On the Contrary

I listened to the Sunday talk shows and I was getting somewhat bored.  Same old arguments that are irrational, failure to challenge them by the media because they have been repeated so many times, and letting the guest drive the argument, instead of penetrating questions to both sides.  Here is how the conventional wisdom of the timid goes:

“ President Obama is moving too fast on too many issues and the American people are uncomfortable with these big changes.  The real problem is jobs so why try to fix health care or pass climate legislation?  Government is getting involved in too many things”

Note this is just a very mild form of the tea party paranoia that says the government is taking over everything, we are losing our freedoms, and we are being turned into a socialist/communist state.  The people who are pushing this agenda are really anti-democracy forces made up mostly of not very bright white people who are afraid of the future.  I say this because our system of government is well and functioning.  We had an election, they lost, and their idea of democracy is my way or revolution.  They don’t believe in majority rule if it threatens their perceived status quo.  They truly are a fringe group that does not need to be addressed here.

This conventional wisdom has an element of truth in it.  People are very unhappy and afraid because the recession drags on and things for the average American are not getting better.  Where this logic of too much change breaks down is that President Obama really hasn’t changed very much.  In fact, as Frank Rich pointed out in his column Sunday, The Night They Drove the Tea Partiers Down, he has become the protector of the status quo with banks, which may be his real Achilles Heel.  His one big accomplishment was the stimulus package that most economists, if they are not blinded by ideology, will admit helped but wasn’t big enough.

And that in a nutshell, that is the problem and the logical failure of the Republican conventional wisdom.  People are not uncomfortable because he is making big changes.  They are uncomfortable because things are not improving.  Congress dithers (the word of the month) and it is business as usual, and people thought they had voted for change.  Half measures are not changing anything.  Republicans are using fear by claiming that the Obama Administration is gutting the American way of life and you can see it doesn’t work, when the reality is they have offered no alternatives except lower taxes and smaller government, and have had a major hand in preventing any real change.

So, unless things change radically, here is what we have.  President Obama promised change but has been too timid and the result has been to right the ship, but not turn it toward a brighter future.  As Frank Rich pointed out, his protecting of the banks and failure to follow Greenspan and Voickers advise on reforming Wall Street and the Banks while backing Treasury Secretary Geithner, who everyone sees is Wall Street’s boy, makes the average American suffering from the recession see business as usual.  We have Republicans leveraging this as disaffection with change that in reality hasn’t really been enough change, but offering absolutely nothing in policy proposals for solving our problems.  And of course, we have a failed media that doesn’t really challenge the Republicans to offer an alternative and examine whether it really addresses the problem.  Their claim that a public option will destroy America or that their recently proposed alternative to health care reform will address our problems is barely examined except by the opposition.  Their cries sound like Ronald Reagan in the 60’s fighting Medicare.  Media asleep at the wheel once again.

The real issue for all of us is that we are facing some major problems.  There is an element of truth to the conventional wisdom that people don’t care about anything but jobs.  The story that has not been adequately sold is that you cannot solve one problem without the other.  All of these issues are interrelated.  So this idea that we are attacking too many problems is a failure to understand that all of these issues are interconnected.

More important is to asked those who push this, just exactly how would they solve these growing problems.  Then challenge their basic assumptions like the market place will pull us out.  My fear is that the Democrats will be too timid, and the voters will return those whose philosophy has brought to our knees to office as the perceive Democrats as more of the same and punish them by throwing them out of office.  Then we will have a much harder time fixing our problems as the Republicans make them worse until they are thrown out of office again as we fall further behind the rest of the industrialized world.

We really are at a crossroad and the issues that we face will require completely new thinking.  Although our President understands this concept, he has surround himself with experts in the old thinking and this worries me greatly.  Here are some cogent examples:

• Afghanistan cannot be solved by applying the lessons from Iraq.  In fact it is possible, that Afghanistan does not need to be solved at all, but this will require entirely new thinking about what is possible and whether it is worth the cost.
• We are in a recession approaching a possible depression and the experts have told us that we need to stimulate the economy with spending and to err on the over spending side which is the overwhelming lesson from history.  What did we do?  We loaded up the stimulus package with questionable tax cuts and were skimpy on the infrastructure spending (Thanks Republicans) which may make it ineffective.  Why is that?
• We all agree that the crisis is being caused by the housing/mortgage bubble.  The issue is to stabilize prices but is complicated by the way the loans were broken up in securitized debt instruments.  President Obama has offered a package that deals with the tip of the iceberg, but it needs to go deeper and allow for bankruptcy judges to modify loan agreements and principle needs to be re-evaluated.  Once again we are up against small thinkers in Congress.  Why are we afraid to be bold?
• The banking crisis is very complicated as are the proposed solutions (insurance, more preferred stock, nationalization).  The essence of this crisis is that banks hold more liabilities than they do equity, and therefore have no ability to lend.  Many of the solutions being offered are overly protective of banks and stockholders, and not so protective of taxpayer dollars (Heads the banks win, tails the taxpayer loses).  The solution will require all to pay a dear price with the possibility of some long-term recovery for the taxpayers.  So why aren’t we nationalizing the banks and getting on with it?

I could go on and on including transportation, alternate energy, and health care.  So why when we require bold new thinking are we being so timid which will get us nowhere?  Well part of the answer is the politics.  Are people ready for big changes?  I actually think they are and Washington is way behind the power curve on this one.  The other part of this answer has to do with who we have put in policy positions to make these changes.

The problem has been eloquently presented by Gary S. Vasilash in a piece in AutoFieldGuide.com called “Fire the Generals” sent to me by my good friend Tom Griffin.  Although the article focused on the problem of the failure of car manufactures and specifically their management to understand the new markets, it applies directly to all our great issues that are challenging us today.  The lesson goes something like this:  Using the military analogy, when the type of conflict changes and a new strategy is required, fire the old generals who are still fighting the last war and bring new generals who understand the new conditions and their new adversary.  Our Iraq strategy change followed this prescription.  Mr. Vasilash makes the point that the management that has brought the auto industry to its knees are ill-equipped to manage in a whole new direction.  They are too wedded to the culture they were brought up in.

My own experience tells me that this is a basic truth.  In my 31 years working for the Feds, change was always a buzzword, but by leaving the existing management in place that was comfortable with the old ways of doing business, we always fell back into old patterns of behavior and management.  Real change is terrifying because it is about leaving your comfort zone and it is usually accomplish only in dire circumstances.  The most afraid, apparently, are the Republicans who are sounding more hysterical and shrill as they fight to reestablish their control with old and failed policies.

So both our President and we must follow Mr. Vasilash’s truism.  We must fire the generals.  Whether it is a real war in Afghanistan, or the war to restore our economy, old thinking is no longer viable and we need new leaders who are not wedded to the status quo, who can see options we did not even consider.  For us that means firing both Democrats and especially Republicans who are not ready for bold solutions.  For our President it means getting outside the Washington think tanks and their products to put people in charge who not afraid of destroying the conventional wisdom.  When we see the solutions to the problems I have identified in the start of this piece, we will see if he has really done this or still needs to find new generals.  So far in the stimulus package we thought small.  Remember that we can fire some of the generals in 2010 if they are still resisting change.

I am beginning to wonder if we are the problem.  Or said another way, I am not sure we know what we know.  We think in comfortable patterns or frames, that is, ways to conceptualize things, and I am wondering if we have almost everything wrong.  Let me give you an example:

I was watching/listening to Rick Sanchez on CNN yesterday at lunch while I worked out.  Rick’s news show tries to involve the listener into the news.  He is using feedback from Twitter, email, etc.  Yesterday he had a group of “average” citizens who he was interviewing about various news items.  The one that caught my attention was the one about the 8-year old that shot his dad and a friend, or alleged to have.  He invited on of his guest to comment and she began by saying, “I have an eight year old and…..”.  She has an 8-year old like the rest of us haven’t at one point in our lives and now she has real insight into this event.  Not only do we not know what we don’t know, we are using this misinformation as informative.  My point is simply this:  Someone who has studied child psychology and deviant behavior might have had some insight into this child, and been able to a give us a little perspective.  What we got was the blind leading the blind masquerading as informative.  She could have had some real insight or it could be totally misleading based upon anecdotal experience.  We don’t differentiate anymore.

Why do I bring this up?  Because we are facing challenging times that require us to rethink everything we have been doing.  It would appear that we have gotten almost everything wrong.  We thought we could bully our way through the world and it has turned out to be a nightmare.  We find out there are limits to military power.  We thought the ends justify the means when interrogating “terrorists” and now we have a compete mess at Guantanamo.  We thought the market would make all the right decisions if we just let its invisible hand flop free.    Now that we have found that all these “conventional wisdoms” were wrong and we are looking for answers, my fear is that we have a tendency to fall back on false logic once again.

The biggie out there is the economy and what to do about it.  We all have lived under the sway of conservative economic philosophy that says low taxes stimulates the economy, along with few government regulations, low government spending, low deficits, and lots of savings.  Guess what, that may all be wrong.  I would recommend a wonderfully challenging book, “The Predator State”, by James Galbraith, that questions many of these beliefs.  To make a long story short, he challenges all these premises with, oh dare I say it, facts.  For instance he says we will always have a deficit in our economy and attempts to wipe it out have caused some of our severe recessions.  The point here is that he is afraid liberals have bought into the conservative group-think and we could be prolonging our misery.

Now Barack Obama’s economic team is coming up with a plan that challenges some of these assumptions and he is going to have a fight selling it because there are some who just can’t let go of the old ideas.  John Boehner, House Minority leader has challenged the Democrat’s plan of major investments in infrastructure to stimulate the economy by chanting the conservative dogma, lowering taxes and reducing government spending.  Now this appeals to us because it is the conventional wisdom and we are use to believing in it, but if you look around us, all you see is lowered taxes that did not stimulate the spending necessary to jump start the economy, and cutting government spending will just further exacerbate the problem.  In fact maybe lowering taxes just allowed people to have more money to spend on frivolities that does not move us forward instead of investing in our energy future through government planning and spending.  Anybody need another Hummer?

So it is time to think outside the box.  Clearly the knee-jerk reaction is where is this money for spending going to come from.  We are going to have to grow the deficit.  We have no choice.  The real discussion here ought to be about how we invest in our future through investments in infrastructure (roads, bridges, water treatment, high speed railroads, alternate energy), while keeping the deficit manageable.  In other words, what is a manageable deficit?  Haven’t heard that one discussed because we are still in the debt free mode.  As Obama and his team try to actually think outside the box, the media and the mindless criticism based upon old thinking is all the rage on the cable news shows.  Just keep in mind that the people who didn’t see this coming are the same people who are now experts on criticizing plans to get us out.

One last little thought here:  Yesterday there was a report compiled by prominent former policymakers from the United States and Latin America by the Brookings Institution that basically found that our whole approach to Latin America is backward.  Most prominent was a call to totally reverse our strategy of isolating Cuba.  What we have been doing is counterproductive.  No fooling.  We have allowed policy to be set by old thinking, conventional wisdom, and of course a lunatic fringe in South Florida.  It is just another example of thinking outside the box and doing things that work instead of things that satisfy some emotional or idealistic need.  It is time to step back and really see what’s around us instead of reflexively doing what we have been doing.  Kind of the opposite of being conservative.

Every now and then it pays us great dividends to stop, think, and evaluate and examine some of our preconceived ideas.  As I am totally absorbed by the economic crisis, on this Monday morning in our rush to fix the problem, maybe it is time to slow down and think, not just about the economy, but some of our other assumptions especially with the upcoming debate.  So here goes:

• The conventional wisdom is we need to act fast to save our economy.  My simple mind understands the economic rescue plan as an attempt by the Fed to buy up bad credit instruments to restore liquidity and capital for borrowing so necessary to the function of our economy.  But the first thing that crosses my mind is that this Republican Administration that touts small government, low regulation government is expanding government and its supreme control over the economy in ways that tower over anything we have ever known.  From an administration that rails at the mention of a government controlled medical system we get a government controlled economy.  Second thought is will it work?  Why should we be bailing out these businesses if the $700b could be used to simulate the economy in other ways?  Exactly who controls this money and what assets will secure these outlays?  Who are the winners and losers in this thing and what is the impact on our ability to rebuild our infrastructure and make investments in alternate energy that are also critical to our financial survival?  If our economy impacts the world economy, why aren’t they offering to help in the bailout as we have helped them in the past?  The people who are structuring this plan are the ones that presided over this debacle, so why are we giving them the benefit of the doubt?  I think it is time for some calm debate about what our choices are instead of being rushed into a 3 page plan for $700b hatched in a backroom and rushed to Congress for a rubber stamp.
• The conventional wisdom is that the surge has worked in Iraq and this works in the favor of John McCain.  This claim and belief is based upon the fact that the violence has been reduced during the surge, ergo, the surge is working.  But this ignores the fact that the policy of paying Sunnis (the Awakening) came into play and full fruition about this time and that as the surge started the segregation of the population into sectarian groups was just completing.  There are an estimated four million displaced Iraqis, half of which left the country and the other half in sectarian enclaves to protect themselves.  So we put more cops on the beat and street thugism is down, but are we not still sitting on a seething caldron of unresolved hate?  Add to that as the Shiites take control of the country, they are not incorporating the Sunnis into the military or police in any meaningful way.  Meanwhile the Kurds are solidifying their control of oil rich areas.   I think we are sitting on a ticking time bomb which has little to do with al-Qaeda.  One might ask John McCain what his definition of winning is and just how much longer can we be responsible for holding the lid on this thing.
• The conventional wisdom in Afghanistan is that this is where the real war is, we had almost won it, and now we need to recommit to it with more troops and strong investment in the soft forms of power (read economy and nation building).  In a highly informative and basically non-partisan discussion, five previous Secretaries of State on CNN’s “The Next President: A World of Challenges” reflected this view.  But in an equally informative interview on Fareed Zakaria’s GPS, the 85 year-old wise ex-Prime Minister of Singapore gave this advice on Afghanistan:

“You’re going to bring democracy to Afghanistan? They have been warring with each other for hundreds of years. They enjoy warring with each other. Thirty-plus years ago they killed a king who was nominally holding the country together, and it’s been shattered ever since.

How do you restore the writ of Kabul? By some 30,000 NATO troops, ISAF, and a few more brigades of Marines or special forces?

The Russians had 140,000 boots on the ground with tanks, helicopters and the lot. And they left.

I think nation-building is not doable. I mean, are you going to do nation-building in Pakistan? If you can’t get Pakistan right, you will never get Afghanistan right.

That Durand Line was arbitrarily drawn by the British between the Northwest Frontier Provinces and Afghanistan. They are the same tribes, brothers, cousins — porous borders. They’re in and out.

Now you’ve not only got Talibans, you’ve got Pakistanis joining the Talibans — or that’s the latest intelligence that I’ve been reading.

It can go on for decades. Do we want to be in Afghanistan for decades?”

So the bottom line here is we are starting down the same road we went down in Iraq.  I think we ought to have a real debate on what is doable and what we can afford.  We may have to weigh whether improving our security through improving our economic strength and position in the world is a better investment that occupying countries in the 7th century who are still engaged in tribal warfare.

Just some idle thoughts of a Contrarian as we move toward the debates and understand that every question asked comes with hidden assumptions that may not stand up to the test of reality.  Thus the answer may be the answer to the wrong question.