Politics, et Cetera

A publication from The Political Forum, LLC

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Tuesday, July 18, 2017

They Said It:

Not only is a democratic people led by its own taste to centralize its government, but the passions of all the men by whom it is governed constantly urge it in the same direction.  It may easily be foreseen that almost all the able and ambitious members of a democratic community will labor unceasingly to extend the powers of government, because they all hope at some time or other to wield those powers themselves.  It would be a waste of time to attempt to prove to them that extreme centralization may be injurious to the state, since they are centralizing it for their own benefit.  Among the public men of democracies, there are hardly any but men of great disinterestedness or extreme mediocrity who seek to oppose the centralization of government; the former are scarce, the latter powerless.

Alexis de Tocqueville, Democracy in America, Volume II, 1840.

 

THE WAY THINGS WORK.

One day, about a hundred years ago, when we were suffering through a stint at Lehman Brothers, our boss chided us – gently, but decisively – for a piece we had written.  “We can’t publish this,” he said.  “There’s no way that the powers that be in New York will allow you to use their publications to call a sitting U.S. Senator ‘stupid.’”

But he is stupid, we countered.  And more to the point, the legislation he is proposing is stupid.  It will not solve the problem it purports to address, and, in fact, will actually make things worse.  It will greatly add to the dysfunction in Washington.  And our clients need to know this.  “You probably have a point,” he conceded.  “This legislation will not solve the problem.  And clients probably should know it.  But they’re still not going to let you publish this.  They’re not going to let you make waves and unsettle carefully cultivated relationships just to make a point about some dumb law.”  “That’s not,” he continued, “the way things work.”

Unfortunately, he wasn’t done.  “And just so you know, as much as I like you guys and want you to succeed here, I can tell you that this isn’t the only thing they won’t publish.  You’re not going to be able to say just anything you want to say.  NO ONE in this business would let you do that.  Again, that’s not the way things work.”

Needless to say, as The Political Forum nears its 15th anniversary as an “Independent Research Provider,” we have to admit that our old boss – a good and decent man – was almost certainly right.  That’s NOT the way things work.  As it turns out, we weren’t there to tell the truth or to explain historical realities to our bosses or to our readers.  We were there to “boost the book,” to help make the research publications more “successful,” and “popular,” so as to help the firm sell deals.  The truth was irrelevant.  The historical causes of current conditions didn’t matter.  At the top of the managerial food chain, they didn’t care about that stuff.  It didn’t matter to them, except in a very superficial sense.

We had not thought about this conversation in years, but it was the first thing that popped into our mind the other day when we read recent comments made by Jamie Dimon, the CEO of JP Morgan Chase and one of the most politically active Wall Street big shots.  In an earnings call with analysts, Dimon vented about his frustration with the current state of American politics.  “We have become one of the most bureaucratic confusing litigious societies on the planet,” the prominent Democrat ranted.  “It’s almost an embarrassment being an American citizen, traveling around the world and listening to the stupid s–t we have to deal with in this country.”  And he was just getting warmed up:

Since the Great Recession, which is now eight years old, we’ve been growing at 1.5 to 2 percent in spite of stupidity and political gridlock, because the American business sector is powerful and strong. . . What I’m saying is it would be much stronger growth had we made intelligent decisions and were there not gridlock. . . .

People wake up in the morning, they want to feed their kids, they want to buy a home, they want to do things, the same with American businesses.  I’m going to be a broken record until this gets done.  We are unable to build bridges, we’re unable to build airports, our inner-city school kids are not graduating. . . .

I was just in France, I was recently in Argentina, I was in Israel, I was in Ireland.  We met with the prime minister of India and China.   It’s amazing to me that every single one of those countries understands that practical policies to promote business and growth is good for the average citizens of those countries, for jobs and wages, and that somehow this great American free-enterprise system, we no longer get it.

We understand Mr. Dimon’s frustration.  And we feel much of the same frustration ourselves.  Indeed, we might even go so far as to say that Dimon probably has a point – just as we did way back when.  And yet, we can’t help but think that someone needs to explain to the guy that, well, that’s not the way things work.

And if you’ll bear with us for a moment, we’ll do our best to explain.

For starters, just in broad terms, a big part of the reason that it’s so difficult to change things in this country is the fact that the Founders wanted it to be that way.  They didn’t create a “democracy,” parliamentary or otherwise.  They didn’t make George Washington king.  They took their time, fumbled once, and then fashioned a constitutional republic, replete with checks, balances, and other institutional barriers to rapid change.  Why do little teeny, tiny states like Rhode Island get as many Senators as massive, heavily populated states like California?  Because the Founders wanted little states to be able to take care of themselves.  They wanted Rhode Island to be able to fashion an alliance with Nebraska and Alaska and North Dakota and South Dakota to protect the interests of the less-populated states against the “tyranny of the majority.”  Indeed, that’s why they did many of the things they did, including creating the Electoral College.

For years now, many on the Left – from Barack Obama to Thomas Friedman – have lamented that the United States isn’t more like, for example, China.  In China, the leaders decide what is best, decide what needs to be done, and then implement the policy to achieve it.  It’s not messy.  It’s not protracted.  It’s efficient.  And it’s wonderful – at least according to the likes of the New York Times’ foreign policy guru and the 44th President of the United States.  As Friedman put it nearly eight years ago exactly:

One-party autocracy certainly has its drawbacks.  But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages.  That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century.  It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power and wind power.  China’s leaders understand that in a world of exploding populations and rising emerging-market middle classes, demand for clean power and energy efficiency is going to soar.  Beijing wants to make sure that it owns that industry and is ordering the policies to do that, including boosting gasoline prices, from the top down.

Our one-party democracy is worse.

The problem, of course, is that sometimes – which is to say nearly all of the time – these brilliant and public-minded autocrats make decisions that are not only difficult, critically important, and efficient, but bloody and murderous as well.  And you don’t have to take our word for that.  You could ask the 24 million-plus young Chinese men who are involuntarily single because their efficient and benevolent leaders decided that they needed to slaughter/abort nearly 400 million of their cohorts, 30-plus million forcibly, and roughly 25 million more girls than boys.  Oh well.  Sucks to be them, we guess.

Fortunately, it doesn’t suck to be us.  It may be frustrating to be us.  But then, there’s a point to that frustration, as Madison noted in Federalist Number 51:

If men were angels, no government would be necessary.  If angels were to govern men, neither external nor internal controls on government would be necessary.  In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.  A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.

Once upon a time, we could have assumed that this was something that every schoolboy not only knew, but understood as well.  Yes, it would be nice if we could all live in perfect confidence that our political leaders were not merely omnicompetent but purely civic-minded as well; if they were angels, to borrow Madison’s term.  But they’re not.  Far from it.  And it’s the leaders who are most convinced of their own righteousness against whom we, as a people, need constitutionally authorized auxiliary precautions.  It’s them to whom we can gratefully say, “That’s not the way things work.”

A second reason why it is so difficult to change anything in Washington today is the fact that the House and Senate – like the rest of the country – are divided these days into two factions that have almost nothing whatsoever in common with one another and distrust each other completely.  Just a few weeks ago, we conceded that it would be hyperbolic to compare today’s political travails with those that preceded the civil war, but nevertheless warned that conditions are serious and potentially catastrophic.  “You see,” wrote, “in 1861 all the combatants in the intra-American war prayed to the same God.  They believed in the same general moral principles.  And they understood the world on the same basic terms.”  But that is definitely not the case today.

Almost twenty years ago, we started writing about American politics in terms of morality and the clashing conceptions of morality that characterized the two major parties in this country.  In our first foray into what has become a staple argument in these pages – “the clash of moral codes” – we put it this way:

One side in this conflict can be described as traditional Judeo-Christian.  The foundation of this belief system was established some 3,300 years ago with the receipt of the Decalogue by Moses at Mt. Sinai.

Besides Old and New Testament teachings, interpreted and clarified by such scholars as St. Augustine and St. Thomas Aquinas, who integrated Platonic and Aristotelian concepts respectively, this system embraces a host of traditions, customs and mores that developed in Western society over many centuries.  It is supported by a rich heritage of art and literature, and historic struggles, both religious and secular. The twin concepts of “sin” and “truth” help bind this system together.

The opposing system espouses beliefs that are often referred to today as “post-modern.”  This system is roughly based on the concept that there are no ultimate, overarching truths, and that judgments about right and wrong are little more than the means by which some people control others, or as Nietzsche, an icon of the movement, put it, the outward expressions of will and power.

The only “sin” recognized by adherents to this system is making judgments about the choices of others. The concepts of “right” and “wrong” are considered to be wholly subjective. Individuals are encouraged to make up their own minds about such things, and neither society nor any person has a right to “judge” those decisions.

The simple fact of the matter is that roughly half of the country supports one of these two differing and irreconcilable moral codes, and one half supports the other.  The nation is almost perfectly divided and divided on moral terms.  All of which is to say that there is no compromising on most issues and no room for negotiation.

Back in the 1860s, when nearly all of the nation’s people believed in and upheld the same moral code, the divisions among the American people still led to Civil War, the murder of a president, and a long and painful Reconstruction.  Today, when the disagreements are greater and more pronounced, if admittedly less violent, the hope of getting all parties to agree on what’s “best for the country” is a pipe dream.  Or to coin a phrase, “that’s not the way things work” anymore.

If that wasn’t bad enough, there’s a third reason that inertia rules in Washington these days.  Again, this reason is one that will be familiar to all of you, but apparently is not understood by Jamie Dimon.  We first began discussing this phenomenon exactly seven years ago tomorrow, when we first cited a piece by our old friend Angelo Codevilla.  The nation, Codevilla wrote, is divided today like never before.  There is a new conflict that dominates our politics, one that pits the vast majority of the nation’s bureaucrats and federal elected officials against their constituents, the ruling class against the country class.  To wit:

Today’s ruling class, from Boston to San Diego, was formed by an educational system that exposed them to the same ideas and gave them remarkably uniform guidance, as well as tastes and habits.  These amount to a social canon of judgments about good and evil, complete with secular sacred history, sins (against minorities and the environment), and saints.  Using the right words and avoiding the wrong ones when referring to such matters — speaking the “in” language — serves as a badge of identity.  Regardless of what business or profession they are in, their road up included government channels and government money because, as government has grown, its boundary with the rest of American life has become indistinct.  Many began their careers in government and leveraged their way into the private sector.  Some, e.g., Secretary of the Treasury Timothy Geithner, never held a non-government job.  Hence whether formally in government, out of it, or halfway, America’s ruling class speaks the language and has the tastes, habits, and tools of bureaucrats.  It rules uneasily over the majority of Americans not oriented to government.

The two classes have less in common culturally, dislike each other more, and embody ways of life more different from one another than did the 19th century’s Northerners and Southerners — nearly all of whom, as Lincoln reminded them, “prayed to the same God.”  By contrast, while most Americans pray to the God “who created and doth sustain us,” our ruling class prays to itself as “saviors of the planet” and improvers of humanity.  Our classes’ clash is over “whose country” America is, over what way of life will prevail, over who is to defer to whom about what.  The gravity of such divisions points us, as it did Lincoln, to Mark’s Gospel: “if a house be divided against itself, that house cannot stand.”

Obviously, we’re not sure if Jaime Dimon knows this or not, but the voters hate their representatives, and the representatives, in turn, loathe the voters.  The big shots in Washington know what they would like to do, what legislation they would like to pass, but they’re not entirely sure what the voters will let them get away with these days.  Over the course of the last four election cycles, the country class has asserted more and more power, tried more and more desperately to retake control over their lives and their government from the professional ruling class.  Indeed, last year, the country class stuck its collective finger in the ruling class’s eye and elected Donald Trump, the ultimate outsider.

Jamie Dimon didn’t see that coming.  A month before the election, he predicted that Hillary would win.  He didn’t understand the country class’s anger then and he apparently still doesn’t understand it now.  The House and Senate are controlled by Republicans, but Republicans who are, at long last, scared to death at the prospect of upsetting their voters.

Maybe, thirty-five years ago, when Congress was dominated by one party and the presidency was occupied by a man who knew what he believed and knew how he wanted to implement it, “change” was possible.  But it’s hard to see how that would be the case now.  Congress is torn – not just between the parties, but among factions, some of whom want to appease special interests, some that want to maintain their power at any costs, and some who believe that the will of the people should be done, but are not sure how to go about doing it.  Ronald Reagan and Tip O’Neill aren’t walking through the door anytime soon.  All of which is to say that things don’t work like that anymore.

Given all of this, the question that Jamie Dimon is asking is no longer operative.  “How do we fix things fast?” is simply pointless.  The real question folks like Dimon should be asking is “how did we get into the position in which we have to rely on government to fix things fast?”  Now, the answers to that question will, we assume, come as no surprise to most of you, although they might to Mr. Dimon.

As many of you undoubtedly know, Dimon was an early and assertive supporter of Barack Obama’s presidential run.  Dimon spent a great deal of time in Chicago and, as a liberal, he believed that Obama would do wonderful things for the country.  He supported Obama and his aides and, in return was rewarded with reciprocal support.  In July, 2009 the New York Times provided the details:

Jamie Dimon, the head of JPMorgan Chase, will hold a meeting of his board here in the nation’s capital for the first time on Monday, with a special guest expected: the White House chief of staff, Rahm Emanuel.  Mr. Emanuel’s appearance would underscore the pull of Mr. Dimon, who amid the disgrace of his industry has emerged as President Obama’s favorite banker, and in turn, the envy of his Wall Street rivals.  It also reflects a good return on what Mr. Dimon has labeled his company’s “seventh line of business” — government relations.

The business of better influencing Washington, begun in late 2007, was jump-started just as the financial crisis hit and the capital displaced New York as the nation’s money center.  Then Mr. Obama’s election brought to power Chicago Democrats well-known to Mr. Dimon from his recent years running a bank there . . . .

Mr. Dimon, JPMorgan’s chairman and chief executive, comes to Washington about twice a month, compared with maybe twice a year in the past. He requires senior managers to commute as well.  In recent months, he has met with officials including Mr. Geithner; the White House economic adviser, Lawrence H. Summers; and lawmakers of both parties. He phones or e-mails Mr. Emanuel at whim.  Each week, his staff gives him the names of a half-dozen public officials to call . . . .

Mr. Obama has singled out Mr. Dimon for praise more than once . . . .Now that Mr. Obama is in the White House, Mr. Dimon has been prominent when the president wants to talk to big business.  During one such meeting in late March, as Citigroup’s chairman, Richard D. Parsons, was trying to explain banks and lending, the president interrupted with a quip: “All right, I’ll talk to Jamie.”

Given the fact that Obama ran on a platform promising health care and financial services reform, Mr. Dimon knew what he was getting into, which is to say that he knew that “reform” would carry some costs.  We don’t doubt that he might have thought that those costs would be more than offset by the benefits.  If so, he was wrong, which is to say that he grossly underestimated the costs of “reform.”  In 2013, CNSNews documented one part of those costs:

Bureaucracies in the Obama Administration have thus far published approximately 11,588,500 words of final Obamacare regulations, while there are only 381,517 words in the Obamacare law itself.  That means unelected federal officials have now written 30 words of regulations for each word in the law.

What is commonly known as the Obamacare law includes both the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA).  Since these bills were signed into law by President Barack Obama in March 2010, various agencies in the administration have published 109 final regulations spelling out how they are to be implemented.  These 109 final regulations account for a combined 10,535 pages in the Federal Register, where the government officially published them.

The Federal Register presents the regulations in relatively small type with three columns of text on each page.  CNSNews.com calculated that there is an average of 1,100 words on each of these pages by counting the actual words in one 78-page Obamacare regulation and then dividing by 78.  At an average of 1,100 words per page, the 10,535 pages of Obamacare regulations consist of approximately 11,588,500 words.

And that was before the law went fully into effect.  The regulatory agencies responsible for Obamacare continued to promulgate rules right up until the moment Donald Trump took office and issued an executive order halting their regulatory dominion.  As for the second part of the costs associated with Obama’s promised policies, also in 2013, The Hill noted the following:

Rules implementing the Dodd-Frank financial reform law could fill 28 copies of Leo Tolstoy’s War and Peace, according to a new analysis of the Wall Street overhaul . . .

All told, regulators have written 13,789 pages and more than 15 million words to put the law in place, which is equal to 42 words of regulations for every single word of the already hefty law, spanning 848 pages itself.

And if that seems like a lot, keep in mind that by Davis Polk’s estimate, the work implementing the law is just 39 percent complete.

Mr. Dimon, we should note, worked hard on the Dodd-Frank financial regulatory law.  Well . . . that’s not exactly accurate.  He worked hard after the law was passed.  You see, Dimon and his firm bristled at the derivatives regulations in Dodd-Frank and immediately set about working to undermine them.  In December, 2014, as President Obama and the Congress were struggling to pass the “Cromnibus” spending bill, liberal Democrats began to oppose the bill because of a provision that would kill or dramatically reduce the Dodd-Frank regulation of derivatives.  While Massachusetts Democrat Elizabeth Warren was speaking out on the Senate floor against the bill and the derivatives provision, two people – Barack Obama and Jamie Dimon – were working the phones, “whipping” Democratic support.  Obama and Dimon won, as House Financial Services Ranking Member Maxine Waters lamented:  “I think we got hurt when Jamie Dimon and the president started to whip.  That’s when I think we lost some votes.”

Nice work if you can get it, we suppose.  Support a guy who favors heavy regulation.  Devise a legislative “carve-out” for a portion of your business that your company dominates.  Get the guy you supported to join you in pressuring members of Congress to vote for the carve-out.  And then complain to the world about how excessive regulation is killing the economy and making you “embarrassed to be an American.”

The funny thing is that Jamie Dimon was caught off-guard by all of this.  He was, apparently, surprised that the reform process didn’t turn out quite like his political associates expected.  Likewise, he was, we presume, stunned at the costs associated with “reforming” the country’s health and financial services sectors.  Interestingly, we doubt that many of you were surprised by either development.  Indeed, we suspect that most of you were well aware both that utopian the leftist reforms would fail and that the regulatory costs would be far greater than anyone could have imagined.

Over the years, we have written countless pieces about the “new political paradigm,” and the damage done to the country, to its politics, and to its people by the “regulatory state.”  Dimon may have thought that the country could use a bracing dose of “reform,” but you, gentle readers, knew better.  You read passages written by us such as the following week after week for years on end:

Between the Great Depression, the New Deal, World War II, the rise of the Military-Industrial Complex, the Great Society and countless other periods of “innovation” in government, the administrative state has ballooned in size and scope to proportions that no one, not even Max Weber, could have imagined.  Today, the federal bureaucracy decides everything for Americans, from which relationships are acceptable in the state’s eyes to who gets to go potty where.  Government “administration” is, as we have noted countless times in these pages, not merely a rival to capital and labor, the traditional bases of power in the Western world, but also the most important and most dominant feature in contemporary civic life . . . .

The bureaucracy is far more powerful than the bureaucrats who run it.  Its collective mechanistic dehumanization is among the most powerful forces man has ever known.  It will not surrender its power willingly.  In the end, it will not die by fire or water.  It will starve us and it.  Or it will strangle us both.  In either case, the administrative state will not go gentle into that good night.  And it will not be “managed” into submission.

For more than a century now, the “progressives” of American politics have been building a state apparatus that is both independent from democratic control and efficient enough to infect every aspect of human endeavor.  This apparatus is comprised of millions of people – government employees – but has a collective behavioral component as well, one which renders its needs and desires different from and superior to those of its individual components.

The idea that this behemoth could be subdued in six months is absurd.  We’re not entirely sure that it can be conquered at all, but if it can, that will require the concerted effort of nearly everyone in government, over years, decades even.  The Leviathan wasn’t built in a day.  And it will not be dismantled in a day.  For the last eight years, the President of the United States did everything in his power to facilitate the growth of the Leviathan, particularly with respect to domestic policy.  For eight years before that, the President of the United States did everything in his power to facilitate the growth of the Leviathan, particularly with respect to national security policy.  And so it goes, back through history, to the early days of the twentieth century.

It is possible, we suppose, that before the Progressive Era that a new president could have changed the course of the nation in a substantive manner and in a reasonable amount of time.  He could, in theory, have taken one of the most “bureaucratic confusing litigious societies on the planet” and made it less so.  But even if that were the case back then, it hasn’t been the case in more than one-hundred years.  And anyone who has paid any attention to the growth of the administrative state and the repercussions of that growth would know that.  That’s not the way things work, we’re afraid.

Here’s the bottom line:  if you spent your entire professional life supporting Democrats; if you actively courted relationships with political players who promised greater government intervention in the everyday lives of Americans; if you donated money to Barack Obama and then used your influence to manipulate the regulatory apparatus to gain advantage for your company, and if you nevertheless define the “problem” with this country as an epidemic of litigation, regulation, gridlock, and other “stupid sh*t,” then you are suffering from a serious case of cognitive dissonance.  That’s not the way things work, and you are living, quite simply, in a dream world.  Eric Voegelin put it this way:

In the Gnostic dream world . . . nonrecognition of reality is the first principle.  As a consequence, types of action which in the real world would be considered as morally insane, because of the real effects which they have, will be considered moral in the dream world, because they intended an entirely different effect.  The gap between intended and real effect will be imputed not to the Gnostic immorality of ignoring the structure of reality but to the immorality of some other person or society that does not behave as it should behave according to the dream conception of cause and effect.  The interpretation of moral insanity as morality, and the values of sophia and prudentia as immorality, is a confusion difficult to unravel.  And the task is not facilitated by the readiness of the dreamers to stigmatize the attempt at critical clarification as an immoral enterprise.  As a matter of fact, practically every great political thinker who recognized the structure of reality . . . has been branded an immoralist by Gnostic intellectuals . . .

The identification of dream and reality as a matter of principle has practical results that may appear strange but can hardly be considered surprising.  The critical exploration of cause and effect in history is prohibited; and consequently the rational coordination of means and ends in politics is impossible.

Of course, you knew this already.  Many of you could probably recite the above passage from memory, as many times as we’ve re-printed it here.  But not everyone gets it.  Once, a long time ago, we were told that the big firms on Wall Street wouldn’t pay us to say things like that, they wouldn’t tolerate us pointing out the disconnect between political rhetoric and political reality.  And indeed, as some of you may recall, we were defenestrated by one firm – Prudential Securities – for doing precisely that.  It’s too bad, really.  It seems to us that a few people at those big firms could have used a dose of the medicine we’ve been selling.  Which reminds us:  does anyone know how ol’ PruSec is doing these days?

In his defense, Jamie Dimon appears to have figured out, at least cursorily, that when it comes getting things done, government is often the problem, not the solution.  And as a result, he’s promised to “be a broken record until” change is made.  Good for him.

Unfortunately, it doesn’t seem that he understands what this would entail.  Harping on the government to fix the government is not especially likely to solve anything.  That’s not, sadly, the way things work.  If only someone in his research department had bothered to tell him that.

Copyright 2017. The Political Forum. 3350 Longview Ct., Lincoln NE  68506, tel. 402-261-3175, fax 402-261-3175. All rights reserved. Information contained herein is based on data obtained from recognized services, issuer reports or communications, or other sources believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness, and we are not responsible for typographical errors. Any statements nonfactual in nature constitute only current opinions which are subject to change without notice.