Wednesday, November 30, 2011

Democrats need to get real about U.S. energy policy

The former generation of Democratic legislators would have embraced the energy opportunities before the U.S. now. Whoever is president in 2013 will have a rare chance to transform the energy picture.

Let me say upfront that I have always been a Democrat. However, I also vote my conscience and have supported independent candidates. Today, energy policy is one area where I think my party is wrong.

I wasn't always a disillusioned Democrat. For decades, the party's policies ensured that the United States had adequate supplies of domestic oil, natural gas, coal, hydroelectric power and uranium to fuel our growing economy while providing good-paying jobs to the men and women who produced our energy and transported it. These policies helped create America's affluence of the 1950s, 1960s and early 1970s.

Even before then, it was a Democratic president — Franklin D. Roosevelt — who transformed the lives of many of our poorest citizens by creating the Tennessee Valley Authorityand the Bonneville Power Administration. These projects brought electricity and industrialization to areas that lagged the rest of the country economically. It was Lyndon B. Johnson and not a "free-market" Republican who transformed East Texas through electrification, setting off an economic boom responsible for the economic success of Texas to this day.

When the oil price shocks hit the United States in the 1970s, many Democratic stalwarts supported the Nixon and Ford administrations in their attempts to enact comprehensive energy policies. They understood that energy is not a partisan issue but rather one that draws people together to ensure the future health and security of the nation. Democratic senators, congressmen, governors and President Carter supported myriad energy technologies, policies and projects, including nuclear power, conservation, renewable energy development, the Trans-Alaska pipeline and the lifting of oil and natural gas price controls.

While other Democratic voices sometimes argued that energy policy leaned too heavily toward conventional fuels and not enough toward conservation, fuel economy or efficiency standards, few party leaders opposed specific forms of energy or played to the galleries of anti-industry activists.

How far we have fallen from those days. Today's Democratic leadership has reached a nadir in rational energy policymaking. In the last several years, congressional party leaders have squandered opportunities for a nuclear waste management storage program and have shown opposition to shale gas production. This month, the party reached a new low: The Obama administration's delay of the Keystone XL pipeline from Canada, in spite of its promise of an additional 750,000 barrels of oil per day and the thousands of new jobs it would create, was an inexcusable political decision unbecoming of a pragmatic leader.

The former generation of Democratic legislators would have embraced the energy opportunities before the United States today. Whoever is president in 2013, it will be the first time in 40 years that the United States has a serious chance to transform its energy landscape. The previously accepted inexorable decline in U.S. oil and gas production is being reversed: New "tight oil" — resources trapped in low-porosity formations such as shale rock — could provide the country with several million barrels of oil per day in the coming decades, and the country's abundant and accessible shale gas reserves may leave us gas independent for up to a century. There also are still conventional reserves to be tapped, most notably in Alaska, where the Beaufort and Chukchi seas and the North Slope hold an abundance of hydrocarbon reserves.

Exploitation of these resources would have a number of benefits. Increased domestic oil production, coupled with growing imports of Canadian oil sands, would result in a reduction of non-North American oil imports, leading to a significant improvement in the country's yawning trade deficit. Increased gas production would be valuable for cleaner electricity generation (when compared with coal) and could also signal a revival of the U.S. industrial and petrochemical sectors. Further, if natural gas can be deployed in the commercial heavy-duty vehicle fleet, we would be able to reduce our oil imports dramatically. We may even be able to export gas to our allies and trading partners.

This is neither a repetition nor a promotion of the Republican refrain to "drill baby, drill."

This is also not a denial or marginalization of the environmental challenges we face. In the wake of the disastrous 2010 Macondo oil spill in the Gulf of Mexico, it is clear that any energy production must be done to the highest environmental standards. That means spending more money and acquiring additional regulatory staff resources, not less (as the Republicans champion).

But we must embrace these challenges pragmatically and economically. We must move aggressively on energy efficiency, spread smart-grid technologies and invest in our electricity grid. We must push curbs that encourage less oil consumption, such as a targeted (to limit the effect on the less fortunate) federal gasoline tax.

I know many of my friends — Democratic and Republican — may dismiss my ideas as too far-reaching or as pie in the sky. But we need a vision now that all Americans accept and one they are ready to help make a reality. The Democratic leadership must start facing the hard truths about energy and stop proselytizing that renewable sources of energy can replace the fossil fuels currently in use. This is not to argue that the reduction of fossil fuel emissions is not an urgent priority. However, the emphasis must be on job creation and on building the 21st century energy infrastructure that will reestablish America's primacy in the world. The size of our energy resources gives us the wherewithal to make this transition.

To paraphrase Winston Churchill: Give the American people the tools and they will finish the job.

Charles K. Ebinger is director of the Brookings Institution's Energy Security Initiative.

Obama 101

Few presidents have dashed so many illusions as Obama.

Victor Davis Hanson at NRO:

In the last three years, the president has taught us a great deal about America, the world, and himself.
Before Obama, many Americans still believed in massive deficit spending, whether as an article of fairness, a means to economic growth, or just a lazy fallback position to justify an out-of-control federal government. But after the failure of a nearly $800 billion “stimulus” program — intended to keep unemployment under 8 percent — no one believes any more that an already indebted government will foster economic growth by taking on another $4 trillion in debt. In other words, “stimulus” is mostly a dead concept. The president — much as he advised a barnstorming President Bush in 2005 to cease pushing Social Security reform on a reluctant population — should give it up and junk the new $500 billion program euphemistically designated as a “jobs bill.” The U.S. government is already borrowing every three days what all of America spent on Black Friday.

Obama has also taught us that prominent government intervention into the private sector often makes things worse, and invites crony-capitalist corruption. Nearly three years into this administration, it is striking how seldom Barack Obama brags about Cash for Clunkers, the Chrysler and GM bailouts, or Solyndra. He either is quiet about them or sort of shrugs, as if to say, “Stuff happens.” Even creative bookkeeping cannot mask the fact that the auto-company bailouts (begun, to be sure, by the Bush administration, but made worse under Obama) will prove a huge drain on the Treasury. No one even attempts any more to convince us that we will like Obamacare once we read the legislation, or that it will save us costs in the long run, or that it will cheer up businesses so that they will invest and hire. All that was dreamland, 2009, and this is reality, 2011, when we hear only “It could have been worse.”

Obama has also taught us that a president’s name, his father’s religion, his ethnic background, loud denunciations of his predecessor, discomforting efforts to apologize, bow, and contextualize past American actions — none of that does anything to lead to greater peace in the world or security for the United States. And by the same token, George Bush’s drawl, Texas identification, and Christianity did not magically turn allies into neutrals and neutrals into enemies.

Israel, Britain, and Eastern Europe are not closer allies now than they were in 2008. Iran is still Iran — and may be even a more dangerous adversary after the failed Obama outreach. Putin’s Russia, despite “reset” (a word we no longer much hear), is still Putin’s Russia. China still despises the U.S., and feels in 2011 that it is in a far better position to act on its contempt than it was in 2009. North Korea never got the “hope and change” message. Europe is collapsing, reminding the world where the United States is headed if it does not change course. Outreach didn’t seem to do much for the Castro brothers, Hugo Chávez, or Daniel Ortega. We are helping Mexico to sue our own states, but that does not seem to persuade its leaders to keep their citizens home. Muslim Pakistan went from a duplicitous ally to a veritable enemy. The more we bragged about Turkey, the more we could feel it holds us in contempt. We hope that the Libyan rebels and the Cairo protesters are headed toward democracy, but we privately admit that they seem to have no more interest in establishing it than we have in promoting it. In other words, Professor Obama reminds future presidents that the world will transcend their rhetoric, their pretensions, and their heritage. Other nations always calibrate their relations with the United States either by their own perceived self-interest, or by centuries-old American values and power, or both.

Barack Obama has taught us a great deal about dealing with radical Islam, an ideology not predicated on what presidents do or say. There will be no shutting down of Guantanamo as promised, and no end to either renditions or preventive detentions and tribunals. Khalid Sheik Mohammed will never be tried, as promised, in a New York courtroom not far from the scene of his mass murdering. The so-called Ground Zero mosque — once so dear to sanctimonious members of the Obama administration — will never be built; either liberal New Yorkers will quietly prevent it, or the architects of the scheme will be exposed as financial as well as cultural con artists. Obama will never again give an interview to Al-Arabiya expanding on how his own heritage will ameliorate relations with Arabs. The Cairo speech will go down in history not as a landmark creative effort to win over Muslims, but, to the extent it is remembered, as one of the most ahistorical constructs in presidential history. The Obama legacy in the War on Terror is as Predator-in-Chief — boldly increasing targeted assassinations tenfold from the Bush era, on the theory that we more or less kill the right suspected terrorists; few civil libertarians care much, apparently because one of their own is doing it.

We have learned from Obama that the messianic presidency is a myth. Obama’s attempt to recreate Camelot has only reminded us that JFK’s presidency — tax cuts, Cold War saber-rattling, Vietnam intervention — was never Camelot. We shall see no more Latinate presidential sloganeering (“Vero Possumus”), no more rainbow posters. Gone are the faux-Greek columns, the speeches about seas receding and the planet cooling — now sources of embarrassment rather than nostalgia. Chancellor Merkel won’t want another Victory Column address from someone who ducked out on the 20th anniversary of the fall of the Berlin Wall. Obama himself will not lecture crowds any longer about the dangers of their fainting when he speaks; Michelle will cease all the nonsense about “deign[ing] to enter the messy thing called politics” and finally acquiring pride in the U.S. when it nominated her husband. Even Chris Matthews’s leg has stopped tingling. There will be no more Newsweek comparisons of Obama to a god. Even the Nobel Prize committee will soon grasp that it tarnished its brand by equating fleeting celebrity with lasting achievement.

“Green” will never be quite the same after Obama. When Solyndra and its affiliated scandals are at last fully brought into the light of day, we will see the logical reification of Climategate I & II, Al Gore’s hucksterism, and Van Jones’s lunacy. How ironic that the more Obama tried to stop drilling in the West, offshore, and in Alaska, as well as stopping the Canadian pipeline, the more the American private sector kept finding oil and gas despite rather than because of the U.S. government. How further ironic that the one area that Obama felt was unnecessary for, or indeed antithetical to, America’s economic recovery — vast new gas and oil finds — will soon turn out to be America’s greatest boon in the last 20 years. While Obama and Energy Secretary Chu still insist on subsidizing money-losing wind and solar concerns, we are in the midst of a revolution that, within 20 years, will reduce or even end the trade deficit, help pay off the national debt, create millions of new jobs, and turn the Western Hemisphere into the new Persian Gulf. The American petroleum revolution can be delayed by Obama, but it cannot be stopped.

One lesson, however, has not fully sunk in and awaits final elucidation in the 2012 election: that of the Chicago style of Barack Obama’s politicking. In 2008 few of the true believers accepted that, in his first political race, in 1996, Barack Obama sued successfully to remove his opponents from the ballot. Or that in his race for the U.S. Senate eight years later, sealed divorced records for both his primary- and general-election opponents were mysteriously leaked by unnamed Chicagoans, leading to the implosions of both candidates’ campaigns. Or that Obama was the first presidential candidate in the history of public campaign financing to reject it, or that he was also the largest recipient of cash from Wall Street in general, and from BP and Goldman Sachs in particular. Or that Obama was the first presidential candidate in recent memory not to disclose either undergraduate records or even partial medical. Or that remarks like “typical white person,” the clingers speech, and the spread-the-wealth quip would soon prove to be characteristic rather than anomalous.

Few American presidents have dashed so many popular, deeply embedded illusions as has Barack Obama. And for that, we owe him a strange sort of thanks.

Christie rips Obama over deficit talks: 'What the hell are we paying you for?'

By Justin Sink 11/29/11 08:27 AM ET
New Jersey Gov. Chris Christie ripped President Obama for the failure of the debt supercommittee, calling the president "a bystander in the Oval Office" in comments Monday.
“I was angry this weekend, listening to the spin coming out of the administration, about the failure of the supercommittee, and that the president knew it was doomed for failure, so he didn’t get involved. Well, then what the hell are we paying you for?” Christie said in Camden, N.J. " 'It’s doomed for failure, so I’m not getting involved'? Well, what have you been doing, exactly?”
Christie was contrasting the Tea Party and Occupy Wall Street movements, saying both stemmed from "anger" with government's inability to respond to the financial crisis. But while Christie said "both parties deserve blame for what's going on in Washington, D.C.," he pointed the finger squarely at Obama for failing to strike a budget deal.
“Why the president of the United States refuses to do this is astonishing to me. If he wanted to run for Senate again and just be one of a hundred, I’m sure he could have gotten reelected over and over again in Illinois,” Christie said. “He’s the one in Washington, and he’s got to get something done here. And it’s not good enough just to say, ‘Well, I’ll get it done after the election.' "
Christie said that the template for fixing budget deficits existed at the state level, where balanced-budget requirements and divided governments often force governors and state legislatures to compromise.
"In New Jersey, the reason why they got done is because I called people into the room and said we’re going to solve this problem and I had people of good will on the other side who said they believed it was their obligation, regardless of party, to get done things like pension and benefit reform,” Christie said.
The popular and outspoken New Jersey governor has endorsed former Massachusetts Gov. Mitt Romney for the Republican nomination for president.

Tuesday, November 29, 2011

Barney Frank: Good riddance

Jennifer Rubin at Right Turn:

I’ll not be sniffling over the departure of Rep. Barney Frank (D-Mass.), who announced he’s not running for re-election in 2012. The good news for conservatives seems to be that he threw cold water on the notion that his party could be back in the majority anytime soon. Politico reported:
The kind of inside work I have felt best at is not going to be as productive in the foreseeable future,” Frank told reporters at a news conference in Newton, Mass. “To my disappointment, the leverage you have within the government has substantially diminished.”
Frank also told reporters that his newly drawn district would have been an uphill battle for him.
“It would have been a tough campaign,” Frank said. “I would have a hard time justifying to myself to do it.”
In other words, he might lose and/or his party might not take the majority so he’s throwing in the towel.
My lack of sorrow is really based on two primary objections to his tenure. First, he was an extreme and irresponsible foe of defense spending. Last Friday, he issued yet another blast revealing his indifference to national defense: “Cutting military spending is really essential if we are going to accomplish some of the things the Occupy movement wants to do in terms of fairness.” And who can forget that in 2003, with two ongoing wars, he called for a 25 percent cut in defense spending? He rarely even bothered to make the case that such cuts wouldn’t harm national security. He simply didn’t care; he wanted the money to use for liberal statism.
But his real legacy will be his cluelessness and indifference to reforming Freddie Mac and Fannie Mae. As Phil Klein put it: “‘These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,’ the New York Times quoted Frank as saying in 2003. ‘The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.’ Frank received $42,350 in campaign contributions from Fannie and Freddie between 1989 and 2008, according to the Center for Responsive Politics.”
Beginning in 1992 and continuing through 2007, Fannie and Freddie were required to meet affordable housing goals established by the Department of Housing and Urban Development. For most of these years, Frank was the staunchest defender of this policy.
An “affordable” housing mortgage was a loan made to a borrower who was at or below the median income in the area where the home was located. A special sub-goal also required the GSEs to make loans to borrowers who were at or below 60 percent of the median income. These requirements were gradually tightened over time, so that by 2007 55 percent of all mortgages Fannie and Freddie acquired had to be “affordable” under this standard.
There are only so many borrowers with good credit who are at or below the median income in the areas where they live, and there was a lot of competition for Fannie and Freddie.
Of this total, the federal government was responsible--through Fannie and Freddie, FHA, and the CRA--for 19 million of these deficient and risky loans. . . .
On September 29, just before Congress recessed for the election, a few Democratic members of Congress introduced legislation that would extend the CRA to all financial institutions--not just banks. And Barney Frank declared that this bill would be his top priority in the lame duck session after the election.
This was very confusing. If Frank thought it was a “great mistake to push low income people into homes,” why would he favor extending the CRA to the entire financial system? That would mean insurance companies, auto finance companies, credit card firms and securities firms would be required to provide credit and other services--not just mortgages--to the same people who couldn’t afford to repay their mortgages.
Here’s my guess: despite my initial impression, Barney Frank actually doesn’t get it. Instead, his real views had only been imprisoned for the election. When the idea of extending CRA came along, they escaped.
To that neglect and active opposition to reform of Freddie and Fannie one can add his support for a monstrous, unintelligible piece of legislation, “Dodd-Frank,” which is a model for excessive regulation that engenders unintended consequences.
I don’t even bother with his ethics problems stemming from paying a male prostitute who operated out of his home. That the scandal disgraced him and Congress was small potatoes compared to the damage wrought by his policies and those that would have followed had his colleagues gone along with some of his most irresponsible proposals.
To paraphrase William F. Buckley, Jr., Massachusetts would be better served by picking a name out of the phone book than by another two years of Barney Frank. Hopefully, they’ll get someone (Democrat or Republican) a heck of a lot better.

Friday, November 25, 2011

Anarchy in the U.S.A. The roots of American disorder.

A great historical piece on the roots of the OWS crowd. Read and learn! -SP

Matthew Continetti at The Weekly Standard:

Ever since September, when activists heeded Adbusters editor Kalle Lasn’s call to Occupy Wall Street, it’s become a rite of passage for reporters, bloggers, and video trackers to go to the occupiers’ tent cities and comment on what they see. Last week, the day after New York mayor Michael Bloomberg ordered the NYPD to dismantle the tent city in Zuccotti Park in Lower Manhattan, the New York Times carried no fewer than half a dozen articles on the subject. Never in living memory has such a small political movement received such disproportionate attention from the press. Never in living memory has a movement been so widely scrutinized and yet so deeply misunderstood.

If income equality is the new political religion, occupied Zuccotti Park was its Mecca. Liberal journalists traveled there and spewed forth torrents of ink on the value of protest, the creativity and spontaneity of the occupiers, the urgency of redistribution, and the gospel of social justice. Occupy Wall Street was compared to the Arab Spring, the Tea Party, and the civil rights movement. Yet, as many a liberal journalist left the park, they lamented the fact that Occupy Wall Street wasn’t more tightly organized. They worried that the demonstration would dissipate without a proper list of demands or a specific policy agenda. They suspected that the thefts, sexual assaults, vandalism, and filth in the camps would limit the occupiers’ appeal.

The conservative reaction has been similar. A great many conservatives stress the conditions among the tents. They crow that Americans will never fall in line behind a bunch of scraggly hippies. They dismiss the movement as a fringe collection of left tendencies, along with assorted homeless, mental cases, and petty criminals. They argue that the Democrats made a huge mistake embracing Occupy Wall Street as an expression of economic and social frustration.

A smaller group of conservatives, however, believes the occupiers are onto something. The banks do have too much power. Wages have been stagnant. The problem, these conservatives say, is that Occupy Wall Street doesn’t really know what to do about any of the problems it laments. So this smaller group of conservatives, along with the majority of liberals, is more than happy to supply the occupiers with an economic agenda.

But they might as well be talking to rocks. Both left and right have made the error of thinking that the forces behind Occupy Wall Street are interested in democratic politics and problem solving. The left mistakenly believes that the tendency of these protests to end in violence, dissolute behavior, and the melting away of the activists is an aberration, while the right mistakenly brushes off the whole thing as a combination of Boomer nostalgia for the New Left and Millennial grousing at the lousy job market. The truth is that the violence is not an aberration and Occupy Wall Street should not be laughed away. What we are seeing here is the latest iteration of an old political program that has been given new strength by the failures of the global economy and the power of postmodern technology.
To be sure, there are plenty of people flocking to the tents who are everyday Democrats and independents concerned about joblessness and the gap between rich and poor. The unions backing the occupiers fall into this group. But the concerns of labor intersect only tangentially with those of Occupy Wall Street’s theorists and prime movers. The occupiers have a lot more in common with the now-decades-old antiglobalization movement. They are linked much more closely to the “hacktivist” agents of chaos at WikiLeaks and Anonymous.

When the police officers and sanitation workers reclaimed Zuccotti Park, Occupy Wall Street’s supporters cried, “You can’t evict an idea whose time has come.” Whether the sympathizers or the critics really understand the idea and the method of the movement is a good question. The idea is utopian socialism. The method is revolutionary anarchism.

It was February 25, 1825, and the U.S. Capitol was under occupation​—​sort of. Robert Owen, a successful Welsh businessman and socialist, wasn’t standing in the Rotunda holding up a placard. He was addressing a joint session of Congress from the dais of the House of Representatives. President James Monroe and president-elect John Quincy Adams were present for at least a portion of the speech. As Joshua Muravchik explains in Heaven on Earth, a history of socialism, the elected officials were mesmerized by Owen’s plans.

In the speech, Owen shared his dream of cooperative villages where workers would see their poverty alleviated and their spirits transformed. Inspired by the success of his New Lanark community in Scotland, where employees lived in hospitable conditions and the children of laborers received early childhood and primary education, Owen hoped to bring to America exquisitely planned spaces where a new, improved mankind would come into being. Owen thought his scientifically organized village would “lead to that state of virtue, intelligence, enjoyment, and happiness, in practice, which has been foretold by the sages of past times, and would at some distant period become the lot of the human race!” Utopia, according to Owen, was not confined to the printed page. Utopia could be realized.
The site of his American utopia would be New Harmony, on the Wabash River in southwest Indiana. Owen welcomed residents to his colony that April. “I am come to this country,” he told them, “to introduce an entire new state of society, to change it from the ignorant, selfish system, to an enlightened social system which shall gradually unite all interests into one, and remove all cause for contests between individuals.” There would be no 1 percent versus the 99 percent in New Harmony. 

Things did not work as planned, however. Structuring a community along rational lines was extremely difficult. There weren’t enough skilled laborers. Many of the residents were lazy. Shortages were commonplace. Central planning hampered the efficient allocation of meals. Factions split off from the main group. The community closely monitored the activities and beliefs of every member. Alcohol was banned. Children were separated from their parents; one later said she saw her “father and mother twice in two years.” Owen expelled malcontents. Only his generous subsidies held New Harmony together.

And not for long. Owen’s “new empire of peace and good will to man” fell apart within four years. But the socialist utopian impulse lives on to this day. America in particular has a long and storied tradition of individuals coming together to create perfect societies. In these earthly utopias, competition is to be replaced by cooperation, private property is to dissolve into communal ownership, traditional family structures are to be transformed into the family of mankind, and religion is to be displaced by the spirit of scientific humanism. The names of these communities are familiar to any student of American history: Brook Farm, Oneida, the North American Phalanx. None of them lasted. None of them realized the ecstasy their founders desired.

Historian J.P. Talmon wrote in Political Messianism (1960) that the American and European utopians “all shared the totalitarian-democratic expectation of some pre-ordained, all-embracing, and exclusive scheme of things, which was presumed to represent the better selves, the true interests, the genuine will and the real freedom of men.” The men and women behind the utopian movements drew inspiration from the French Revolution, which proclaimed the liberty, equality, and fraternity of all, and from the political philosophy of Jean-Jacques Rousseau, who taught that individuals born free and equal were made subservient and estranged through the institutions of society and private property. Lost freedom could be recovered by dismantling the obstacles that prevent man from being true to himself. The reconstruction of society along rational lines would allow us to reclaim the state of natural bliss that had been lost.

Utopianism attracts goofballs as light attracts moths. The postrevolutionary thinker Charles Fourier was a classic example. “He was an odd old bachelor,” Talmon writes, “a denizen of boarding houses, with the ways of an incurable pedant, loving cats and parrots, tending flowers; rather frightening with his uncanny fixed habits and air of mystery; brooding in immobile silence, but flying into a temper when anyone interfered in the slightest with his routine.” Fourier’s vision was mindboggling. If his plans were put into effect, Fourier believed, “anti-lions” and “anti-crocodiles” would one day transport people across the globe. Hens would lay so many eggs that the British national debt would be paid off in months. The possibility existed, in Fourier’s mind, that the oceans would turn into lemonade.

The basic unit of social organization in Fourier’s dream world was the phalanx. Six million of them would be enough to encompass all of humanity. Fourier planned each aspect of his fantastic environment in intricate detail. Every structure​—​from dormitories to stables to restaurants​—​was precisely designed. Once men lived in the phalanx, there would be no need for property or law or God or family or restraint. Every person would live in accord with his fellow man and nature. This self-regulating community would unleash the creative potential in every human heart.
Children were the clay from which Fourier would sculpt new men. “The phalanx containing an exceedingly great variety of occupations,” he wrote, “it is impossible that the child in passing from one to the other should not find opportunities of satisfying several of his dominant instincts.” There would be no resentment in Fourier’s ideal community, no envy of others. The passions would flow freely. Every want would be fulfilled. It would be, indeed, paradise.

When he looks at the world, the utopian is repelled by two things in particular. One is private property. “The civilized order,” Fourier wrote, “is incapable of making a just distribution except in the case of capital,” where your return on investment is a function of what you put in. Other than that, the market system is unjust. Economics is a zero-sum game. One man holds possessions at the expense of another. For another nineteenth-century French utopian, Pierre-Joseph Proudhon, property was theft.

Private property embodies the chains of society that keep man down. As Talmon put it, for the utopian, property is “an instrument of irrational and selfish exploitation; instead of a vehicle for enlarging our personality, a tyrannical master to both the haves driven by insatiable cupidity, and the have-nots, whose lives were being stunted by want and alienated through bondage.” And because property is the source of inequality, only through the communal redistribution of goods can true equality be achieved.

The utopian’s other great hatred is for middle-class or “bourgeois” culture. Monogamy, monotheism, self-control, prudence, cleanliness, fortitude, self-interested labor​—​these are the utopian’s enemies. “Morality teaches man to be at war with himself,” Fourier wrote, “to resist his passions, to repress them, to believe that God was incapable of organizing our souls, our passions wisely.” What were called the bourgeois virtues had been designed to maintain unjust social relations and stop man from being true to himself. Thus, to recover one’s natural state, one “must undertake a vast operation of ‘desanctification,’ beginning with the so-called morality of the bourgeoisie,” wrote the twentieth-century utopian Daniel Guérin. “The moral prejudices inculcated by Christianity have an especially strong hold on the masses of the people.”  

It is therefore necessary to liberate individuals from their social and sexual mores. “The family will no longer be the exclusive unit, as it is in civilization,” wrote Talmon. At Brook Farm in Massachusetts, which lasted from 1841 to 1847, men and women were encouraged to interact as complete social, political, and sexual equals. Residents of the Oneida Community (1848-1880) in upstate New York engaged in “complex marriage,” in which older members of the commune “introduced” younger members to sex. The Oneidans engaged in selective breeding. These practices, radical at the time, have been characteristic of left-wing movements ever since. The free love associated with the New Left and student rebellion in the 1960s, for instance, is today so deeply embedded in American culture that only social conservatives pay it any mind.

The persistence of certain features of utopian socialism over 200 years is impressive. Only the dress codes and gadgets change. If Charles Fourier emerged from a wormhole at the Occupy Wall Street D.C. tent city in McPherson Square in Washington, he’d feel right at home. The very term “occupy” or “occupation” is an attack on private property. So are the theft and vandalism widely reported at Occupy Wall Street locations. The smells, the assaults, the rejection of the conventional in favor of the subversive, and the embrace of pantheistic spirituality flow logically from the utopian rejection of middle-class norms. The things that Mayor Bloomberg found objectionable about the encampment in Zuccotti Park​—​that it “was coming to pose a health and fire safety hazard to the protesters and to the surrounding community”​—​are not accidental. They are baked into the utopian cake.
Over the course of the nineteenth century the quest for the ideal society took many directions that can be clustered in two broad categories. There were the Marxian attempts at “scientific socialism,” in which the proletarian vanguard sought to overthrow the bourgeoisie to bring about the classless society as ordained by the laws of history. And there was the revolutionary anarchist project of achieving utopia by leveling hierarchies and abolishing authorities.
The two overlapped on certain points. But for the most part the Marxists looked at the anarchists as boobs and the anarchists looked at the Marxists as totalitarians​—​which of course they were. Scientific socialism is more famous than revolutionary anarchism, if only because in the twentieth century it succeeded in taking over much of the world. The incalculable human cost of communism has obscured the destructive activities of the anarchists, but they were considerable. 

Anarchism is often dismissed as merely the rationalization of hooligans. But that is a mistake. Anarchism has a theory and even a canon: Bakunin, Kropotkin, Goldman, and others. Anarchism’s purpose is to turn the whole world into one big Fourierist phalanx. “At every stage of history our concern must be to dismantle those forms of authority and oppression that survive from an era when they might have been justified in terms of the need for security or survival or economic development, but that now contribute to​—​rather than alleviate​—​material and cultural deficit,” writes Noam Chomsky in an introduction to Daniel Guérin’s classic,Anarchism. Dismantle “the system.” Then we’ll be free.

The anarchist sees no distinction between free enterprise and state socialism. He cannot be happy as long as anyone has more property or power than someone else. “Any consistent anarchist must oppose private ownership of the means of production and the wage-slavery which is a component of this system,” Chomsky writes, “as incompatible with the principle that labor must be freely undertaken and under the control of the producer.” What Chomsky is saying is that you can justly grow your own tomato, but you can never hire anyone else to pick it.
An anarchist does not distinguish between types 

of government. Democracy to him is just another form of control. Here is Chomsky again: “Democracy is largely a sham when the industrial system is controlled by any form of autocratic elite, whether of owners, managers and technocrats, a ‘vanguard’ party, or a state bureaucracy.” (Or bankers!) The ballot, wrote Guérin, is “a cunning swindle benefiting only the united barons of industry, trade, and property.” 

This permanent rebellion leads to some predictable outcomes. By denying the legitimacy of democratic politics, the anarchists undermine their ability to affect people’s lives. No living wage movement for them. No debate over the Bush tax rates. Anarchists don’t believe in wages, and they certainly don’t believe in taxes. David Graeber, an anthropologist and a leading figure in Occupy Wall Street, puts it this way: “By participating in policy debates the very best one can achieve is to limit the damage, since the very premise is inimical to the idea of people managing their own affairs.” The reason that Occupy Wall Street has no agenda is that anarchism allows for no agenda. All the anarchist can do is set an example​—​or tear down the existing order through violence.

Just as hostility to property is inextricably linked to utopian socialism, violence is tightly bound to anarchism. “Anarchists reject states and all those systematic forms of inequality states make possible,” writes Graeber. “They do not seek to pressure the government to institute reforms. Neither do they seek to seize state power for themselves. Rather, they wish to destroy that power, using means that are​—​so far as possible​—​consistent with their ends, that embody them.” What seems aimless and chaotic is in fact purposeful. By means of “direct action”​—​marches, occupations, blockades, sit-ins​—​the anarchist “proceeds as if the state does not exist.” But one who behaves as if the government has no reality and the laws do not apply is an outlaw, not to say a criminal.

When you see occupiers clash with the NYPD on the Brooklyn Bridge, or masked teenagers destroying shop windows and lighting fires in downtown Oakland, you are seeing anarchism in action. Apologists for Occupy Wall Street may say that these “black bloc” tactics are deployed solely by fringe elements. But the apologists miss the point. The young men in black wearing keffiyehs and causing mayhem are simply following the logic of revolutionary anarchism to its violent conclusion. The fringe isn’t the exception, it’s the rule. The exception would be “direct action” that took care to respect the law.

The unstable nature of revolutionary anarchism has meant that movements based on these tactics quickly flame out. Consider the case of the International Working People’s Association, an anarchist group in 1880s Chicago. As Michael Kazin details inAmerican Dreamers, his history of the U.S. left, the IWPA held an adversarial attitude toward government, markets, and elections. They didn’t run candidates for office. They blew things up. “Men and women could organize their affairs quite well, they believed, without the aid of any boss or master, even that of a workers’ state.” But rejecting democratic politics was a dead end. And violence was the natural consequence: In 1887, four IWPA leaders were executed for the murder of eight policemen in the Haymarket Square bombing. The organization collapsed soon after.

Attempts to establish a socialist utopia through revolutionary anarchism tend to be short-lived. The last great outbreak in America was in the late 1960s and early ’70s, with the urban riots, terrorism, and street actions of the New Left and the Weathermen. The tide turned with the rise of conservatism in American politics and the end of the Soviet empire. The utopian ideal seemed discredited. The teachings of Fourier and Chomsky seemed confined to the academy. Little did we realize that the stage was being set for a new anarchism​—​the variety that confronts us today.

David Graeber identifies January 1, 1994, as the birth of the antiglobalization movement. That was the day the North American Free Trade Agreement went into effect, and the Zapatistas launched their revolt in Chiapas, Mexico. The model for twenty-first century anarchism was established. “The Zapatistas,” Graeber writes, “with their rejection of the old-fashioned guerrilla strategy of seizing state control through armed struggle, with their call instead for the creation of autonomous, democratic, self-governing communities, in alliance with a global network of like-minded democratic revolutionaries, managed to crystallize, often in beautiful poetic language, all the strains of opposition that had been slowly coalescing in the years before.” In a “flat” world, where borders and national governments counted for less and less, the new anarchism would reject the idea of seizing state power by force. Anarchist forms of organization, Graeber wrote, “would involve an endless variety of communities, associations, networks, projects, on every conceivable scale, overlapping and intersecting in any way we could imagine, and possibly many that we can’t.”

The engine powering the new anarchism was economic and political globalization. A worldwide movement devoted to undermining the institutions of “neoliberalism”​—​the IMF, World Bank, WTO, EU, NAFTA, G20, central banks​—​gathered force. Anarchists appeared at the World Trade Organization meetings in Seattle in 1999, at the Democratic National Convention in Los Angeles in 2000, at the G8 summit in Genoa, Italy, and in bankrupt Argentina in 2001, at the World Economic Forum meeting in New York City in 2002, and at the Republican conventions in New York City in 2004 and St. Paul 2008. For a time during the George W. Bush years, the “global justice” movement was intertwined with the antiwar movement. But, as President Obama has said, “the tide of war is receding” (or so it seems). With the Great Recession and financial panic of 2008, with the onset of austerity policies and the crisis in sovereign debt, economics has returned to the foreground of political life.

Long-term joblessness, especially among the college-educated, and subpar economic growth not only created a pool from which the new anarchists drew recruits, but also made it harder to distinguish the radicals from their anguished fellow travelers. The technological advances that allowed information and capital to travel between continents at the speed of light also provided the means by which the anarchists could disrupt markets and governments. The black bloc tactics of riot and destruction had their Internet equivalent in the denial of service attacks on government and industry computer servers by the hackers collective Anonymous and the unauthorized release of classified information by WikiLeaks. As we saw in the urban riots in England last summer and elsewhere, social media platforms like Facebook and Twitter allow people to mobilize quickly and stay one step ahead of the police. The new anarchism finds no contradiction between its critique of property and capitalism and its embrace of technology created by capitalist corporations. How can there be contradiction, after all, when there are no rules of order or logic in the first place?

Unsurprisingly, the call to occupy Zuccotti Park went out over Twitter, and the masked spokesmen of Anonymous publicized the movement on YouTube. An intellectual, financial, technological, and social infrastructure to undermine global capitalism has been developing for more than two decades, and we are in the middle of its latest manifestation. Occupy Wall Street’s global encampments are exactly the sort of communities David Graeber had in mind when he wrote about the Zapatistas. The occupiers’ tent cities are self-governing, communal, egalitarian, and networked. They reject everyday politics. They foster bohemianism and confrontation with the civil authorities. They are the Phalanx and New Harmony, updated for postmodern times and plopped in the middle of our cities.

There may not be that many activists in the camps. They may appear silly, even grotesque. They may resist “agendas” and “policies.” They may not agree on what they want or when they want it. And they may disappear as winter arrives and the liberals whose parks they are occupying lose patience with them. But the utopians and anarchists will reappear​—​next year’s party conventions will no doubt be a flashpoint​—​and it is wrong to coddle, appropriate, or dismiss them. They must be confronted, not only by law but by ideas. The occupation will persist as long as individuals believe that inequalities of property are unjust and that the brotherhood of man can be established on the earth.

Matthew Continetti is opinion editor of The Weekly Standard.

Thursday, November 24, 2011


David Harasanyi at RealClearPolitics:

Our government has the time to worry about school lunch menus in Boise, Idaho, but the Senate hasn't found the time to pass a budget in Washington, D.C., in nearly three years. H.L. Mencken famously wrote that every decent man is ashamed of his government. This one gives you little choice.
Gridlock is ordinarily the most constructive and moral form of government, but with entitlement programs on autopilot self-destruct, we're in trouble. So Americans turned their weary eyes toward a dream team, a supercommittee, a 12-member panel of our brightest lights, charged with identifying a measly $1.2 trillion in deficit savings over 10 years. Save us.
Alas, for Democrats, it boiled down to the most important issue facing the nation -- maybe ever: "revenue enhancement."
Politico reported that during the supercommittee hearing, both sides agreed to produce "wish lists" to offer some notion of where negotiations might go. Republicans -- believe them or not -- claimed to want to save $700 billion by block granting Medicaid, another $400 billion in spending cuts, $1.4 trillion in cuts to some mandatory health care programs, and about $150 billion in cuts to the federal workforce.
Democrats, on the other hand, reportedly wanted to pass a new $447 billion spending bill (perhaps forgetting that this was a wish list for a deficit reduction committee) and $1 trillion in tax hikes on those 1-percenters. Since Washington spent $1 trillion more than it took in just last year, this would provide nearly no purpose over 10 years -- well, other than a political one.
Senate Majority Leader Harry Reid -- taking a break from fending off fictional goblins, Kochs and Norquists -- laid out his position, explaining that Republicans had undermined the entire process by insisting "on expanding President Bush's tax giveaways to millionaires." The good Lord, you see, created every dollar for the U.S. Treasury to spend wisely; what you keep is a gift -- a giveaway. Every tax cut is temporary, and every tax increase is a new base line. That's just how it works.
And the good senator from Nevada must be making a compelling case. A new poll by Quinnipiac University claims that 44 percent of Americans blame Republicans for the supercommittee's failure, whereas 38 percent blame Democrats. This, notwithstanding the fact that the same poll shows, by a 49-39 percent margin, Americans prefer closing the deficit with spending cuts only. (That is what democracy looks like.)
The committee's failure allegedly means that an automatic $1.2 trillion in cuts should kick in. It won't happen. Some Republicans are already grousing about defense cuts, and the newly involved Barack Obama -- the guardian of frugality -- has warned Congress that he would veto any cuts to the automatic cuts. Will anyone slash any defense spending before an election? Doubtful.
Granted, the GOP talks a big game about reform but offers very little in the way of specifics. Republicans do, however, deserve credit for stopping tax increases until both parties start the discussion on entitlement reform. One side doesn't define what compromise should look like. The supercommittee's failure is victory because any so-called compromise would have meant the institution of tax hikes, and spending cuts would only be as good as the next Congress' emergency or new priority.
But everyone understands that this entire process was theater. If members of Congress, with a $15 trillion debt and a trillion-dollar yearly deficit, can't find $1.2 trillion to cut in 10 years, the only reason is they aren't serious. 

Thursday, November 17, 2011

The next financial crisis will be hellish, and it’s on its way

If you're not scared yet, read this.

"There is definitely going to be another financial crisis around the corner," says hedge fund legend Mark Mobius, "because we haven't solved any of the things that caused the previous crisis."
We're raising our alert status for the next financial crisis. We already raised it last week after spreads on U.S. credit default swaps started blowing out.  We raised it again after seeing the remarks of Mr. Mobius, chief of the $50 billion emerging markets desk at Templeton Asset Management.
Speaking in Tokyo, he pointed to derivatives, the financial hairball of futures, options, and swaps in which nearly all the world's major banks are tangled up.
Estimates on the amount of derivatives out there worldwide vary. An oft-heard estimate is $600 trillion. That squares with Mobius' guess of 10 times the world's annual GDP. "Are the derivatives regulated?" asks Mobius. "No. Are you still getting growth in derivatives? Yes."
In other words, something along the lines of securitized mortgages is lurking out there, ready to trigger another crisis as in 2007-08.
What could it be? We'll offer up a good guess, one the market is discounting.
Seldom does a stock index rise so much, for so little reason, as the Dow did on the open Tuesday morning: 115 Dow points on a rumor that Greece is going to get a second bailout.
Let's step back for a moment: The Greek crisis is first and foremost about the German and French banks that were foolish enough to lend money to Greece in the first place. What sort of derivative contracts tied to Greek debt are they sitting on? What worldwide mayhem would ensue if Greece didn't pay back 100 centimes on the euro?
That's a rhetorical question, since the balance sheets of European banks are even more opaque than American ones. Whatever the actual answer, it's scary enough that the European Central Bank has refused to entertain any talk about the holders of Greek sovereign debt taking a haircut, even in the form of Greece stretching out its payments.
That was the preferred solution among German leaders. But it seems the ECB is about to get its way. Greece will likely get another bailout — 30 billion euros on top of the 110 billion euro bailout it got a year ago.
It will accomplish nothing. Going deeper into hock is never a good way to get out of debt. And at some point, this exercise in kicking the can has to stop. When it does, you get your next financial crisis.
And what of the derivatives sitting on the balance sheet of the Federal Reserve? Here's another factor behind our heightened state of alert.
"Through quantitative easing efforts alone," says Euro Pacific Capital's Michael Pento, "Ben Bernanke has added $1.8 trillion of longer-term GSE debt and mortgage-backed securities (MBS)."
Think about that for a moment. The Fed's entire balance sheet totaled around $800 billion before the 2008 crash, nearly all of it Treasuries. Now the Fed holds more than double that amount in mortgage derivatives alone, junk that the banks needed to clear off their own balance sheets.
"As the size of the Fed's balance sheet ballooned," continues Mr. Pento, "the dollar amount of capital held at the Fed has remained fairly constant. Today, the Fed has $52.5 billion of capital backing a $2.7 trillion balance sheet.
"Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out."
Mr. Pento's and Mr. Mobius' views line up with our own, which we laid out during interviews on our trip to China this month.