Quote of the Day
Men argue, nature acts.
Voltaire
Earlier Post Explains the Interruption in Daily Posts
The Baltimore area was affected by widespread power outages as Hurricane Irene passed over the Maryland coast early Sunday morning, leaving me without Internet access or cable. I give a tongue-in-cheek personal experience in an earlier post today.
I will say that I was intrigued by one commentator I heard after finally being able to access FNC for the first time in days, questioning the legitimate legitimate role in dealing with disaster relief. Recall in pre-Katrina Florida, FEMA was responsive a number of storms (4) hitting Florida, and the 2004 Kerry Democrats were accusing the Bush Administration of politicizing federal aid.
This has been a struggle between drunken progressive sailor spending and fiscal conservatives for years. The progressives tried to suggest that the failures of Katrina in Louisiana were the result of privatization efforts. The fact is that Mayor Nagin waited until hours before Katrina's landfall to issue a poorly crafted evacuation order (e.g., not addressing particularly vulnerable communities like the sick and elderly), too little, too late, which exacerbated local shelters with supply estimates assuming normal evacuation efforts. (There were other delayed responses to efficiently expedite evacuations, e.g., unidirectional traffic flows out of the city.) There were also issues with FEMA in some cases stonewalling private-sector suppliers like Wal-Mart in their desire to coordinate the combined effort. Governor Blanco was slow to the mark of securing necessary National Guard staffing for the disaster; some requests were up to days AFTER landfall, and Blanco refused to grant a waiver to Bush allowing federalized National Guard to enforce local/state laws (e.g., anti-rioting/looting). Blanco, on the other hand, could use federalized National Guard to enforce local/state laws under her command, which is what she asked for, too little, too late: the lawlessness we saw after Katrina landfall speaks volumes about Blanco's failure in managing the crisis; even Nagin was publicly attacking Blanco's lack of responsiveness.
FEMA was a fairly recent Carter-era contribution to Big Government growth and so it's not unusual for legitimate conservatives and libertarians to challenge the federal scope creep into what is by nature a primarily local/first responder issue, not a federal responsibility. There are already inter-state cooperative agreements pooling resources. If the Feds take over, where's the incentive to right-size the state National Guard or engage in inter-state resource sharing? As early as April 2001, then Bush Budget Director Mitch Daniels (completing his second term as Indiana's governor) was advocating privatizing much of FEMA's programs. And, of course, the left-wing blogs are already playing Chicken Little, obsessed that GOP Presidential front runner Mitt Romney hints at the same thing. Right now the House GOP is particularly looking at one relevant federal program, national flood insurance, which many charge effectively subsidize the true costs of building in or near flood-prone areas.
Where do I stand? Do you really have to ask? I think that the states should exercise their tenth amendment right and responsibilities, and I think there is moral hazard in states grabbing for the federal tit short of catastrophic losses (over and beyond more predictable expenses). I think that states and municipalities should avail themselves of existing private-sector resources and logistics, including companies like Wal-Marts reach across locales and/or the American Red Cross. What if private-sector bus lines, vans, trains and other vendors could expedite evacuation of high-risk populations, a virtual extension of local resources?
Sandy Franks and Sara Nunnally, Barbarians of Wealth:
Some Political Reflections
This book, published last December, is an interesting discussion of the great conquerors in world history, not so much the nature and extent of their conquests but in terms of their material motivations. It also discusses the genesis of banking and its crony relationships with governments, fiat currency (paper money), etc.. The authors interestingly integrate discussions of these ancient leaders (e.g., Attila the Hun, Genghis Khan, Charlemagne, etc.) with various individuals and parties to the recent economic tsunami. This was a volume that I had purchased earlier but started reading during my power outage period (see above). There were a few related points, more incidental to the book but I found interesting in terms of certain political insights, not really addressed by the authors in their discussions.
First, there's the authors' sympathetic discussion of the 1930's Glass-Steagall, which created artificial barriers against certain business line combinations, e.g., commercial banks, investment banks, and insurance companies. I have never believed the fairy tale that Glass-Steagall was divinely inspired. Some argue that that the reasons for up to a third of banks failing after the 1929 crash was because they had speculated depositor money on risky stocks, resulting in Glass-Steagall--not so. Diversified financial services companies existed outside the US--just not in the US. We allowed other types of conglomerates. Yes, banks sometimes fail. Sometimes commercial bankers fail, insurers fail. We have conglomerates of all kinds (e.g., GE). The reasons for failure can be specific to the bank and its loan portfolio.
But the idea that an allegedly free market country like the US would create artificial barriers in financial services that put domestic corporations at a competitive disadvantage against international companies with no such scruples made American companies uncompetitive--sort of like fighting bigger global entities with one arm tied behind its back. In fact, government regulation of banking had become dysfunctional: it wasn't until the mid-1990's that banks could open branches in different states. In fact, look at the results: what did Uncle Sam take possession of? Did AIG have an investment bank subsidiary? No. What about the GSE's, i.e., Fannie Mae and Freddie Mac? No. What happened to failing Bear Stearns and Merrill Lynch? Were they merged with other investment banks? Nope. Banks like Bank of America and Chase? Yup. Did banks without insurance or investment banking go under as a result of bad mortgages? Yup--e.g., Washington Mutual. The above-cited author also points out that Glass-Steagall was no longer the same law it was back in the 1930's; regulators had been granting certain exceptions which eventually become more the rule than the exception.
Now some people will argue that government guarantees of depositors for more highly regulated banks creates a moral hazard, e.g., which would allow an investment bank to speculate at the expense of the American taxpayer. But we've seen similar issues in other contexts. For example, I served as a de facto SBC (now AT&T) corporate DBA, just before telecommunications deregulation in the mid-1990's where we got feeds of regulated landline phone revenues plus competitive lines of business, e.g., mobile phones and yellow pages. I think there's an intrinsic problem with government guarantees which essentially relieves bank customers of doing due diligence to search for the most reliable, best run bank. The issue has not so much to do, say, funneling funds to investment banks but business decisions in their own lines of business, e.g., loans or other investments, as well.
Those of us who are at peace with the free market had no problem whatsoever of seeing AIG go bankrupt. They took on too much risk, and they gambled the company's future on writing those swaps. Maybe domestic competitors would bid for AIG's lines of business. I also would not have paid Goldman Sachs full price for the value of their nearly $3B AIG swaps. In fact, Goldman Sachs did about $20B worth of swap business from AIG; if they didn't diversify their swap business and/or realize that AIG might not have sufficient funds to meet its obligations, they should have taken their chances with a bankruptcy court along with other AIG claimants.
Second, against many military, evangelical and pop conservatives taking on Muslim fundamentalists because of military/terrorist actions and concept of the religious state, we should note it's a relatively recent development in the 2000 years of Christianity that we've seen more of a separation of the church from the state. If we go back to high school world history and examine Charlemagne, we know that he was not tolerant of pagans whom wanted to retain the current religious beliefs; they were given a choice of baptism or a different fate. Charlemagne established a number of churches based on his acquired resources and his government enforced tithing to the Church. For its part, the influential Church was generally supportive of Charlemagne's rule. There were battles between Christian denominations, e.g., the Thirty Years War, and, of course, religious tensions in Northern Ireland have existed within our own lifetimes.
I'm not here attempting to suggest that there is a moral equivalence between the great religions on the nature and extent of violence to gain followers. Jesus at several places in scripture specifically rejects a political leadership role and condemns violent actions unconditionally. But certainly the growth of Christianity was helped by mutually beneficial relationships with political leaders since the days of the Roman Empire.
Finally, I'm fascinated by how much personality played a role in some of the great world conquerors of their day; their empires dissolved over disputes among successors in a matter of several years or more. One of the way I judge leaders is being their staying power, over and beyond their time in office. I remember in one of my first companies (now a subsidiary of Equifax), I had essentially created my own position for the company's largest client. I migrated to another business group with a more diversified group of clients (including the above-cited one-year contract with SBC), but they ended up replacing me with a consultant whom basically followed my standard procedures; when he left to work for Oracle Consulting, they decided to replace him with developer manager within 2 years of retirement, and he was able to follow my procedures. There were other DBA's in the company beginning to imitate my ways of doing things. I had no formal authority but a lot of informal power; my bosses loved the job I was doing and backed me up.
Now forget about talking about Barack Obama, because anyone considering him to be a legitimate leader is out of touch with reality. This is not a partisan snipe but take into consideration that his major accomplishments in the 111st Congress drew essentially no GOP support whatsoever and he had no choice but resort to lopsided partisan majorities; moreover, the laws largely reflected convoluted legislative initiatives that significantly departed from his early positions; for example, Barack Obama during the campaign opposed health care insurance mandates and also opposed earmarks; he also ran on class warfare tax hikes. He ran against the wars and yet continued with essentially the same policies. His views are conventional Democratic progressive, essentially the same as his 2008 competitors.
Ronald Reagan, on the other hand, had a cohesive set of policy beliefs that have defined many of the current political battles for decades. Nobody running for President on the GOP side materially departs from Reagan on major policies.
But let me point out the real target of this discussion: John McCain. Make no mistake: I'm more convinced than ever that McCain should have won the 2008 election. I'm not going to comment on the typical criticisms by the opposition of him as a carpetbagger and political opportunist. Contrary to his detractors, he, in fact, did have management experience in the US Navy. Let my point out the comparison from context. one of his proudest accomplishments after returning from Vietnam was reducing the planes sitting on the ground undergoing maintenance. The gist I can from reading on this topic was that as long as McCain was in command, those productivity gains were sustained. However, after McCain left command, we saw the maintenance record return to normal. The question is whether McCain's Presidential accomplishments would have endured over the coming decades; I suspect not.
Musical Interlude: My Favorite Groups
Bread, "Lost Without Your Love". I think Bread is one of the few groups where almost every single released was a soft rock classic I loved; tomorrow's post will feature Gates' superb songwriting in the title song for a Neil Simon movie. There are a few other singer-songwriters I look forward to any and all releases: Paul McCartney, Elton John, The BeeGees, Neil Diamond, Lionel Richie, Jim Brickman/collaborators, Diane Warren/collaborators, Jimmy Webb/collaborators, Paul Simon, Holland-Dozier-Holland/collaborators, and ABBA.
