J. Enriquez: Understanding The Economic Crisis

Everyone should must watch this short 30 minute clip on the Financial Crisis and the necessity for absolutely radical change.  The talk is a PopTech gtalk given by Juan Enriquez, whose spent most of his life studying similar crises around the world (particularly in Latin America).

His 5 Stages of Meltdown are:

1. Denial (Greenspan, W. Bush)
2. Borrow, Spend, Borrow More (Stimulus Packages)
3. Go Broke
4. Brutal Readjustment
5. Rebuild

The US and much of the world is at step 2. Question: When the whole industrialized world goes broke simultaneously who foots the bill? Who does the restructuring? Where does that money come from?

Without a massive change–i.e. massive cuts in defense and entitlement spending, caps in health care spending, raised taxes–the US appears headed to become Mexico (or perhaps Brazil) in about t-minus 6-10 years.  If the dollar loses its value (with 70% of debt owned by foreign entities) then there will be a global run on shorting the dollar and that’s all she wrote folks.

The Democrats are increasingly beholden to Keynesian economics, which assumes the problem is on the demand side.  Whatever is left of the Republican party thinks its Fannie Mae and some temporary credit crisis and a nice chance to apply some shock-therapy disaster capitalism (say to the Auto Unions).  I’m less than a true believer in the Obama stimulus (or the Krugman retort that it is too tax cut heavy and not enough infrastructure buildup).  Both are just variations on how best to do the Keynesian thing.  [Friedman monetary policy has failed and I think Keynesian will as well].

The right-after-the-immediacy of the credit/demand problem-is-over horizon is a solvency crisis.  It is a debt crisis–a crisis of the fundamental way of doing economic business.  That we have to be more like our grandparents (my grandparents I should say), who actually built things and saved money.  No get rich quick schemes.  As Enriquez says the stimulus at best is a torniquet, but with all torniquets if it is applied beyond the moment of aboslute need, then it will cut off the circulation, causing amputation or worse death. I’m not lauding or romaniticizing some austerity program and the good old days when everyone helped one another.  This is going to brutal.  It’s surgery–invasive, multi-organ, painful surgery–in Enriquez’s words.

It’s that or enjoying living in a post-imperial decline state.

Another related clip here from the film IOUSA

For an alternative view, see Krugman here.

Patrick Deneen on (Purposefully) Ignorant Democracy

Patrick Deneen excerpts a decent-sized section of a recently published article of his entitled Democracy Wrongly Understood. It is so brilliant I’m tempted to just cut and paste the whole thing. Read it all. Link here.

Deneen’s basic point is that the US Federalist system (as in Federal power not he states rights’ understanding of Federalism) is of course a republic not a democracy. Madison, the main architect of The Constitution, feared the agglomeration of factionalism within the country. He argued for a powerful federal government that would be filled by disinterested parties who would rightly guide the nation. In that regard, that a whole mess of Americans can’t find the US on a map (“our adults isn’t learning” apparently) shouldn’t surprise us as the US republic is predicated on divide and dissipate dissent–it is built to create a fairly uneducated populace in other words.

For all of the differences between the Progressives and the Framers – and the differences are manifold, as many scholars eagerly point out (e.g., Pestritto, 2005) – there nevertheless exists this striking continuity: both the Founding and the Progressive Eras are dominated by thinkers who praise the rule of the electorate even as they seek to promote systemic governmental features that will minimize electoral influence in the name of good policy outcomes.

As Sanford Levinson has argued for a long time the US constitution is not democratic.

Deneen again:

What requires more reflection are the deeper presuppositions of what constitutes “good policy” [of the sort consistently called upon by social scientists who study civic competence]. Good policy for the Founders and Progressives alike were policies that promoted the economic and political strength of the American republic and the attendant expansion of power in its private and public forms. For all their differences, what is strikingly similar about the thinkers of the Founding era and leading thinkers of the Progressive era were similar efforts to increase the “orbit” or scope of the national government concomitant with increases in the scale of the American economic order.

These patterns of similarity between The Progressives and The Founders (as well as Cold War Liberals and Conservatives) helps undercut arguments that the liberal (or progressive) are entirely foreign constructs. Particularly once Lincoln’s understanding of the republic/constitutional order becomes normative–over say a Calhoun’s.

I have to do some further thinking on this, but one thought that occurs to me is that a serious bug in Madison’s design was the assumption that there were ever dis-interested individuals. Charles Beard I think put that argument to bed in US history. The “corrosive political economics” of our age maybe attributable to this bug. The republican order does play off the intrinsic factionalism at the local level but among other things, with the failure of the Legislative Branch to be anything other than an attempt to get into The Executive these days and the politicization (on both sides liberal and conservative) of SCOTUS, we have a real problem. No one exists to check the factionalism at the federal level.

I think Deneen’s contribution is that (if I’m riffing correctly here) that this is not some European transplant from the left in the 20th century (a la Jonah Goldberg) but is there (at least in germinal form) from the get go.

Deneen’s analysis dovetails nicely with the book I’m currently reading Bounding Power: republican Security Theory from the Polis to the Global Village by Daniel Deudney. I’ve mentioned the book before, and I plan to do so more posts just on it, but a core argument of the text is that republican (little ‘r’) security theory goes through a series of emergent stages of development which are intertwined with material/technological contexts (i.e. it wasn’t just Marx would came up with this insight).

republics exist, for Deudney, between or perhaps bypassing the extremes of anarchy and hierarchy. [Hierarchy understood as domination not natural hierarchies, e.g. physiosphere to biosphere to noosphere].

The early republics–e.g. Sparta–were martial because they were fragile and vulnerable to attack. They either became too successful in war in which case they became imperial–see the shift of Greece from the Persian War to Alexander the Great’s Conquests or the evolution of the Roman republic to the Roman Empire–or they were unsuccessful and destroyed.

Madison feared democracy and (as Deneen points out) saw them as small scale state-level republics. See the failure of The Articles of Confederation. The creation of a federal republic which pushed up a complexified level of the “sphere of sovereignty” was a major achievement.

Deneen in the rest of his article argues for an alternate, localized, Aristotelian, more communitarian type notion of citizenship. That has its place to be sure I think, so long as we recall that (following Deudney’s insight) that frame was connected in part with technological-material constructs. We do not live in the plow and horse (or human chattel slavery) age. [Well sadly many do, but not in the contexts generally of people reading this blog]. In this technology age, any such micro-communities, need to be linked to each other through the internet, so the local and the global are not really particularly separate. In that sense, I wonder what education for republican order in a global age might look like? Deudney makes an argument for republican security theory applied to world setting (not a world government mind you) but I wonder what that would entail for those who are not part of that power holding class? De facto Deneenism? I need to think more on that one.

debate live thread

[All times Pacific Standard]

8:05 McCain’s preening-hood was on display at the beginning, but he did manage to modulate it (slightly).  McCain had some moments where he looked relaxed and in command of his facts/talking points.  But the repeated shots at Obama was not pretty.  What is clear to me over the psychodrama that is his campaign especially in the last 48 hours or so, is that for all this “Obama is the Messiah” talk (he’s an image, a dream, gives a good speech), it’s all driven clearly by the fact that Obama gets under McCain’s skin.  McCain can’t handle not being the media darling.  Jilted lover with the media.  (Que sera, sera I say).  Obama just thinks McCain is a honorable old fool.  He has the decency and good sense not to get personal as McCain wants to do.  Not flattering.

McCain’s viewpoint is very limited to the 20th century.  His crieria of who is ready to lead is totally predicated on his insider-carpetbagger-aristocrat background.  Obama certainly isn’t that, so he doesn’t pass the test (whereas Hillary would by McCain’s standards).

I don’t know ultimately how Obama will turn out as president (if and when).  But I do know that I supported him from the get go (way back like 20 months ago now) because I’ve always sensed he had a different insight than all the others.  Even the ones I like (like Biden).  That intuition I find borne out again tonight.  I’m willing to take that chance, not because I know for sure Obama is the greatest being ever or something but because the way of operating that the Boomers have done has served its time and is now over.  They can help in the new order. Lend a hand if Bob Dylan were singing about it (or get outta the way).  But whatever, the same can not do.  While I still have some serious policy disagreements with Obama (check the thread), I didn’t see anything to dissuade me tonight.  I saw Obama give what I think was his strongest debate performance by far to date.

8:00 One correction. I said that McCain was only interested domestically in tax & spending cuts. Forgot Nuclear Power. (Yippee!!!–isn’t that what the Iranians say they are building their reactors for? Oh nevermind).

7:38 The ending was pretty flat from both of them as I said earlier. But overall I have to give it to Obama. Especially during that middle portion. McCain showed that the only domestic agenda he cares about is spending and the only foreign policy is Iraq and Russia/Georgia.

Obama looked sharp and in control. McCain settled in towards the end I think but at the beginning was really jittery.

7:37 McCain gets the last line and it’s actually a pretty decent one: He knows how to heal wounds of war, deal with enemies, work with friends.

7:36 McCain came back to Reform, Peace, Prosperity. Haven’t heard that slogan (only one of 15 or so he’s had so far this campaign) for awhile. I think that was given the McCain Campaign, four iterations ago.

7:35 McCain says that the veterans know he will take care of them. Except that he voted against the last bill (and the Webb GI Bill).

7:34 But little mini-comeback by referring to global vision versus the tunnel vision-”all chips in” on Iraq that is Bush-McCain.

7:33 I don’t like Fear the Chinese Dragon lines here from BO. Almost as dumb as McCain’s League of Democracies/Fear the Autocracies. The balloon is going on both of them.

7:31 BS on McCain Alert. If we lose in Iraq, al-Qaeda will have a base there. Not uh when the Sunni Tribesmen, Shia gov’t/Army, and/or Kurds kill them dude.

7:29 Neither of them are very strong on the “Are We Safer Question?”. Did Obama just support Star Wars (er Missile Defense)? Haven’t heard that before. Ugh.

7:27 McCain taking credit for Homeland Security? You can have it. If Biden were here, he would blow his top on McCain’s suggestion that they have done most of the recommendations.

7:22 Thumbs down to Obama for Georgia/Ukraine NATO entrance. Apparently it was all Russian aggression now in the CW (Larison is probably head in hands now). No Georgian aggression.

7:21 McCain’s story about Abkhazia where he saw a poster Putin for President just undermined his whole argument about how it was Georgian territory. Apparently they thought it wasn’t Georgian territory.

7:13 McCain’s attempt at a joke/dig at Obama for a seal just bombed out. McCain doesn’t get the difference between preparation and precondition. A precondition is say “Unless you stop all nuclear activity you will not get to talk with us.” Preparation is we put the issues we will discuss on the table. I was five seconds ahead of him as on a few others.

7:11 He is going back to Axis of Evil. Iraq had no WMDs. North Korea gets the message that if you don’t have a nuke you get overthrown (minus a security agreement) and BOOM–Builds one. And Iran…..same thing?

7:08 oh shit. he just flipped Kissinger wanting to talk with Iran on McCain after McCain just cited Kissinger & Nixon go to China. BAM!

7:06 zing. Obama hits McCain on how you need China and Russia (which my esteemed colleague would admit are not democracies).

7:05 League of Democracies. If I had liquor nearby, that would be a triple shot. On to Iran….

6:54. McCain just mispronounced the name of the new President of Pakistan. And now we are going to have THE SAME SURGE in Afghanistan as in Iraq. W-T-F? Who are the Awakening in this version? The Shia?

6:53. Obama’s strong on Afghanistan in his answer (though I still harbor question his policy). McCain is answering about the 80s. He just said we couldn’t leave Afghanistan like we did after the Soviet War. Except that is exactly what happened when we went into Iraq. McCain has got nothing on Afghanistan.

6:46: Obama’s got a very good answer on the troop funding. Obama is the only one to see strategy as a beyond one country tunnel vision. Strategy as Overall Strategy.

6:41. What is up with McCain bringing up the no-hearings on Afghanistan. Really he is so petulant. Obama just needs to keep it cool. McCain just said Obama doesn’t know the difference between a tactic and a strategy. Hello pot, kettle here.

6:39: Allright. Onto foreign policy. McCain’s answer on Iraq just made no sense. The lesson from Iraq was we can’t have a failed strategy that we will cause us almost to lose. Except that the STRATEGY is elections, the push for national reconciliation, creation of strong central government, NOT THE SURGE. Sorry Johnny. The Surge did not change the STRATEGY. The Surge is a tactic pinned to the Strategy which exists only to serve the goal (unified democratic Iraq).

6:35: Obama is getting to the issue of values. This is smart imo. McCain only has his value as less government/less spending. I don’t know it plays in this economy. Republican economic deregulation orthodoxy–like none of this fallout just happened.

6:30 [PST]: I wasn’t expecting it go about budget hawk wonkery. Kinda weird and has essentially nothing with the Bailout.

6:27 [PST]: Good question from Lehrer. What can they not do post-bailout? Obama is dodging a bit. He says he is still going forward with health care, energy, education, infrastructure. I think he actually is right–i.e. those things have to be done–but where is the cash? Do we just bust the budget because you know the Republicans get the levers of power again, they will f it up again. And the Democrats always have to come in (a la Clinton) and have their agenda screwed via Republican monetary malfeasance.

6:21 [PST]: McCain is giving the US has the 2nd highest corporate tax rate we need to be more like Ireland. Except that it’s on the books as the 2nd highest, there are so many loopholes, that the payout is much lower. Obama just makes the same point.

6:20 [PST]: WTF is with McCain’s monomania against earmarks? Seriously. Seriously dude. Now you wanna pick this fight?

6:19 [PST]: Obama is quick to make sure he doesn’t get the tax raiser/big spender librual.

6:17 [PST]: oooh. interesting. Obama has got his numbers and is calling McCain out on tax cuts for the rich. He’s doesn’t want McCain to grab populist ground. Pretty shrewd.

6:14 [PST]: McCain has got his talking points ready. Spending, responsibility, increased gov’t (nice Great Society shot there). I don’t know how this plays. God he just said earmarks are a gateway drug (like pot?)–DRUG WAR on EARMARKS? The Bears in Montana? WTF? How does this have anything to do with the financial crisis?

Education Plans

From the Dept. of Who Would Have Guessed (but glad somebody is saying nonetheless):

This broader, bolder approach breaks with the past by embracing an expanded concept of education in two respects. First, conventional education policy making focuses on learning that occurs in formal school settings during the years from kindergarten through high school. The new approach recognizes the centrality of formal schooling, but it also recognizes the importance of high-quality early childhood and pre-school programs, after-school and summer programs, and programs that develop parents’ capacity to support their children’s education. It seeks to build working relationships between schools and surrounding community institutions.

Second, the broader, bolder approach pays attention not only to basic academic skills and cognitive growth narrowly defined, but to development of the whole person, including physical health, character, social development, and non-academic skills, from birth through the end of formal schooling. It assigns value to the new knowledge and skills that young people need to become effective participants in a global environment, including citizenship, creativity, and the ability to respect and work with persons from different backgrounds.

Of course all depends on what one defines as education for the whole person, citizenship, moral, character, and so forth.  But at least it’s an acknowledgment of such needs particularly from a left perspective.   We’ll see if elements of the right pushes against the first point.

Published in: on August 5, 2008 at 9:38 pm  Leave a Comment  
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