand is how someone who is open to the fundamental interconnectedness of things reaches the conclusion that they they somehow occupy the moral high ground when their political position requires them to reach for a metaphorical gun. Or a real one.

That applies to both the right and the left, by the way. Neither has qualms about resorting to force. The debate is about how and where to apply it.

[Teabinge]

Martin Luther has said that man is like a drunkard that has fallen of the wagon. He goes from one ditch to the other.

I cannot say where the "middle road" is exactly, but I certainly beleive in some kind of middle way. We are both individuals AND part of a whole. We need both freedom AND security, when you chose something you will lose something else.

Compromise and balance, yin and yang. Also that kind of expression "yin and yang" becomes too simple. Sometimes it's right to be strongly anti (Hitler) sometimes it is a matter of finding a balance where no side will be perfectly realised.

Buddha spoke of the middle way, in contrast to the ways of the extremists.

I strongly detest extremists, whether blue or red or brown or green.

But from my Scandinavian point of view - Yes, I do find the right wingers of the USA to be really scary and extreme. They are in one of the ditches and marxist-leninists or ultra-environmentalists are in other ditches (there are more than two).

"Freedom" is a beautiful word, but when it implies a way of some strong individuals increasing their grade of freedom at the cost of others freedom...

[Teabinge]

Republicans planning suicide because they fear "Obamanation"...

Geee...

Well, if that isn't a clinically clear case of paranoia, I don't know what is.

[Chris]

I think to many of you are evaluating this through the assumption that we have a true, unrestricted free market. We do not. The only period which came even remotely close to a 'true' free market was perhaps the American Wild West. Although I am of the libertarian/anarchist persuasion, I am also a realist, I think that nowadays, with a society as large complex as ours, trying to create a free market is largely unproductive, and has effects which are the opposite of their intention.

IMO, what should be examined is the nature of private-public partnerships like the Fannie and Freddie which primarily benefit the rich, along with the nature of the Federal Reserve. The deregulation of the Reagan area gave these partnerships more freedom than they ought to have.

[Mark Alexander (the other Mark)]

Larry Boy, I really cannot comprehend you.

When engaging in thoughtful argument and debate, it is much better to:

1) Understand what your opponent is actually saying by questioning him specifically on the argument he is advancing.

2) Focus on and respond to what he is saying rather than to split focus by introducing other topics.

I've found that I don't have time engaging with people whose responses tend to be all over the map.

Cheers

[Michael Prescott]

Interesting discussion. Several people have asked why I would support the American system over the European approach. I would say that the American system offers more of what I'm looking for in life.

If I can judge by some of the Europeans I have known, there is a type of person who is very common in Europe and much less common in the USA. This person spends a lot of time hanging out in coffee shops and enjoying long lunches. He has little ambition, because high marginal tax rates reduce the value of any promotion he might receive. Besides, he can live comfortably enough on government relief. He will take a job for a while, but he will leave it when he becomes bored. He is more passive than active. He drifts.

I am not saying all Europeans fit this mold (obviously they don't), but I do think this type of person is far more prevalent - and far more socially accepted - in Europe than in America. And I have no doubt that such a lifestyle is much lower in stress than the typical American lifestyle. But if avoiding stress were the be-all and end-all of life, we would never leave the womb. I prefer a more muscular approach to life. I would rather accept more risks in exchange for having more opportunities.

Naturally, I realize that many people prefer an easy, stress-free lifestyle. That's fine - for them. But why should everybody fit the same cookie-cutter mold? Why do we all have to be Europeans? Let Europe be Europe, and let America be America. As Edgar Wallace famously said, "It takes all sorts of people to make a world."

[william]

“Let Europe be Europe, and let America be America.”

I can give you about ten reasons why some do not believe we should let “America be America” so here are two of the ten. More later if you like. :-)

Apparently you are not one of the 47 million without health care or one of 50% of Americans that filed bankruptcy last year due to medical expenses or one of the hundreds of thousands of Americans that have exclusions in their insurance policies for preexisting conditions; the very reason they need medical insurance. Maybe you have done well in such a system but many have not. Are we just individuals in this world or are we interconnected?

Unfettered capitalism can create a very aggressive mode of being in the world. One only has to travel Europe and the world to discover how many of these people feel about our let America be America. 765 military bases around the world is the very definition of imperialism to these people.

Like smoking it appears that in America it had to take over 50% of the people to quite smoking before we began to see laws that outlaw smoking in public places. I used to hear all this let America be America and smokers stating almost to a person this is America we should have the freedom to smoke where we please anywhere we please not too many years ago until a majority of people quit smoking.

Ike gave the best speech of his life when he left office in 1961 about the future of America if we did not detune our industrial military complex during peace time but unfortunately no one listened to him now we pay the price. As far as republican or democrat I am neither as neither party in my opinion represents the majority of the American people.

“This person spends a lot of time hanging out in coffee shops and enjoying long lunches.”

As far as people in Europe hanging out in those coffee shops I noticed during my travels in Europe as a consultant and tourist they often talk politics in those coffee shops and appear to know much more about world affairs and political ideologies than most Americans I know and read their comments on political blogs.

Isn’t it strange how people can compartmentalize their points of view? There is a psychological theory that we have “little minds” inside us which vie for our conscious attention. Depending on which “little mind” is in control, we can seem to others to have a “split personality”. That's when a judge might go to an orgy.

I know someone who on one day can write a blog about Eckhart Tolle, and on another day can talk about being “muscular”, “active rather than passive”, enjoying “stress”, and having “ambition”.

Of course, it may simply be that such a person simply enjoys stirring up his tame bloggers. Good luck to him, I say. After all, only fundamentalists are always consistent.

[Filip Van Droogenbroeck]

"If I can judge by some of the Europeans I have known, there is a type of person who is very common in Europe and much less common in the USA. This person spends a lot of time hanging out in coffee shops and enjoying long lunches. He has little ambition, ...."

This reminds me about people thinking the USA is full of war mongers or jerry springer type of people.
It is just to simplistic.
Ambition can also happen on many levels, inner work, career to make money, family life. There is also a difference between having ambition and having a knife on your troath to make it or lose it because you have no back up.
Generalisations are to easy and I think we need some big sociological statistical analyses if we want to say anything about the general "American personality" versus the general "European personality". And I personally think that is an illusion.
Basically you have the same kind of people, knowing sadness and happiness, love and fear, that is the backbone, all the stuff around it are theories, surface structures which can be in service of people, in service to self or of mixed orientation and are bound to change over time.
I think every person has all the aspects in himself, positive, negative, non dualistic.
How a government should be organised I think can be measured on how much of those people have a decent standard of life to be able to do other things than only survive, how much people report high life quality, how much crime, mean age of dying, general happiness, how much influence your government has on the well being of foreign countries, and so on. In such an analysis I personally think currently there are much better organised countries than the USA, that serve the majority of the people and other countries better than how the USA is doing now, and much better than what Belgium is doing now to. :)

greets,
Filip

Anyhow

[Michael Prescott]

I know someone who on one day can write a blog about Eckhart Tolle, and on another day can talk about being “muscular”, “active rather than passive”, enjoying “stress”, and having “ambition”.

While I like some of what Tolle has to say, I've always expressed reservations about his ideas. His approach is a useful counterweight to stress-inducing behavioral patterns, but I don't think I would want to be quite as blissed out as Tolle - a man who, interviewed on 9-11, remarked languidly that the day merely illustrated that the "forms" of things are always changing. You have some tall buildings ... then you don't have the buildings ... forms change. Yawn. Now where are my slippers ...?

Overreacting is a vice, but it is possible to underreact, as well, although it is much less common. Immersion in Tolle can encourage a rather disconcerting apathy.

I once imagined a Tolle-seque Winston Churchill fighting WWII. It wasn't pretty.

[Michael Prescott]

a Tolle-seque Winston Churchill

That should read "Tolle-esque." I'm too blissed out to change it.

Now where are my slippers?

[Ally Eden]

I am liberal does anyone here really know the difference between being a liberal and conservative? This is how I see it, A liberal likes to take chances for change even if thats a risk. That could be alright and even embraces hope.
A conservative is not for change and is more comfortable with the way things are now.They seem to live in a comfort zone of a reality they themselves have nurtured,rather that be good or bad in hindsight that things never stay the same.what is happening right now with wall street is a good meter on things that erode with a static view of ,Its ok because its always worked in the past. That leaves out the rest of the [whole] a portion of the body only thatif you pay attention it also which needs attention in order for the thing to keep working.Thats the governing body; government. As for myself, I,d much rather be for change when something is not working well anymore right? Obama is that change and even if he going to be the "First" black president, its a hell of alot better than some aging white man who deserves honor and respect for his duty and service to our country and pow, but alot of others received purple hearts such as my brother in the Korean war and countless impairments. That souldn,t play on our choice to put in the highest office of the United States, as McCain seems intent on, not to mention an *UNexperienced governor from a small populated part of Alaska ,God Forbid! As Mr Prescott points out the congress on both sides left and right has more to say on what passes but the president has the power of veto.
If elected Obama will make changes never before seen but remeniscent of the days of old when ,
'everyone' was taken in account. I just can,t fathom the republican
administration being any different than it is now borrowing our future for the sake of those who benefit from the immediate .now.
what about the following generation, our children,s future?
We cannot afford to borrow to stave of tomorro. sacrifice is needed to bring about harmony with what is disjointed and no longer 'fits. If that means suffering with less so be it for the best in a end result which will take almost two terms to see its effect working. And to the one called michael you know who you are, honey don,t be afraid because of color, we,re all the same underneath,Michael prescott I mean this sincerely and wish to offend no one ...just speaking my liberal mind.
Let Peace Reign!

[william]

“But if by a "Liberal" they mean someone who looks ahead and not behind, someone who welcomes new ideas without rigid reactions, someone who cares about the welfare of the people -- their health, their housing, their schools, their jobs, their civil rights, and their civil liberties -- someone who believes we can break through the stalemate and suspicions that grip us in our policies abroad, if that is what they mean by a "Liberal," then I'm proud to say I'm a "Liberal."

This person did not think being a liberal was such a bad thing. I personally don’t think it has to do with liberal or conservative but does a nation align their laws, policies, and leadership principles with something I suspect are universal laws or maybe spiritual laws. I.e. not suggesting religious laws or teachings.

One side appears to think if we throw enough money at it any problem can be fixed and the other side seems to think if we just have a free for all individualism it will trickle down to everyone. This country is as divided in political ideologies as it has been since the civil war.

One thing among many I love about America is that you can already buy shirts on the Internet that state “that one”. We must find a way to allow those opportunities to flourish but yet provide necessary hope and services for all of our people. It appears to be a delicate balance.

[Zerdini]

From the BBC website:

I'm an unlucky guy, and I'll tell you why,
I just bought my kitchen from MFI!
My mortgage was held with the Northern Rock,
All my investments in Lehman Brothers stock.
So Bradford and Bingley were my new chosen investor,
Who procured my shares in Alliance and Leicester.
In financial desperation,
I moved my money to another nation.
So all my cash for a rainy day,
Was lodged with Freddie Mac and Fanny May!
They sold my funds without my knowing,
To keep their bad debt pile from growing.
And now I'm told that my personal pension,
is in a bank I shouldn't mention.
In Belgium where my funds - now not so huge,
Are lodged with Fortisbank in Bruges.
But Gordon Brown is saying 'don't you worry',
Please don't remove your cash in such a hurry.
And now the cash point on the wall,
Advises me I have no cash at all!
But a message on the small display,
Tells me I can have a nice big loan today!

Gary Parker, Slough, UK

[Larry Boy]

"And a recent decade-long period of economic stagnation in Japan. Don't forget that aspect."

Well, don't forget either that the U.S. is now in the middle of one of the biggest economical crisises ever.

[Larry Boy]

Mark Alexander:

I find it hard to respond to that post. Please explain where I'm wrong and it will be a lot easier. I'm sorry if I get a little emotional/confused at times, but I guess that's what happens when politics is discussed.

[Larry Boy]

"I prefer a more muscular approach to life. I would rather accept more risks in exchange for having more opportunities."

The question is: Does the American system really offer more opportunities than a mixed economy does? Well, I guess if you want to get super duper rich without having to care about your fellow human beings, then there is no place better than the U.S. But if you're ambitions are different, say, you want to become an artist of some kind, then is the American system really to prefer? I can't see why it should be.

Moreover, for other people the "freedom" of the American system means they have to take three jobs at the same time because the salary is ridiculously low in each one of them, and they don't have access to decent healthcare, they live in houses or apartments that haven't been renovated for decades, etc etc.

[william]

“Moreover, for other people the "freedom" of the American system means they have to take three jobs”

This reminds me of a conversation I had at a costo gas pump as I was filling my gas tank I tend to have some small talk with the person filling close to me and this time I asked a guy if he is into politics. Here was his response. “ I don’t have time for politics I have to work three jobs to make ends meet”. And then he drove away very fast.

I thought to myself maybe if he and others had time for politics he would not have to work three jobs.

[Michael H]

Well, don't forget either that the U.S. is now in the middle of one of the biggest economical crisises ever.

This is a global crisis, LB. The core issue has to do with the US Housing market going haywire, but the real problem is about the mortgages that were generated during the housing boom being converted to highly leveraged debt instruments, which were then bought and distributed with more leverage. Vast amounts of cash chasing high returns and low risk went on worldwide, on an almost inconceivable scale. Consider this from Jon Markman’s column this morning (emphasis added):

Banks on the continent have acted under an even looser regulatory environment than in the United States, and have piled up even more leverage than U.S. banks -- all of which must be unwound. This week, European banks tumbled even faster than ours, with the Royal Bank of Scotland plunging 43% on Tuesday alone.

Does the American system really offer more opportunities than a mixed economy does?

The United States has been a mixed economy forever. It’s remarkable that we are as productive as we are.

But if you're ambitions are different, say, you want to become an artist of some kind, then is the American system really to prefer?

Only if you want a market for your artwork. Damien Hirst recently took full advantage of the greedy capitalists to the tune of $198 million, bypassing the art dealers in the process. I’m not familiar with Hirst’s politics, but I wouldn’t be surprised if he advocates collectivism for other people.

It’s always struck me that those who imagine a global economic system that can provide some sort of heaven on earth constantly ignore the realities of Economics 101: One can’t consume more than one produces. A global GDP of $60 trillion sounds like plenty, until one divides that number by the seven billion people on earth. That comes to $8600 per person. So for a little over $700 per person per month, we are supposed to provide, as Filip envisions, high life quality, low crime, long lives and “general happiness”. Hell, let’s toss in universal state-of-the-art health care for good measure.

Not to be a spoilsport, but I think we need more capital. And though I’m belaboring the point, we can either provide the freedom and incentives for more productivity, or we can try to force it.

As far as “influencing the well being of other countries”, it will be interesting to see what the fallout of the current financial upheaval actually is. With the US providing nearly 25% of global GDP ($14 trillion) a major decline here may provide a profound demonstration of how much the States has provided to the well being of other countries over the past century. Maybe we’ll even find it expedient to close all of those intrusive military bases as well.

Discussions such as this one make me wonder if Ayn Rand wasn’t right. The productive should just go on strike. I just need to remind myself that in a hundred years there will be all new people.

[Teabinge]

I am strongly suspicious of GREAT IDEAS. Whenever those Great Ideas gains power, human beings and other beings tends to be crushed or exploited beneath them.

Communism is such a Great Idea. Islamism another, and the Mammon-worshipping market libertarianism is a Great Idea too.

The evangelic fervor of those who truly believes that "the Market" will solve anything as long as nobody nohow interferes with it, really scares me.

The American Dream is just that: A Dream, and a dream is not the reality.

These true believers seem to lack one of the hallmarks of mental sanity; the ability to doubt.

Some american right-wingers really don't see how much in common the have with the jihadists, they are each others mirrors. They have Great Ideas and they want to force those Great Ideas upon others, who have not yet seen the Glory of their ideas.

Mixed economics is not about Great Ideas. It is about careful navigation in an uncertain world in uncharted waters. Maybe a system that works in a certain period of time does not work in another. It is about a mixture of some bits of idealism and some bits of pragmatism, it is about compromises, something that every maturing individual has to learn about and learn how to accept.

I'm European. I have about 20 minutes to eat my lunch and I work regularly 10 hours a day.

[Teri]

"One can’t consume more than one produces"
"but I think we need more capital"

That capital is Natural resources...you know...those remote places where species other than humans live...
Poor old planet Earth when you get to be vice president, Michael H.

I suppose it is an ilusory world, though.

[Pete]

I am strongly suspicious of GREAT IDEAS. -Teabinge

Market forces is economic Darwinism. It has proven successful, so far. If you refuse to accept the theory, then you must be an economic Intelligent Designer, which, as everyone on this blog knows, is a discredited theory.

[Michael H]

They have Great Ideas and they want to force those Great Ideas upon others, who have not yet seen the Glory of their ideas.

Who's discussing force? How do you think governmental policies are implemented? By voluntary cooperation?

That capital is Natural resources...you know...those remote places where species other than humans live...

In many cases it is, Teri. China's building a coal plant a week, but they've pulled hundreds of millions out of abject poverty in the last couple of decades.

Would you prefer that they had made a different choice?

[william]

“Some American right-wingers really don't see how much in common the have with the jihadists, they are each others mirrors. They have Great Ideas and they want to force those Great Ideas upon others, who have not yet seen the Glory of their ideas.”

Although I do not consider myself a right-winger the left-wingers have their own ideas also and that they want to force upon others. The division is great and is dividing this country into two camps.

This country is as divided now in political ideology as it has been since the civil war. This is one of the most winnable elections in history but if history is any indicator of future events the demos to their credit may figure out some way to lose it. :-)

Change the system change the outcome; change only the players within an existing system and the outcome usually remains the same. There are exceptions of course but those exceptions are rare.

I smile when I think about we are going to give 700 billion to the same players on wall street that helped get us into this mess. Already they have gone off on a junket in California and spent over 400,000 of taxpayer’s money at an expensive hotel. We kept the same system and the same players and we expect a different outcome. Isn’t that the definition of insanity?

My point here is: Politics and religion offer great opportunities to gain insights into the human mind and these universal laws that exist; I think this fact is often overlooked. These divisions may exist for a reason and could that reason be to advance the soul in love and divine intelligence.

[Filip Van Droogenbroeck]

Michael said :"It’s always struck me that those who imagine a global economic system that can provide some sort of heaven on earth constantly ignore the realities of Economics. 101: One can’t consume more than one produces. A global GDP of $60 trillion sounds like plenty, until one divides that number by the seven billion people on earth. That comes to $8600 per person. So for a little over $700 per person per month, we are supposed to provide, as Filip envisions, high life quality, low crime, long lives and “general happiness”. Hell, let’s toss in universal state-of-the-art health care for good measure. "

I think you misunderstood me. I don't think it is possible with the current economic system to create a decent standard of living for everybody in the world, the current system clearly needs low wages and some poor people paying for the profits or in other words it needs exploitation to survive.
1% of the world population has 50% of all the wealth. I think we really can do better than that on sharing things.
I also meant that looking on a national level there are better examples than the USA, countries where general happiness, welfare, social security, average age of dying, crime rates, are much better than in the USA but there are many countries which are much worse to of course.

For a decent world standard of living much more is needed than some change of structure. This needs at least clear orientation to service to others, ethics, and not blind profit hunger.
All the international economic organisations (World bank, IMF) promote the free market thinking from the USA and this has really bad effects on for example Africa. Countries getting loans only when they cut back on their public services which is devastating for poor people, privatisation, deregulation with no backbone to build on. Nigeria is a good example ofsuch a poor country when it should be one of the richest.
I know it is not the only factor of course I'm well aware of that, corruption, wars etc.. are as important.
But the current economic system based on greed just doesn't have a magic ethic of itself that will make it better for everybody. That is a big illusion.

How can an economic system which infiltrates everybody their lives be so divorced from politics, be above politics? Be so divorced from control from the people , so divorced from the greatest possible welfare to the most people.
I love individual freedom, free will is essential, but it doesn't stop there, what do we do with our free will. Do we make choices in service to others or in service to self? And you can do this on a bigger structural level to.
And I'm not blaming the USA alone for Africa or whatever, this is the west in general but the USA is the most outspoken proponent of the current type of economic organisation and also the biggest Opponent of change and reorganisation of the economic system! I do believe changing structures are secondary, I think every system of thought can become something dogmatic and be used to exploit people. Changing people their orientation is much harder and more necessary in my view.

I really think we should be asking different questions to, just plain common sense things. Why are we having this kind of system, to what are we growing with this current system. Economic growth, to what?
For what? Does constant economic growth create more happiness? Is that why we live for create more profit?
Common sense really wasn't playing anymore with the people who caused this crisis.

Maybe we could create a book list, documentaries, movies whatever about these topics, to create some more mutual understanding of the different views here?
I'm sure there is next to the disagreement also agreement between everybody. :)

greets,
Filip

[Teabinge]

Well, I just think there are other and better ways of dealing with the problems of the world, than Great Ideas.

It's strange with with the very different attitude (in Europe and the USA) towards governments.

All europeans does not exactly love their governments, but in general we don't have the same amount of almost paranoia that many americans seem to have: "The government *forces* things upon us, the government hides the truth about UFO:s" etc.

How come we don't hear the same amount of "Government lying about UFO:s" in Britain or Germany? Isn't that interesting?

Maybe one can hear such an utterance once in a while, but not with the same fervor and anger.

Isn't the government in some respects chosen by the people in accordance with certain democratic rules?

Of course, it can be frustrating to me that the political right now rules in my country, Sweden, but that is something one have to respect (and I even kind of like the prime minister, he is a sound person).

We cannot rule the whole world by ourselves, there are lots of people besides me and lots of countries.

How can many of you americans be so utterly hostile against governments *just because* they decide things that does not always go your little way?

Isn't that a bit narcissistic, anarchistic, immature even? Childish.

If you hate all things connected with politics, governments, majority decisions, why don't you take just one step further in your beloved experiment with social darwinism into a full fledged Mad-Max society where people kill each other for fun or gasoline?

Social darwinism is a kind of fascism. Adolf Hitler talked a lot about his social darwinistic ideas in the last day in the bunker, and he wrote about it a lot in "Mein Kampf"

If you say OK to social darwinism, and that really is the essence of your Mammon-religion, you are in the same boat as Adolf and you should be ashame of yourselves.

What does it help you if you earn a helluva lot of money but lose yourselves?

[Teabinge]

PS I'm NOT against market economy.

I'm against the Market getting Supreme Command over all other values.

The Market should be in service of human beings, not the other way round.

"No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. You cannot serve God and mammon".

Jesus said that. Is there anyone here in this very spiritual gathering that wants to argue with that? Was he just doin' pretty talk or did he acually mean what he said?

[Michael H]

Is there anyone here in this very spiritual gathering that wants to argue with that?

I also seem to recall something about teaching fishing rather than giving away fish, Teabinge.

Does constant economic growth create more happiness?

It’s highly doubtful that it creates more happiness, It does, however, lead to the things that most people in today’s world equate with happiness, especially in the west. Things such as longer lives, better health, easier lifestyles, more leisure time and so on. Not to mention the ability to discuss economic principles on internet blogs - which is surely entertaining for everyone involved.

It’s occurred to me many times that tribal societies, such as the Native Americans, were almost definitely much happier overall than we are today. Hunting, gathering, a little agriculture now and then, the occasional bloodbath with a neighboring tribe . . . but generally happy. You can have a pretty good time if you're not trying to be happy.

Common sense really wasn't playing anymore with the people who caused this crisis.

I couldn't agree with this more, Filip. That the global financial community allowed the derivatives market to grow to some $500 - $600 trillion with virtually no regulation at all is atrocious. It's so bad that no one can arrive at an exact figure as to how much paper is actually floating around out there, or how to actually value any of it. The Credit Default Swap market alone exceeds $60 trillion, according to a recent Forbes article. So we now have what amounts to dicey insurance contracts, written against various debt instruments, the total value of which exceeds the annual gross domestic product of the entire planet! And the CDS's exist in order to insure the toxic debt that's causing the panic!

Only a fool would argue that things aren't out of balance at the moment, but the left’s agenda seems to involve a Utopian dream of redistribution of wealth in order to provide an elevated lifestyle for every person on earth, with no impact on the environment, and the expectation that people will choose to pursue an education, work and innovate to support those who don’t want to pursue an education, work and innovate.

That may happen in subsequent realms. As for this one, well . . .

[Filip Van Droogenbroeck]

Teabinge said: "PS I'm NOT against market economy.

I'm against the Market getting Supreme Command over all other values.

The Market should be in service of human beings, not the other way round."

I agree very much Teabinge, and I don't think anybody would disagree with this? I think it is than very obvious that if we want a market in service of human beings, that the market needs rules and supervision so it is assured it will serve most people, or do people still believe the market should move further as it was going and everything will get magically better, by the ethics of the market which showed the last decennia it doesn't have much of that?

[dmduncan]

Here's a radical idea: government itself is a scam. But if you speak the word anarchy people have this vision of buildings burning, people being raped and killed en masse. Well, when Columbus got to America he obviously found people living here already, many of them having complex societies without any government at all. So if you want evidence that people can live without government, all you have to do is look for it. It's there. I think people confuse society with government and they are not necessarily the same.

This also brings up the issue that there are more forms of social existence than are expressed by the absurd simplicity that "left" and "right" tries to get us all to think in terms of. Was the Six Nations Iroquois Confederacy left or right? Capitalist or Marxist? It was neither.

As long as we think in those rediculous stark terms of "left" and "right" we miss other possibilities which are better than either. Some day human beings may come to live in one of those ways, but I do believe it will take a massive world wide cataclysm to completely clean the slate fresh enough to start over, so powerful is this notion of both the leftists and rightists that it has to be this way or no way. And the ad baculum is never a good argument that our way is better; rather, it is evidence that our way is worse.

Having live on The Rosebud, I can tell you that American Indians were not and still are not fond of the politics imported to North America from Europe. Even on their land it encourages corruption where no opportunities for such existed before.

[Larry Boy]

Michael H wrote:

"This is a global crisis, LB. The core issue has to do with the US Housing market going haywire, but the real problem is about the mortgages that were generated during the housing boom being converted to highly leveraged debt instruments, which were then bought and distributed with more leverage. Vast amounts of cash chasing high returns and low risk went on worldwide, on an almost inconceivable scale."

Okay, I don't know what the origin of this crisis is. But let's look at its effects? Which countries have been able to handle the crisis the best? Is it the U.S.? I don't think so. My impression is that most other Western countries have been able to deal with it better. None of the big banks in Sweden, for instance, have been even close to bankruptcy, and so far have only made relatively minor losses.

"The United States has been a mixed economy forever. It’s remarkable that we are as productive as we are."

What are you trying to say? That any kind of regulation of the market by the government will reduce productivity? I think this is a highly questionable claim. Look at Japan, for God's sake, their government has practically been one with the market, and they have for long periods had the highest production rate of any country! The bubble burst in the nineties, yes, but ups and downs have happened to all economies as far as I know, and now the Japanese economy has been in a positive trend for some time.

"It’s always struck me that those who imagine a global economic system that can provide some sort of heaven on earth constantly ignore the realities of Economics 101: One can’t consume more than one produces."

Do you think it's impossible to meet this standard unless you have a practically free market such as the U.S.? If so, how do you explain the success of the Japanese economy, for instance?

"Not to be a spoilsport, but I think we need more capital. And though I’m belaboring the point, we can either provide the freedom and incentives for more productivity, or we can try to force it."

Oh, so the European countries, Canada and Japan are "forcing" people to provide them with opportunities for economical growth? Is that what you're saying? Gosh, it sounds like you're talking about the old Soviet regime or something.

"As far as “influencing the well being of other countries”, it will be interesting to see what the fallout of the current financial upheaval actually is. With the US providing nearly 25% of global GDP ($14 trillion) a major decline here may provide a profound demonstration of how much the States has provided to the well being of other countries over the past century."

Well, the fact is that per capita, the U.S does not top the list, so this is not remarkable at all. Therefore, a major decline will only show that the U.S. is unable to handle its own economy in a responsible way, draggig down others in the mud.

[william]

This is the part that the neo conservatives miss. A TV star was on glen beck tonight and glen asked this star if medical care was a right or a responsibility. The star responded a responsibility. He suggested that instead of buying that new motorcycle the person should buy medical insurance.

Well I suppose there are some that would buy a motorcycle instead of medical insurance but there are many that cannot afford either or some that have preexisting conditions and cannot get medical insurance for their medical condition. The system is designed for profits not people. Martin Luther King stated that the lack of universal medical care was the most profound injustice in America. I believe history will show otherwise but it is a close second.

I suspect if you ask most people in Europe if medical care is a right or a responsibility most would answer a right like fire protection and police protection. Why do we Americans have such a different mentality?

A privatized health care system will bankrupt this country with or without universal coverage. Wait and see.

[Teabinge]

It seems to me som, many, americans are unrealistically fearful of "socialism".

Almost like a phobia.

Almost like the sexual phobia of Victorian England when they put cloth around the piano "legs" so that they wouldn't make the gents excited.

For a proper definition of socialism one can read in Wikipedia.

I am not a socialist, I am pro market economy and personal responsibility but Market and Money cannot be supreme to all other values. It's supposed to be a useful servant, not an emperor.

Barack Obama is not a socialist, that's plain ridiculous. If he is to be regarded as a socialist, like Rosa Luxemburg or Trotskij or Che Guevara - well I just can't follow you, it's so silly.

Please use sane definitions of things.

You will not live in a Gulag concentration camp" just because you get a reformed healthare system where even poor people gets help. (But I doubt that will ever happen).

You really shouldn't be so over-scared.

[Teabinge]

Americans and politicians -

One one hand, it seems to me almost like you regard politicians and governing structures as enemies.

On the other hand you seem to be hailing your politicians as semi-gods or pop-stars; screaming ladies and a million baloons.

All these myriads of movies with the numinous white house and the numinous mr president, mr president, mr president...the oval room...woo

Really strange. Is this division within the same individuals? The goverment hating + president hailing? Or are it more like diffent individuals being haters or hailers?

[oliviaharis]

Democrats now have the Republicans in a political vise and will keep squeezing them. Let Bush veto whatever anti-war measure House and Senate finally produce. Let the president's GOP troops uphold his veto. Democrats will then rally for another legislative assault on the willfully blind chief executive.
-----------------
oliviaharis
stealth

[TSK]

Question to the US citizens here which you should ask and answer to yourself honestly:
Where is the USA abominably bad compared to other countries ?

I ask this question because I travelled through other countries and noticed some weaknesses, but also admitted grudgingly that they also have equally good and *better* solutions than my home country.
There is simply no ideal place on this world.

But US citizens seem conspicously extremely reluctant to acknowledge weaknesses. While Michael strike out potential weaknesses in the old world ("Excessively high taxation, smothering regulation, and counter-productive social-welfare policies are luxuries that even France and Germany have begun to realize they cannot afford"), I notice that it doesn't help to state "For better or worse" if the text does not even mention why the European system *could* be better at all.

Is the USA the best country in the world, New Kanaan with rivers of honey and milk ? No, there is no such country. So when other people from other countries point out perceived strengths of their systems, why is the answer almost automatically a negation, a mitigation or a sulking discussion stopper (USA, love it or leave it) ?

I must say if the question of weaknesses is asked and if you have really problems to accept the inquiry and you cannot think of serious problems at once, then something is amiss. If you do know the problems, but feel still compelled to defend the USA, ok. If not, then we have a very bad kind of ego, blinding yourselves against your faults. If you try to export your preferred values of democracy (which is ironically first founded in the UK) and freedom, why not listen what other countries may have found out ?