The Border Wall Mystery

With respect to the proposed wall on our southern border, I think I have it right that Democrats oppose it — vehemently — and Republicans, by and large, favor it. I understand the Republican position. They seem convinced that it will help solve our illegal immigration problem. But barring building a Berlin-type barrier with electrified fences, mines and machine guns, I frankly doubt this. A complete wall built according to current proposals will likely have some effect, but people will find a way across our border if the economic incentive is sufficient.

However I am a bit puzzled by the Democratic opposition. I searched the internet and none of their spokesmen make a clear and unambiguous statement about this. I would have thought that wasting all that money that could be put to better use would be an obvious reason, but they never seem willing to put it quite that baldly. Still, I assume that this is basically their position — and mine, too.

But here’s the problem. Both of the top Democratic leaders, Sen. Chuck Schumer and Representative Nancy Pelosi, have stated in clear terms that, if funding the wall is included in a bill to raise the debt ceiling, Democrats will vote to block it. This situation will likely arise in December. They are fully aware that Democratic votes plus those of the extreme right in the Republican caucus will prevail. In other words, they are willing to sabotage the nation’s credit, drop a bomb on our economy, and risk significantly increased interest rates rather than wasting some money on the wall. On its face that doesn’t make economic sense. In fact, it defies logic unless there is something more at stake than wasting a few billions. So, what exactly is the real issue? And is it really worth that much?

Knowing Democrats, my theory is that this isn’t a money issue at all, or at least not in its essence. There is something about building a barrier on our border that strikes at the very core of progressive ideology. To many Democrats, it’s a bit like tearing down the Statue of Liberty, perhaps combined with making English our national language. The wall has become a symbol of exclusionary philosophy that is anathema to old-style Democrats. So perhaps they would indeed risk an economic catastrophe rather than conceding this point.

Of course, this is just a theory. But if it is true, then Democrats are about as nutty as Republicans, which is a standard that is rather hard to meet.

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A Radical Obamacare Solution

Regardless of how the faltering Republican effort fares, no one is going to be satisfied with what is done with Obamacare. The current law has obvious flaws. It may not collapse as Republicans predict and probably hope, but it is far from the solution originally planned by its supporters. Moreover it is in a financially precarious situation. So, what to do?

The two sides in this debate are irreconcilable. One reason is pure politics. Each side has deeply held and fundamentally different ideas of the proper relationship between government and the governed. Another reason arises from differing projections for how each of their prescriptions will work in practice. Yet neither side is being given a fair opportunity to test its ideas in the real world. We just get half measures and flawed compromises.

The first reason can’t be addressed via any specific issue, and most definitely not by the emotionally charged case of health care. But the second one could be evaluated by a scientific experiment!

How about this idea? We let Congressional Democrats design their “optimum Obamacare”, i.e. with any changes they believe would make it work better, including just making it a true single-payer, uniform system like they have in the U.K. Congress then passes this bill intact, with Republicans holding their noses as they vote. However – and this is the key provision – this plan would be completely optional on a state-by-state basis. States could accept Improved Obamacare or they could reject it entirely. They couldn’t equivocate; it would be all or nothing. I think the default should be rejection, to account for miscreants who simply can’t make up their own minds, but that is open for debate. I am also assuming that Trump doesn’t interfere with this experiment.

No doubt many red states would reject this plan, probably including a majority of the states. Meanwhile big states like California, New York and Massachusetts, plus several others, would gladly accept it, and they may actually comprise a majority of the population.

That would set up the experiment. This shouldn’t be too difficult for insurance companies to handle from an actuarial perspective. There would be very large population groups under each of the two circumstances, and there would be only the two to consider.

After a few years the results should be clear. Democrats believe that those states accepting Improved Obamacare would flourish, with abundant, affordable and high-quality health care. Health care providers would accept their new reality and easily adjust to it. Meanwhile, Republican states would rejoice that the federal meddlers were finally leaving health care decisions to the people, with a free-market proliferation of products that meet individual needs and pocketbooks. I suppose it is conceivable that both circumstances would be successful, since people truly do have different perceptions of what is good, but I strongly doubt it.

One side is going to look longingly over the fence at a neighboring state. Voters will importune or force their legislators to reverse their initial choice. Meanwhile, people will vote with their feet and move to where the grass is greener. The same is true for individual providers. Doctors and insurance companies will gravitate to the environment that suits them best. Over time, one side or the other will give up and the country will finally have what it actually wants from border to border, and not just something which some Congressional ideologues think they want. There might be some irreconcilable holdouts. For example, I could conceive of the entire country rejecting Improved Obamacare while California stubbornly goes its own way. But what is wrong with that?

Of course such an experiment would be a bit cruel. That is the nature of scientific experiments on human subjects. Those in the political minority in a state would suffer the choice of the majority. But isn’t that how our system mostly works anyway? In any case, if I am right, the experiment will naturally terminate in at most a few years as one approach proves its case in practice and the other fails. And if unexpectedly both are actually successful in their own ways, meeting the differing desires of their states, that would be a success too.

Reforming Government Work

One long-standing Republican idea may finally be put to the test in the coming Trump administration. They propose to change the model of government business to align with how business in general is conducted. And the federal civilian workforce is not going to like it one bit.

The primary motivation for this is efficiency. The view of many Republicans is that government workers, or “the bureaucracy” as they snidely say, are a coddled elite who are profligate with our tax dollars. This cartoon from the Bill Clinton era captures that viewpoint amusingly.

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This is a gross canard, but it is true that they live in a somewhat insulated world, with job protections and benefits the rest of us don’t enjoy. At one time this seemed justified by the fact that they were paid less than equivalent workers in the private sector. By and large this is no longer true, so why not strip off some of this insulation? Wouldn’t it be helpful for government workers to better appreciate the impacts of their actions if they were equally affected?

Note that I said “some of this insulation”. Creation of a modern civil service was a big improvement over the politically corrupt system it replaced. It should be a matter of pride not scorn. So changes should be made cautiously so as to preserve its benefits. Those envisioned seem largely to satisfy that constraint.

The key ideas are pay for performance rather than longevity, green light to fire poor performers, ban on union business on government time, and switching to 401k’s instead of defined benefit pensions. Every one of these is anathema to federal unions and, presumably, to their members. But really, what is wrong with them from the broader perspective of a productive and frugal government?

Their one other idea along these lines is to impose a hiring freeze in order to shrink government generally by attrition. Even though they would exempt military, public safety and health workers, and actually increase the Border Patrol, this still seems a bit mindless to me.

What now for Democrats?

As I have often remarked, I hold no allegiance to either of our two venerable political parties. Indeed, at the risk of insulting my readers, I confess that I consider true-believers of either ideology to be happily deluded at best and sadly demented at worst. Both parties have ideas worth considering and certitudes that are simply nonsense on their face. With this background in mind, here are a few of my thoughts about the situation that the Democrats now face after their recent electoral defeat.

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First, here are few statistics to ponder. It is no surprise that Democrats are despondent.

  • Republicans will shortly control the Presidency and both Houses of Congress.
  • They will likely also dominate the Supreme Court after the Scalia vacancy is filled.
  • Of the 99 state legislatures, 69 are totally controlled by Republicans.
  • In 24 states, Republicans control both the State House and the legislatures.
  • Only 6 states have Democratic Governors and legislatures.
  • There are 34 Republican Governors, providing a full bench for future Presidential candidates.
  • Fully one-third of the House Democratic caucus comes from just 3 states: MA, CA & NY.
  • Of the almost 700 counties that Obama won twice, Trump won 209 of them.
  • Of the counties that never voted for Obama, Hillary won only 6.

Basically, contrary to popular opinion, we are not a divided nation except in the sense of an Athenian democracy, which of course is not our form of government. We could take all Democratic voters and stuff them into California and never again have full Democratic control of our federal government!

I won’t list the comparable situation when Obama took office in 2008, but suffice to say that the years of his leadership have been an unmitigated disaster for his party from the perspective of political power. Not that he didn’t have some policy successes, but evidently the electorate gave him and his party scant credit. The President of course doesn’t directly influence what happens in elections at the state level. But he sets the tone and his successes or failures trickle down to a significant degree.

To be fair, Republicans did everything in their power both to see that he failed and that he was seen as a failure. His successes are thus all the more remarkable in the face of their intransigence. Still, compare his tenure with that of Bill Clinton, who faced at least as clever and relentless political opposition while presiding over the most successful Democratic regime in the modern era. And all of this was in spite of the indignity of almost being impeached.

The Democratic Party will recover and once again become a vibrant political force across the land. Early reports of fracture or even demise are overwrought and are comparable to what is usually said after painful defeats of either party. For example, the Goldwater cataclysm in 1964 was supposed to be the end of the Republican Party. However, the near victory by Hillary Clinton this time is misleading. She had the weakest opponent since the Democrats threw up Walter Mondale or Michael Dukakis. I think Joe Biden would have won handily even though he would be fighting the tide of a change election.

How long this recovery takes depends on how quickly Democratic movers and shakers come to grips with what is wrong and why. It is too soon after this election to even begin this process. In addition, the poison fruits of a generation of neglect of “flyover America” will threaten any renaissance. The 2020 census is not that far off and the mass of Republican legislatures and Governors will no doubt continue their re-apportionment gerrymandering.

My two cents worth is that depending on big city juggernauts and the growth of the Hispanic population will not work. The latter group is far more diverse in outlook and interests than is popularly appreciated. Democrats have to listen to old hands like Joe Biden and reconnect with their old base among the less-educated middle class, both white and black. These are not just “po’ white trash” as the Democratic intelligentsia sometimes appear to believe. Relying on the poor and the well-to-do intellectual class is not a viable long-term solution because they are geographically concentrated in ways that don’t work on our electoral map. Bernie Sanders had it right is some ways, but he was a flawed spokesman for that viewpoint.

Another critical flaw in the recent approach by Democrats is laying a big bet on income inequality as a political wedge. The problem is that, even for many of the poor, “coveting their neighbor’s ass” has never been much of a motivator for most Americans. People want a piece of the action but not necessarily by redistributing wealth. Indeed they often admire great success unless it is clearly undeserved; they just want a fair shot at achieving it themselves. Unsurprisingly, the big proponents for income redistribution are well-off intellectuals who, I presume, expect that “it won’t effect thee or me, but instead that guy behind the tree.

To end on a bright note for those of you who voted for Hillary, there is an excellent chance that Republicans under the leadership of Donald Trump will step in the big do-do. The announcement yesterday that Steve Bannon, of Alt-Right infamy, will be Chief Strategist for the new administration is a time-bomb waiting to explode. If the nation survives this, as I am quite confident it will, we will be well-positioned for a return to sane, progressive leadership if the Democrats can find their way to offer it in 2020.

No, it’s not just the economy, stupid!

brexit

The recent Brexit vote confounds many who built their careers on understanding politics. How could so many choose an action that so obviously seems contrary to their economic interest? This has bearing on our presidential election because we have a similar choice. Clinton proposes to continue and improve on the current administration’s policies, working to control and exploit globalization to our benefit. Trump shouts “America First!” and proposes to reverse the trends of recent decades toward open borders and free trade between nations. Political elites here and abroad, the business establishment, and most mainline economists side with Clinton. Indeed, in this broad sense, so do many mainline Republicans. But Brexit sent a clear message to the contrary and treating it as an aberration is a mistake.

Our serious political leaders, Hillary Clinton and Paul Ryan, argue for policies that each believes will improve our lives and make us more prosperous. These policies differ widely but they reasonably cover the spectrum of historically plausible approaches. And neither of them will have a clue about why their sensible prescriptions are seemingly ignored. Meanwhile Donald Trump’s simplistic appeal will confound them with his success, conceivably even extending to his election.

When Hillary’s husband Bill Clinton was running for his first term in 1992, his campaign strategist James Carville coined a slogan that is widely perceived as the key to his success. “It’s the economy, stupid!” The idea is that economic interest trumps all others, and that fundamentally people vote their pocketbooks. It doesn’t imply that no other interests are relevant to an election, just that none will come close to overriding economic self-interest. I have always believed that this insight is sound and have even quoted it from time to time in my postings here. But, now I confess that I was wrong. Simply put, it is not just the economy, not by a long shot. Until the Clintons and Ryans of the world really understand this they will continue to face unpleasant surprises. And the same is true across the pond in the United Kingdom and in the remaining nations of the shaky European Union.

There has been an accelerating cultural change happening in the developed world that many find unsettling. I have lived in both England and the United States and I am old enough to have a personal perspective of this change. In both countries, young people don’t see it because this is how life has always been for them. But for the middle-aged and older, they are beginning not to recognize their countries. It is not simply nostalgia for an idealized past. Thinking people know that earlier there was a great deal wrong, and changes that right these wrongs are not unwelcome. Moreover this is mainly a white, mainstream phenomenon. People of color and first or second generation immigrants have not yet fully established themselves within the mainstream, so their attachment to it is immature and weak.

What is definitely unwelcome to this aging white majority is what appears to them to be a fundamental change in the character of our country. We no longer think alike about much at all and these differences rock our country like earthquakes. In particular, patriotism has become a somewhat scurrilous concept, as though love of country meant willful ignorance of our flaws and also hatred of others. It doesn’t, or at least it doesn’t have to be. In sum, we no longer know our neighbors and we don’t seem to have shared aspirations, although politicians like to pretend that we do.

In the United States, few look back fondly on the days of racial segregation, and certainly not those who were its target. But some changes since then strike at the heart of what it once meant to be an American. A factor in this is our changing demographics. While America has always been a country of immigrants, previous groups consciously and hopefully merged their cultures with the existing one. They were certainly proud of their heritage but they became equally proud Americans, notwithstanding the flaws in our way of life that were evident and exasperating. This seems no longer true. Also, the growing economic separation of the classes exaggerates the feeling that we are, in a sense, no longer in this together. There have always been the rich and the poor, but the increasing segmentation into the “haves” and the “never-will-haves” is disturbing to many. It has been a common expectation by each generation that its children will fare better than them, but for the first time in my lifetime that is coming into question.

Those who benefit economically from it have promoted immigration beyond our emotional capacity to accept and have glorified globalism with little real concern for its disruptive effects. All of this means that many older Americans look around and find themselves to be strangers in a strange land. They are alarmed by this and are drawn to the cartoonish simplicities of a Trump. “Make America great again” is heard as “Restore the country I once knew”.

Brexit was a harbinger of coming political events. England, and indeed all of the United Kingdom, used to have a recognizable character, not always lovable or admirable, but constant and familiar. The same kinds of changes driven by immigration and globalization have  riven that country and, to a significant degree, Brexit exposes the consequences.

Those who analyze events based mainly on economics will never understand this, and thus they will continually be dumbfounded by election results that appear foolish and impractical. So, it is not just the economy, stupid! Prosperity is not equivalent to life satisfaction, all the more so when prosperity is unevenly distributed. Listen to the speeches of Clinton and Ryan. See if they are beginning to understand this or if they remain attached to their comfortable verities.

Thoughts on Islam and the West

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In the aftermath of each terrorism event, there is usually a flood of comments in the media seeking to explain why it happened. We have had incidents of this type attributed to individuals from the full spectrum of backgrounds and characteristics. Christians, Jews and Muslims have all killed and destroyed in the name of their faiths, and not only in the distant past. Nevertheless it is undeniable that the defining characteristic of violent extremism today is a connection to Islam. Be honest, when you see the latest atrocity on the TV news, don’t you nod your head resignedly when you hear the names of the suspects?

Trying to understand this absorbs us. We ask, “Why do Muslims hate the United States?” No one, other than perhaps Donald Trump, thinks that this is a universal attitude. But the general perception persists, based on recurring terrorist acts and also the sight of cheering crowds in the Muslim world whenever some disaster befalls the West, and in particular the United States. If they don’t hate us, they are certainly putting on a great performance. Nevertheless, any generalization encompassing 1.5 billion individuals world-wide must be viewed skeptically, many of whom probably have little or no interest in the United States.

This topic whetted my curiosity, so I made my usual excursion into the wilds of the Internet. There is no shortage of opinions, many filled with supporting data. The sources cover the gamut from academic scholars to the clearly deranged. It is fairly easy to filter out the latter since their diatribes usually veer into off-topic rants. Keeping in mind the limitations of this kind of research, I did find a fairly clear dichotomy of views.

One large group of postings challenges the premise of the question. They usually point to peaceful statements and actions of many Muslims, here and abroad. They note the great contributions of American Muslims to our culture and economy. They record almost universal condemnation of terrorist acts. In other words, they see the terrorist incidents that worry and inflame us as an aberration, unrepresentative of Muslim attitudes. Their conclusion is that Islam is a peaceful faith with no ideological animus to the West or the United States. Scholars also mention that readings from the Qur’an that seem antagonistic to nonbelievers are taken out of context and often represent anachronisms or mistranslations. Our Judeo-Christian texts certainly are subject to the same problematic interpretations.

The second equally large group of postings, quite to the contrary, point to historical actions by the West over centuries that fully justify fear and hatred by Muslims, including here at home. These actions include direct conflicts between Christianity and Islam as far back as the Crusades. To demur on the basis that such ancient grudges are irrelevant today is to misunderstand the way Islamic scholars pass down oral histories from generation to generation. In addition, western colonialism and the slave trade are also cited as more recent wrongs. While we may view these as secular issues, Islam doesn’t make the same fine distinction between matters of church and state that Christianity does. Or course these perspectives are often overstated for effect. Nevertheless, the basic historical context appears reasonable to a degree. Their conclusion is that Islam has every justification for seeing us as an enemy to be feared and opposed, violently if necessary. Far from denying that Muslims hate us, they see this as an entirely reasonable attitude, exactly as we would feel in their place.

So where does that leave us? Both of these viewpoints can’t be simultaneously correct, or at least not generally speaking. The Islamic world is no more uniform than is the Christian world. For those portions properly characterized by the first viewpoint, we have nothing to fear and should not paint them with such a broad brush. For the rest, we must be wary and careful in our dealings. The problem is that people don’t come with nice identifying badges on their clothing. So the widely mocked proposal by Trump to “ban them all” can’t be rejected out of hand. The real problem is that we cannot insulate ourselves thereby. No wall is tall enough and no immigration policies are impenetrable enough to keep out a determined foe.

I have no prescription for resolution of this issue, and I suggest that anyone who tells you he does is likely a fool or an ideologue. But some actions could help, and for these we must look both to ourselves and to those Muslims in leadership roles, here and abroad, who desire a rapprochement.

For ourselves, our first step should be to recognize the dichotomy I have described and cease lumping all Muslims in the same category. We can have friends in the Muslim world if we treat them as we would wish to be treated. We should not hesitate or fear to negotiate with Muslim nations, regardless of their discouraging rhetoric. It is true that we have made mistakes in the past in some negotiations and treaties, but avoiding diplomacy on that basis is to assume that we don’t learn from our mistakes. I believe that, in general, we do. Most importantly, we need to cease assuming that our ways should be theirs too. Beliefs that we deem unseemly or even barbaric may be intrinsic to their way of life and not, as we often assume, simply deviant behavior. Basically, trying to “reform them” to our way of life, politically or socially, is none of our business and, worse, is a fool’s errand.

But as I have said, both sides of this dispute have a role. I don’t claim to be well-informed, but it appears to me that friendly Muslim leaders here and abroad have not been pulling their weight in resolving our differences, even if we take at face value their remonstrations to the contrary. The promotion of hatred within Mosques and Madrassas is a matter of record. I see little evidence that those in a position to change this have done much at all, while it is no secret that some governments continue to provide financial support for this regressive activity. None of our actions will succeed while this pattern of subversion continues. All this talk of spying on religious institutions at home betrays our values and would likely be counterproductive. However, American Muslim leaders surely know where to look and they could reform from within if they truly wanted to. I think we should put them to the test.

The Little Engine That Couldn’t

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The Federal Reserve once again did a head fake. Interest rates will remain at historic lows for yet another cycle. You can hear echoes of the children’s fairy tale from our little economic engine, “I think I can. I think I can. Hmm…maybe not this time.” This is getting old and the markets are coming to realize this. Keep this up and no one will listen to the Fed, even though it is speaking publicly at historic volumes.

Fed Chair Janet Yellen says that they really, really want to normalize rates, and the economic indicators support this if they ignore short-term effects as they should. But they always find some monster on the horizon that deters them. So far anyway, these monsters never bite, although statistically we know that one eventually will. The latest is Brexit plus a disappointing jobs report. Will there ever be a clear field ahead? Probably not. The nature of our world economic system is that threats are endemic. Sooner or later, the Fed must accept the risk and move firmly forward on rates, but if they wait until the coast is entirely clear, timidly dithering on the edge, disaster is likely.

Consider this. Remaining in an unsustainably low-interest environment removes the main lever that the Fed has to respond to a real problem when it inevitably strikes. Of course they can always print money, but that is a fool’s errand.