Sunday, October 11, 2009

The Economy -- Is It Real? Was It Ever?

Let’s do a little speculating—using the mind, not the online stock broker. It’s the sort of thing done best with the TV turned off and the music down low. It involves doing the sort of thing students are most desperate to avoid in school—thinking.
In all known historical societies (and in most contemporary ones) the economic breakdown has gone pretty much as follows: a top tier of rarely more than, often not as much as, five percent which controls much of the society’s assets.
Next comes an affluent tier made up of managers, very skilled artisans, scientists, priests and bureaucrats who may live paycheck to paycheck, but do so at a relatively high level. In contemporary American terms they can afford homes up to a million dollars and drive BMWs. The Japanese have a nice term for them: “salary men”.
Below that comes a vast manufacturing/service/servant (even slave) class. They live from payday to payday, at a much lower level—in Nineteenth Century America they worked for a dollar a day, six days a week for decades. They control few if any important assets. It is from this class that Muslim extremists are able to recruit their suicide bombers.
American society reflected this three tier society quite accurately from 1776 until the 1940s, with a slowly growing affluent class—as logically followed the growth of our economy as a whole. Then, in the late ‘40s and the 1950s there was a sudden BUMP in that middle group.
Literally millions joined it. Home ownership exploded—from the 800 foot Levittown bungalows to the ever more pretentious half million and three quarter million tract homes of Las Vegas and suburban Los Angeles.
People who for millennia would have been considered as being among the lowest, semi-slave orders of society suddenly made enough money to buy four bedroom homes, two cars, a camper and a couple of snowmobiles. Everyone had at least one TV, a stereo and, by now, a computer.
We proclaimed to the world that we had invented a whole new middle class—one that everyone in society could aspire to join. A gentleman’s college degree became almost a civil right. (When I was in college, an amused medieval scholar pointed out to me that in modern America, college degrees had replaced traditional medieval social distinctions.
In place of Serfs, there were the non-degreed. For Knights we had baccalaureates, for the lower levels of the nobility [Barons and Baronet’s] we had the master’s degree. For Dukes and Counts we had Doctors of Philosophy and Medicine. As soon, as you become entitled to an academic robe, with or without sleeves, you join the modern nobility. You are a Peer in this society.)
All of which gave you a ticket (in most of the last half of the Twentieth Century) to the modern equivalent of a landed estate—a guaranteed salary at a large corporation that could allow you to live better than most medieval nobility, with superb benefits and a luxurious retirement.
We proclaimed that this new and all inclusive society (in wave after wave of civil rights movements, blacks, Hispanics and women demanded their place at the table) constituted a new order of things, that it represented a permanent change in the historical order of human existance—that the new middle class was here forever.
WHAT IF THAT ASSUMPTION WAS WRONG? What if what happened in America and Europe for the fifty to seventy-five years after World War II was merely a momentary blip caused by a unique set of circumstances that could not and have not lasted?
Let’s start tomorrow by looking at the circumstances and forces that came into play in 1945. That may help us get a handle on the future.

Saturday, October 10, 2009

The Economy: The Fat Lady Ain't Sung Yet

After a busy day we decided to go out for a bite to eat. We chose a once busy center anchored by a Walmart and a Sam’s Club. A couple of years ago it had a Ruby Tuesdays, an Old Country Buffet, a Fazzoli’s and an Applebee’s.
Target has moved out of the center; Circuit City has died. Ruby Tuesdays has closed, as has Old Country Buffet. Fazzoli’s has cut their portions and their quality to the point that I don’t think there were more than five or six patron’s cars parked there all evening. We don’t go anymore.
That left Applebee’s. Two dinners for twenty bucks wasn’t bad. (There’s a rainbow to every market crash.) It was Saturday night—once a busy night in west Michigan. As we sat, we started to count the empty tables. Three this way, four that way and so on.
Applebee’s was making money. (Exactly how much on two dinners for twenty dollars—which most tables seemed to be ordering—I cannot say. I’m sure it’s not a profit margin that pleases headquarters terribly.) But, I kept asking myself, what if the other two restaurants were still open? Would any of them be making a dime?
This is not an isolated incident. I could name other restaurants that have closed up in this part of the state. (Even a “Little Caesar’s Pizza” outlet that’s been open for decades near my house shut down in the past month or so.) Empty store fronts are blooming everywhere.
National Christmas shopping forecasts suggest a retail season that promises to be even worse than last year’s. An article I saw the other week warned shoppers not to wait to the last minute hoping that prices will be cut some more—this year, retailers simply aren’t ordering all that much.
I know of three houses in my neighborhood that have sold this summer/fall. One was a short sale (the bank forgave part of the mortgage); in the second, the seller underwrote the down payment out his own pocket; in the third—a house that was purchased nearly twenty years ago—the seller got out of it the bare minimum he needed to pay off the mortgage.
To me this is in no way a clear sign of recovery. Right now the Federal money being pumped in to the economy is acting as life support. What happens when that plug is pulled? Remember 1937? FDR’s infusion of “bailout money” had brought things back by 1936.
Being an innately conservative man, Roosevelt cut back on Federal spending that year. Pop—right back to full scale Depression levels. It finally took Hitler and the Japanese to bail us out permanently. So what will happened in 2011 or '12? (Maybe the Aztec calendar was written for the American stock exchanges?)
Speaking of the stock market. It’s having a mini-boom. Just like it did in the spring after the Crash of 1929. We’ve gone from over 14,000 to under 7,000 and now back to nearly 10,000—all in the space of two or three years.
More and more pundits, business writers and economists are looking at the DOW, the NASDAQ, and STANDARD & POORS, and wondering what on earth is holding them up. It sure isn’t the business at Walmart corners here in western Michigan, I’ll tell you.
Nor is it the real estate market. Or the employment rate. Or family earnings (down in absolute dollars since the 1970s—even for those who are working). As I drove past the shuttered Circuit City and Target store fronts—as I sat looking at the empty tables in Applebee’s, eating my two for twenty dollars dinner—I had to say it certainly isn’t anything happening here.
Do we stand by for the next exciting episode? Or do we just wait and hope Applebee’s will get so busy they have to reopen the restaurant across the street? Yogi Berra maybe didn’t actually say it, but he could’ve—“It ain’t over ‘til the fat lady sings”.
I don’t even see her on stage yet.

Friday, October 9, 2009

A nobel Peace Prize For Obama?

Talk about debasing the coin of the realm! I’m aware that the criteria for the Nobel Peace Prize are a bit nebulous—and the array of eligible achievements is quite broad, but shouldn’t there be SOMETHING substantive that the recipient has accomplished?
Other than get elected to office? This becomes an especially pertinent question when you consider that the closing date for the nomination is February 1st—ten days after Mr. Obama took office. All he had done at that point was win an election and make a few speeches.
(Frankly, if you compare Obama to an actor or a good orator, his speeches are wooden, without emotion.) I am, as I have written, well aware of the mountain of problems Obama faced when he took office. He staved off eminent ECONOMIC collapse for the moment—the jury is still out on whether his fix will prove to be permanent.
He drew down forces in Iraq—but he did not END the war or bring any serious sort of peace to that politically artificial entity (created by Churchill in 1921 to save Britain money in administrating her new imperial territory obtained after World War I). Too early for a peace prize there.
Afghanistan has heated up considerably since he took office. You don’t win a peace prize for doubling the number killed in a year (however worthy the cause—neither Roosevelt, Stalin nor Churchill won the award for fighting World War II).
He got the Palestinian and Israeli prime ministers to shake hands as he glared down at them—one handshake does not merit a peace prize. There is honestly no sign that he has brought resolution to the ancient American domestic racial divide—except in some symbolic way.
Iran continues to build nuclear weapons; North Korea fires its missiles. We’re still breaking up terrorists rings that are trying to do us mischief. Venezuela’s Chavez spews hatred and imprisons his opponents. The drug wars on the Mexican frontier go on apace.
The savage political infighting between conservatives and Roosevelt liberals seems only to intensify in this country—and no person who understands the health care issues in America is sanguine about the bill that is likely to emerge from Congress this fall.
What therefore has President Obama DONE so far? “Holding the lid on”, keeping his balance so far on a jiggling tight rope may show political talent, but is it Nobel class achievement? I suspect that this year’s prize was actually given for a far different reason than any kind of accomplishment.
It almost seems the Nobel Peace Prize judges were saying, “Mr. Bush was such a nasty man and you, Mr. Obama, seem so much nicer, we are going to award you our highest honor for just not being Bush.
On that basis, Nikita Khrushchev (who seemed much nicer than the Stalin he replaced) or Admiral Doenitz (who took over Nazi Germany for the week after Hitler died—and was far nicer) should have won the Peace Prize. No more ludicrous than giving it to Obama for not being Bush.
Teddy Roosevelt won it for actually stopping a war between Russia and Japan. Jimmy Carter won one after decades of being a world class good dobe. Ralph Bunche won for negotiating a cease fire between Israel and five nations that had attacked it. These are significant and REAL achievements.
So are the achievements of Peace Prize winners Jane Addams (Hull House, Annville Institute), the efforts of Dag Hammarskjold, George Marshall (Marshall Plan), Martin Luther King, Jr., Mother Teresa, Lech Walesa, Nelson Mendela, Albert Schweitzer, Cordell Hull (primer mover in founding the UN), and even the duo of Sadat and Began.
When we look at Obama’s accomplishments so far, we an only echo the little old lady in the 1980s hamburger commercial—“Where’s the meat?”

Tuesday, October 6, 2009

The Economy: Good News If It Weren't So Bad

It’s sort of fun to read business news these days. On one page of this week’s “BusinessWeek” we’re told that the coming recovery is going to be soon—and it will meet our most optimistic projections and hopes—up, up and away!
A few pages on and we are told that the housing market is unlikely to recover anytime soon. A third of all mortgages are still underwater (the homeowner owes more than he can sell for). We are further told that this number will probably keep rising.
Furthermore, we learn, banks are becoming less and less willing to accept short sales. This means that your bank (or mortgage holder) is beginning to refuse to forgive the amount you still owe when you sell. Since around 15% of all sales have been short sales, that’s a significant change.
Banks increasingly demand promissory notes (IOUs that say you still owe the money you couldn’t get out of the house) or even cash up front. Distressed buyers certainly cannot manage that. Banks are in some cases making the short sale market go away by taking months longer to give a decision.
After four months or more the prospective buyer is very likely to walk away. This leaves the beleaguered (often unemployed or under employed) owner with no choice but to hang on as he misses more and more payments, owes more and more back taxes.
That can add up quickly—as he teeters closer to foreclosure and possible bankruptcy. As the article points out, in days when banks couldn’t meet payroll, they took any money they could get. Now that things are a bit better, they want their full pound of flesh. (To add to all the money the government gave them?)
Another article tells me that airlines are in much better shape. They are making pots of gold by charging for pillows, luggage, food, use of certain credit cards and check in service. Another bit says TV execs are getting worried that we’re changing channels because commercials start before we’re hooked. They might double the time until the first commercial—from 8 to 15 minutes.
The President of Brazil (whose country is doing very nicely right now) faults US banks for having “no parameters on leveraging loans”. He says our banks were, in effect, lending money out that they didn’t have. But Mergers and Acquisitions are back (those guys haven’t been working much for a year). That makes a lot of people happy.
The stock market is booming. The DOW got so excited over new merger activity that it shot up 124 points in a day late in September. A law professor writes a column in which he points out that the market came back 90% after the Crash of ’29. (Spring 1930)
He could have gone on to mention that three years later, our GNP was down 50% and our entire banking sector had flat lined. Several prominent fund managers are quoted as saying that the market today is overdue for a “correction”. Read: down, down, down.
But a small electronics chain has done well by leaping into the gap left by the bankruptcy of Circuit City last winter. Oh, and another article assures us the nation of Turkey is doing much better handling this recession than it did the last few.
It’s like flying without an altimeter. Are we upside up or upside down? I keep remembering an old frontier ballad that contained the line, “Sun so hot I froze to death.” In any case, don’t cry, Suzanna—I come from New York City with my broker’s chit on my knee.

Saturday, October 3, 2009

Walking Out Of Afghanistan

In the early 1970s, Republican Senator George Aiken of Vermont is reputed to have suggested that we resolve the unpopular war in Vietnam by having all our troops shout, “We win!” And then run for the boats. Is that the model we want for Afghanistan?
Remember, the Vietnamese hadn’t done anything to us or even threatened us. Ho Chi Minh adored the Declaration of Independence and he’d tried to be friends with both Wilson and Truman. Even as an enemy he had no ability to damage any part of the United States.
When we did finally pull out of Vietnam (quite unilaterally), no one blew up any buildings in the US or in the cities of our allies. We were just as safe after that war as we were before it. (This begs the question of what we were doing there in the first place—and I can offer no better answer than Temporary Insanity.) Will we be safe if we walk away from Afghanistan?
People trained in Afghanistan—and working with the blessing of the people who are killing our troops now—have already blown up a couple of landmark buildings in New York. They left us a couple thousand dead civilians, and they keep talking about doing it again.
Unlike the Vietnamese, who were willing to be our friends before the war and are perfectly content to be friendly afterwards, Afghanistan contains some real enemies. One reason they haven’t blown up any more American buildings may be that we are keeping them too well occupied fighting us at home. Do we really want to stop—and free them up to do more mischief here?
When Obama meets with his generals over the next few weeks, he has a whole lot of issues to consider that I’m very glad I’m not facing. He is losing support at home—and that makes fighting a war exceedingly hard indeed. A lot of Americans simply want out.
We are fighting in execrable terrain that the enemy knows well. We are hunched up against the borders of some enemy dominated provinces in Pakistan that they can hide in and we cannot pursue. NOBODY over there really likes us.
Our often stated goals of turning Afghanistan into a democratic nation are looking more and more unattainable as the bombs go off. Elections are, if anything, more crooked than our city ballots were under the days of the worst machines. “Nation building”? In Afghanistan? Only if you believe “creation ex nihilo” is an ongoing phenomenon.
It appears that we can neither fish nor cut bait. If we stay, they kill some of us there. If we leave, they come here and kill some of us. Talk about “no win”. If we don’t shoot back, they get bolder. If we shoot back we often hit civilians (who may well be just as much our enemies as the chaps with guns) and are excoriated for killing “innocents”.
Is it possible that we are working from the wrong playbook? During the Indian wars and the Civil War we worked from the strategic point of view that killing and starving lots of civilians would eventually damage the enemy war effort. When they finally quit, Lee’s men hadn’t eaten in days. The Indians were finally forced to come to us for government issue food.
Perhaps we should forget about democracy in Afghanistan and nation building—and just concentrate on making sure no one survives to blow any of us up. Churchill looked at the ruins of London during the blitz and said to the Germans, “You do your worst and we shall do our best.” Our best eventually came to killing up to half-million German women and children in a single raid.
Maybe a workable third alternative in Afghanistan will be a more ruthless version of older strategies. After all, these are enemies. The village “civilians” are not picking up weapons to fight on our side. Perhaps we should leave a small, picked group of special forces types (with, unlike now, enough helicopters in hand for rapid deployment missions) and bring the nation builders home.
Should we make it clear that we are only there to destroy radicals and their silent partners who want to hurt us? And that we will do it—as we did in the 1800s and the 1940s—without pity. After we have convinced them of our intentions—and killed enough—we can sit down and talk?
Horrible as this third alternative sounds, somebody show me how either of the others will work. I don’t see it. I don’t hear Obama talking like he does either. Sometimes war is necessary. Sometimes war is a very, very, very messy and nasty business. God help us. And them.

Friday, October 2, 2009

Politicians Reflect US

Yes they do. I was reminded of that fact after writing yesterday’s blog—which attempted to answer all the people out there who consider the men and women who actually govern this nation to be “blood sucking parasites”.
Democracy—and, admittedly, its attendant woes of political maneuver, shenanigans and outright corruption—cannot long exist without a fundamentally responsible citizenry to vote and be governed. Take that out of the equation and democracy collapses.
Remember, politicians are drawn from the body of citizens whom they govern. They are nothing more than you or me elected to public office. When we look at George Bush, Bill Clinton, Jimmy Carter or Barack Obama, we are looking at ourselves. What we choose—be it clothing, movies, friends or politicians--reflects on us. We are what we eat—we are what we choose.
Their morals are our morals. Their corrupt behavior is our behavior. If they are wasteful and greedy, they mirror the rest of us. (Maybe that’s why we get so angry with them—few people like what they see in a looking glass.)
If there is a scoundrel in Congress—who elected him or her? He was your neighbor when you voted for him; he still is. Democracy is absolutely premised on the existence of a responsible and ethical citizenry. Civic virtue—or wickedness—does not originate in government—but rather among the governed.
Yes, democracies can fold up and collapse. When there is a failure of virtue in the people, they must be governed more harshly than democracy will permit. An unbridled populace cannot be permitted to make its own rules to suit its own whims. That way, as history so amply shows us, lies chaos, evil choices and, finally, death.
If the governors have become unbridled and dangerously whimsical (“blood sucking parasites”), whom then do they reflect? If our politicians have indeed become unethical and irresponsible, it is a fair question to ask: How close are we to collapse?
Rome lost its Republic in bloodshed and murder. France lost its Republic (more than once) in street riots and tyranny. Weimar Germany collapsed into Naziism. Russia’s Kerensky was replaced with Lenin and Stalin—millions on millions died. There is always a man on a horse willing to ride to the rescue of citizens grown desperate in the face of a corrupt and ineffectual government.
If we really feel that our government and those we elect to rule us are as bad as many of us say they are, it is high time to straighten ourselves up and restore civic virtue—not just to Washington but to our own lives. In any case, it cannot hurt.
Next time we want to castigate our politicians, let’s first ask—Is it really true? Are they that evil or do they merely espouse policies we don’t favor? Policy difference is not a sin. Convince enough folk to see matters your way and vote the other side out.
Beware of painting the opposition—or even all of government—with the tar brush of parasitism or sinfulness. The last time we tarred an opposition that way (both sides did it), it cost us 700,000 dead out of a population of less than 100,000,000 at places like Gettysburg and Shiloh.
When you hear the old doggerel, “Here, richly with ridiculous display, the politician's corpse was laid away. While others sneered and slanged, I wept. For I longed to see him hanged.”—just remember one thing.
It’s us in the coffin.

Thursday, October 1, 2009

Politics and Democracy, The Best and Worst

While substitute teaching at the local high school today I noticed a poster the teacher had put up. “Politicians”, it said, “Root word, ‘Poli’. Root word, ‘tics’”. “Poli means many; tics are blood sucking parasites”. It struck me as funny; I laughed.
Then it got me thinking. So many of us view our elected rulers with the same contempt and dislike that we show our bosses, our clergymen, our spouses, our parents and teachers, and anyone with authority over us. There’s the old non-com snarl, “Don’t call me ‘sir’; I work for a living!”
Some, perhaps many, politicians seem to work to earn our contempt—as do supervisors, clerics, teachers and the like. No doubt. But politicians seem to hold a special place in our pantheon of the loathed. Especially in today’s political world in which half the folk running for office seem to offer as their highest qualification the fact that they are not involved in government, don’t know anyone who is, and are most definitely not governmental material.
A generation of proudly self-proclaimed non-politicians holding political office have taught us to immediately distrust anyone who knows anything about governing. (Michigan, for instance, throws all legislators out after six years. That’s about when they start knowing where the key to the bathroom is located.)
How would we actually like a world without “politicians”? (Don’t be hasty with your answer.) Perhaps we’d like to go back to the founding of this nation. Government in the days of Washington, Jefferson and Madison was a wealthy gentlemen’s affair—peons like you and me had precious little to say and were expected to keep to their place.
It was only when the first real professional “politicians” in human history (Think O.K.-- Old Kinterbrook—Van Buren, from whom we get “Okay” as in “I’m O.K. with him”) became active in the 1820s that ordinary sorts of folk could get involved with their government.
Or would we prefer a system wherein we are ruled by commissars, viziers, Fuhrers and Caudillos—or kings, emperors and nobles? No politicians here! (Court politics, yes—as between Himmler and Goering, Stalin and Trotsky—but no politicians. You want freedom from American style politics? Here’s your model.)
I sometimes suspect that at least a few of the people who curse our system and its “bloodsucking parasites” would almost prefer a system with less democracy. They seem sometimes to have a radical agenda that they would be willing to ram through with no recourse to democratic—and that often means political—process.
Since politics and politicians, as we know them, only exist in democracies, one risks calling democracy itself a blood sucker and a parasite. Many rulers alive today would agree with this. They point to the corruption one finds in democratic politics (as if there were no corruption in other systems of government!).
I’ve always remembered what the character played by Charles Laughton in “Spartacus” (an excellent political film if you took out the parts with Kirk Douglas in them) said. He was the champion of the Plebeian Party in the ancient Roman Republic. He spoke truth.
“Better a little [democratic] corruption AND a little [democratic] freedom."
The other thing those who hate democratic politics fret about is its inefficiency. Remember, the founders of our republic MADE our government inefficient to PROTECT us. Pray God you never live under a truly efficient government!
Churchill said it best, speaking of democracy and its politics. “Democracy is the worst system in the world—except for all the others.” Cuss the politicians all you want—but, as Jack Benny used to say, “Consider the alternative.”