I’m organizing a weekly series of what I have rather pretentiously termed “discussion salons.”  My goal is to get individuals with diverse views to have a dialogue on the most divisive of topics without it turning into The McLaughlin Group (or, as my mother-in-law likes to call it, “Five People Fighting”).

In a recent email, Lisa Schwartz, an acquaintance who is particularly interested in the “salon” idea, perfectly summed up the dilemma that has inspired me to create them:

Despite my cynicism about politics, I think political discourse is critical, especially now. The country has never been more polarized, or not in my lifetime anyway. And yet I have never believed more firmly in my own convictions. This cannot be good. I used to think that maybe the “other side” had a few good points. No more. I see no viable arguments, no redeeming ideas. Nothing. The “other side” has become unrecognizable to me. Or maybe I have become too myopic. And therein lies the rub. Things have gotten so bad that neither side seems willing to see, let alone understand, any opposing views. We’re riven by chaos, hostility and fear. Pity our poor President. 

And so, as I discussed in Part 1 of this post, I wonder how much of this rift is the product of our reliance on ideology to form our opinions, to decide what news and analysis to read, which experts to believe, etc. and how much is the result of some relatively objective and independent analysis of “reality?” 

The salons may be a place to begin such an exploration.  Can we find any common starting points from which to make a connection and build a dialogue?  Can we at least get past the hostility and fear?  Can we gain a better understanding of the views of people who see things in a radically different way?

Ron Suskind wrote a famous piece for The NY Times Magazine in 2004 in which he recounted a remarkable conversation with an anonymous senior Bush advisor:

The aide said that guys like me were “in what we call the reality-based community,” which he defined as people who “believe that solutions emerge from your judicious study of discernible reality.” … “That’s not the way the world really works anymore,” he continued. “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors…and you, all of you, will be left to just study what we do.”

While the hubris of that comment was apparent at the time, few would have dared to guess at the full scope of the tragic fate it foreshadowed.  And while the words stuck with me (and have been widely quoted and mocked), I had forgotten that the piece was mostly about the degree to which the Bush Administration represented, in Suskind’s words, a “faith-based presidency.” It was a regime, he suggested, in which “open dialogue, based on facts, [was] not seen as something of inherent value” but rather as something that “may, in fact, create doubt, which undercuts faith” and might therefore “result in a loss of confidence in the decision-maker and, just as important, by the decision-maker.”

So perhaps the substitution of faith for “open dialogue,” of certainty for ambiguity, of the “gut” for facts–as Steven Colbert likes to put it– is a major part of the problem. Colbert famously assured us that “reality has a well-known liberal bias.”  Most people who do not consider themselves to be liberal but are nonetheless well informed would disagree, of course.  But how much are we all guilty of substituting ideological faith for reason?   

I took a philosophy course in my freshman year of college in which I read Kant.  I remember three things from it, which is pretty remarkable given how little I retain in general from those early studies.  The first is the concept of the “categorical imperative,” which I recall as Kant’s version of the Golden Rule.  The second is that I wrote a paper about that concept in which I misspelled the word “imperative” throughout, including in the title.  I got a B+ anyway, but scrawled in an out of the way corner on the back of the paper (in a totally separate spot from the grader’s notes) was the following comment: “You’re idiotic, ignorant, fatuous and DULL!!!” (emphasis in the original).

I will preface the third thing I remember with an apology to any serious student of philosophy for the gross oversimplification of a theory the subtleties of which I do not begin to comprehend.  It concerns Kant’s conception of “reality,” which as I understood it, he basically said was unknowable.  Kant argued that the sensory-based data that we perceive is our only direct means for understanding the world.  He claimed that these “phenomena” were the product of something he termed “noumena” (“the thing itself”) about which we could have no direct knowledge. 

In addition, Kant suggested that only by making “a priori assumptions” about the nature of noumena can we even begin to make heads or tails of the sensory data we get.   These assumptions include concepts such as the existence of space, time and God.  Their validity cannot be derived from sensory data, he argued.  We have no way to verify them objectively, because we must assume them in the first place in order to create a rational framework for understanding anything at all.

Now, if you’ve stayed with me this far, you’re probably thinking that the grad student who wrote that comment on the back of my paper was on to something.  And I must admit that part of my motivation for this philosophical digression was simply to have the chance to tell that precious story.  But I do believe we are struggling with something analogous to Kant’s epistemology in our current processing of political and economic ideas. 

The notion of the “free market” provides a case study.  Outside of philosophical circles, the theories of Adam Smith have proved far more popular than those of Kant, who was born just a year after him.  I watched Bill Maher interview Ron Paul last night and heard him singing the praises of “The Market,” arguing that the Great Depression was caused by the New Deal (with help from the Federal Reserve) and that Keynesian economists are telling us to repeat those errors today.  He even suggested that the current crisis is the result of markets not being free enough—of too much regulation and intervention.

Paul may be a slightly extreme case, but not by much.  In the introduction of his 1998 book The Crisis of Global Capitalism, George Soros wrote:

Financial markets are inherently unstable and there are social needs that cannot be met by giving market forces free rein. Unfortunately these defects are not recognized. Instead there is a widespread belief that markets are self-correcting and a global economy can flourish without any need for a global society. It is claimed that the common interest is best served by allowing everyone to look out for his or her own interests and that attempts to protect the common interest by collective decision-making distort the market mechanism. This idea was called laissez faire in the nineteenth century… I have found a better name for it: market fundamentalism.

The irony is that a quick perusal of Adam Smith demonstrates that his free market theory was a utopian vision and that he agreed with Soros that civil society as well as government intervention were necessary in order for markets to truly serve the greater good.  One of Smith’s basic tenets, for example, is that the price signals in the market must completely reflect every cost to society related to the provision of that particular good or service.  Yet we know that the “free market” is terrible at this.  Pollution is the classic example of an “external” cost that will only be reflected in the price of a product if the government takes steps to regulate or tax the polluting activities. 

Such “externalities” are by no means minor dimensions of our economic reality.  “The Real Price of Gasoline,” a 1998 study by the International Center for Technology Assessment, estimated that the true cost of gas at that time was between $5.60 and $15.14 per gallon, once a whole host of expenses that were not directly borne by oil companies (as well as subsidies and tax breaks those companies receive) were included. 

When the real costs are not reflected in the price, Smith taught us that markets will fail to allocate resources efficiently.  We will tend to use too much of a good or service and the accumulating costs will be borne by society as a whole.   Thus the climate crisis is the mother of all market failures.

One would imagine that the current economic collapse (if not the peanut butter fiasco) has put to rest the simplistic notion of the “free market” as a perfect self-regulating mechanism on the one hand and government intervention as a negative distortion that inevitably leads to inefficiency and even economic disaster on the other. Yet those arguments are very much alive. 

The problem, argue the “market fundamentalists,” is that the markets aren’t free enough.  But given that that “freedom” is a utopian ideal, it is actually impossible to have a real world testing of the pure principal.  Thus, no matter how many times one points to examples of market failure, the fundamentalists remain unconvinced.  The efficiency of markets is an assumption, inherent in the way they make sense of the world.

This brings me back to my central question.  How can I argue that my left-wing views are any less ideologically driven than those of someone on the right?  Am I suggesting that I somehow have a better grasp of those unknowable noumena?  Or perhaps I am simply substituting one set of a priori assumptions for another? 

The answer, I would argue, lies in the difference between a fundamentalist approach and a realistic one.  Kant may have established some lasting philosophical “truths,” but there is a reason (other than the fact that his writing is often impenetrable) that most people don’t know what they are.  Generally, we find the notion that we cannot understand the basic nature of things to be true only in the most extreme, and therefore absurd, sense.   The table I am sitting at is made of wood from a tree that grew in a forest, nurtured by water, earth and sunlight.  To the extent that this “reality” I perceive is merely some echo of the deeper world, I am not likely to alter my behavior as a result of that knowledge. 

At the same time, I accept that the world is hugely varied and complex, not black and white but a million shades of grey.  While I may understand the basic factors that allowed that tree to become my table, I also accept that a forest (especially one that is thousands of years old) operates in ways that we have barely begun to fathom.

When it comes to political reality however, conservative fundamentalists see things quite differently.  They embrace black and white divides, good vs. evil, free markets vs. government intervention.  They live, I would argue, in a world where their a priori assumptions are given primacy over phenomenological data.  Bush’s “faith-based presidency” was a perfect embodiment of this perspective.  So is “creationism.”   And while a cynical case can be made that there is a thick layer of charlatanism and graft embedded in the foundations of conservative fundamentalist belief, I think that its persistence is about more than the power of a wealthy few to control the will of the many.  There is something seductive about simplicity and certainty; about having a framework for understanding the world that is true in and of itself. 

These are scary times.  They call for radical actions.   They also demand that we come to grips with complexity and the limits of our ability to understand all the forces at work in our world.  In the face of this chaotic whirlwind of crises, reliance on faith in a few simple principles becomes highly appealing.  Those who yield to this temptation tend to become conservatives.  Those who do not enjoy songs like this one.*

 *No Gravity, written by David Hershey Webb (dhw628@nyc.rr.com), performed live by David Hershey Webb and Felicia Michael

As always, due to compliance restrictions deriving from my position as an Investment Advisory Representative of the First Affirmative Financial Network, LLC, I regret that I cannot currently accept direct comments on this blog, but I welcome your email replies or any other financial inquiries you may have. Mention of specific securities should not be considered an offer to buy or sell that security.  For information on the suitability of any investment for your portfolio please contact your investment adviser.

 It’s been an embarrassingly long time since I’ve posted to Conscious Comments.  The holidays, my step-daughter’s wedding and a new puppy, not to mention my work, have all occupied time I might have spent writing.  But there have certainly been many events on which I have considered commenting.

I thought about posting on the Inauguration, for example, but there was more than enough attention being paid at the time.  Among the multitudes of commentary, my cousin Alex, a high school senior, wrote a wonderfully heart-felt, first-hand account of the day for her local paper.  Adding to the chorus of cheers would have been utterly redundant, while fretting that all was not as well as it seemed (my natural contrarian inclination) just felt wrong for an occasion that was historic on so many levels. 

Now that the glow has subsided, however, I have gone back and reviewed some critical commentary that I found persuasive at the time, by Paul Krugman and David Michael Green.

Krugman’s January 22^nd column in The NY Times included this analysis:

[M]y real problem with the [inauguration] speech, on matters economic, was its conventionality. In response to an unprecedented economic crisis — or, more accurately, a crisis whose only real precedent is the Great Depression — Mr. Obama did what people in Washington do when they want to sound serious: he spoke, more or less in the abstract, of the need to make hard choices and stand up to special interests.

That’s not enough. In fact, it’s not even right.

Thus, in his speech Mr. Obama attributed the economic crisis in part to “our collective failure to make hard choices and prepare the nation for a new age” — but I have no idea what he meant. This is, first and foremost, a crisis brought on by a runaway financial industry. And if we failed to rein in that industry, it wasn’t because Americans “collectively” refused to make hard choices; the American public had no idea what was going on, and the people who did know what was going on mostly thought deregulation was a great idea.

 And Green, in a typically forthright lefty screed on his blog “The Regressive Antidote,” wrote:

Ultimately, the question of our time is about sustainability. Have we merely hit various speed-bumps along the road – somehow, in a stroke of ridiculously improbable bad luck, all simultaneously – or do these economic and fiscal and environmental and foreign policy and healthcare and national security crises represent something far more fundamental? Has America been living, in all these respects, a fundamentally unsustainable lifestyle? One in which maintaining pathetically juvenile materialist compulsions of seemingly bottomless proportions requires predatory foreign policies, catastrophic environmental degradation, looting of our own children’s piggy banks, and leaving one-sixth of the population with no health insurance whatsoever?…

These are gigantic challenges necessitating gigantic responses. Even accounting for the possible benefits of incrementalism and perhaps even certain amounts of benign subterfuge, there is no way imaginable to me that we can get close to the required remedies for these problems without a leadership busy at framing these crises as such, articulating grand solutions, cajoling us to do better, and cheering along our progress.

That is why this speech strikes me so much as a lost opportunity. As president, you only get that platform once or twice ever. The only thing even close is an annual state of the union. Everything else is just a speech, just a weekly radio broadcast, just another commencement address. This was the time for some serious cognitive reorientation to lay the groundwork for what comes next.

It seems easier to revisit these critiques now, as Obama comes off a rough couple of weeks selling his stimulus and bank rescue plans and back-peddling on the Daschle nomination.  Add to that his bitterly disappointing continuation of the last administration’s constitution-shredding opacity regarding torture, asking for the dismissal of a case brought by five former detainees and muzzling a British government investigation as well.  And there’s the ongoing disaster of our Afghanistan/Pakistan policies, clearly outlined in this recent Bill Moyers program and only slightly mitigated by the faint hope that the newly announced policy review will result in a move away from a military-based “solution.”

Still, as both Krugman and Green concluded, I’m far from losing faith in the Obama Presidency.  It goes without saying that he is moving in the right (i.e. Left) direction more or less across the full range of issues.  I also would love to believe the argument that he is strategizing at a much higher level than the pundits give him credit for, so that what appear to be missteps are in many cases subtle victories which will become more apparent with the passage of time (see pieces by Bob Cesca,  Greg Palast, Stan Collender for examples of this view). 

 It seems reasonable that we must grant him the leeway necessary to achieve what is practical in a real-world context and that we must accept and be tolerant of mistakes along the way.  But that still leaves open the larger point made by Krugman and Green– and fleshed out in more detail in Jonathan Schell’s excellent Nation piece “Obama and the Return of the Real,”—that the multiple crises we face require truly bold action, and that it is therefore pragmatic to be radical.  If you want to get to Mexico but you’re heading for Canada, slowing down won’t do the trick.  How long before our failure to fully change course across a whole range of policy issues produces irrevocable and unacceptable damage?

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Compliance with SEC regulations limits my ability to host an open comments section on this blog, however readers do email me reasponses to my posts from time to time—something I greatly appreciate.  I received permission from a few of them to post their thoughts on this piece as an addendum.  My apologies for the long delay in getting them up on the blog.  Hopefully they will still be of interest.

Stephen Kaye wrote:

Ben,

Your blogs serve a real purpose as they synthesize your collection of readings.  Keeping up with what’s being written is a full time task.

Here are my insights for what they are worth.

Power corrupts etc.

The danger is that Obama gets caught in the huge bureaucratic mess that we have created that may be too big to manage.  This is why he said nothing at his inaugural. Whatever he said of substance would anger some important interest group that he thinks he will need at some time or sooner.  This is why, I suspect, he flubbed so badly on the motion for dismissal of the torture claims of the detainees.  He didn’t want to lose the support of the CIA and that piece of the federal system devoted to fighting Bin Laden and terrorists.  Bold moves would upset the guys on the front line - he has already gone out of his way to sing their praises.  He may have been delaying so Panetta can get into position and take control (which may be impossible) of the CIA.

On the economy.  After reading a number of books on the subject of the Depression (Galbraith and Krugman) I am coming to think that there is nothing the government can do to change the direction of the economy.  The stimulus package is unlikely to stimulate.  What the government can do is rescue individual banks, help individuals via targeted and specific programs, like food stamps and unemployment benefits.  What it can’t do is save an industry in decline like the auto industry.  Since the mission is impossible, we shouldn’t even attempt it.  We might be able to offer targeted help in developing non-polluting carbon free transportation solutions, but then we would probably put our money on the wrong horse since the decision process in inevitably corrupted (Dingel).

It seems that Obama fears those abrupt changes he suggested he wanted.  He wants to help the people of Detroit so he does not have the heart to tell them the industry they depend on is obsolete; he wants to get out of Iraq but he also needs to work with the military which has other ideas (including keeping the power they have accumulated).  He is going to be perpetually caught between competing interests and may not yet have worked out exactly how to proceed.

There are too many competing interests in Washington and too often the winner is chosen by who has the most money or makes the loudest noise or maybe the ear of the press.

So, it going to be up to us citizens, not the government.

Any ideas?

Regards,

Steve Kaye

Jeff Thomas wrote:

The questions, comments on your mind require a relaxed conversation.  This is the second time that I have attempted a response and find myself writing a book. The inauguration speech was flat. I too was a bit surprised. But Obama can not be both honest and hopeful very easily. He made the clear point which the day itself symbolizes, Bush and Cheney are out and so too their failed ideas.

Krugman has the most salient points on the economy as anyone that I have read. He gets it. He has even finally began to touch on the actual problems rather than the MSM ones. I wanted to know if such thoughts were on his mind. Beyond that, as it relates to Obama and politics, he is off as often as correct. As understandable as it is amazing he too views most everything through his personal prism.

It has been my experience, looking in depth at issues, backing out again in an attempt to view the larger picture from different points of view and then asking myself what I would do, I find that Obama has already done it. Not once have I forecasted a response from him. He’s too far ahead. The Republican’s today and during the campaign, as well as the Clintons during the campaign, have not been able to keep up with him and Axelrod.

It’s only been three weeks since he took office, I get aggravated with Obama for not turning harder left. But he can’t. Even if he wanted to.

There’s too much at stake and he must bring the Country with him. It’s not a nimble speed boat that he pilots capable of fast turns, it’s a large much slower responding ship. As he has mentioned, It has taken decades to arrive at this point, it will take some time to correct Most of this relates to changing the perceptions of the people.

We could list the dozens of large issues on his plate, remind ourselves that he has been handed an intentionally dismembered government, virtually no financial resources and as many powerful people pushing for his failure as there are pulling for his success while attempting to lead and coalesce half of an electorate - intentionally misled for decades and happily acting against their best interest - with the other half, though well intentioned, remains equally uninformed, confused and very slow to organize.

As best I can tell, his success is related to his frame of reference. He truly cares about the greater percentage of people, the Country and the World. It’s not positioning for a party, nor is he concerned solely with winning for winning sake. He began from humble beginnings and has continued to move up. Anything he does, and any point he stops, he can consider himself successful. This is not true for most politicians, perhaps most people, they are protecting their position, protecting their income or reputation, fighting to maintain, fighting for what they view as theirs.

Acting with such a clear conscious allows him to speak more easily - it is not simply some uncanny ability.  Understanding the full picture, as well as the detailed aspects, viewing it from a realistic perspective and not attempting to mislead has allowed him to jump from topic to topic with more clarity and genuine concern than we have seen in some time. Clinton.

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Fred Bruning wrote:

“I also would love to believe the argument that he is strategizing at a much higher level than the pundits give him credit for…”

let’s hope. he looks a little lost to me.

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As always, due to compliance restrictions deriving from my position as an Investment Advisory Representative of the First Affirmative Financial Network, LLC, I regret that I cannot currently accept direct comments on this blog, but I welcome your email replies or any other financial inquiries you may have. Mention of specific securities should not be considered an offer to buy or sell that security.  For information on the suitability of any investment for your portfolio please contact your investment adviser.

A number of commentators have remarked on the discrepancy between the instant behind-the-scenes bail-out of Citibank and the far more drawn out process US auto makers are being put through as they seek Federal support.  Is there a double standard here? 

On the one hand, banks are vulnerable to runs that can cause a sudden collapse in a way that manufacturers are not, so it makes some sense that the Citi deal was rushed while the car companies’ request is subject to a more rigorous and prolonged analysis (or at least the appearance of one).  On the other hand, it’s also clear that the auto companies (especially GM) can’t wait too long for help either.

Additionally, the argument is made that the banking sector is more central to the economy’s functioning than any other, so that saving it is necessary for the country’s business as a whole to thrive.  Again, there is some merit to this claim, but the auto sector also supports a pretty large chunk of our economy that we can ill afford to see go under in the current circumstances.  And while in normal times, a company like GM might be able to go through Chapter 11 bankruptcy and reorganize, it seems doubtful that, in the midst of this financial crisis, such an option would work without some government involvement.

Still, just because it makes sense to save these high profile companies doesn’t mean we should give away the store.  The Citigroup deal is receiving some pretty harsh criticism from a wide range of sources.  Here is a sample from Paul Krugman:

A bailout was necessary — but this bailout is an outrage: a lousy deal for the taxpayers, no accountability for management, and just to make things perfect, quite possibly inadequate, so that Citi will be back for more.

And another from Robert Reich:

This is not a particularly good deal for American taxpayers, but it is a marvelous deal for Citi. In return for all the cash and guarantees they are giving away, taxpayers will get only $27 billion of preferred shares paying an 8 percent dividend. No other strings are attached. The senior executives of Citi, including those who have served at the highest levels in the US government, have done their jobs exceedingly well. The American public, including the media, have not the slightest clue what just happened.

Meanwhile, the debate over the auto industry has been extended for a few weeks, but remains urgent.  Here is an excellent piece from The New Republic arguing for the need to avoid bankruptcy.  And here is an equally compelling argument from New York Times Dealbook reporter Andrew Sorkin arguing Chapter 11 is the only way to go, albeit with a hand from the Feds to address some of the challenges posed by the financial crisis. 

I’m inclined toward Sorkin’s perspective, particularly because I don’t think taxpayers should bail out the automaker’s stock and bond holders, who should have understood the risks they were taking (ditto for the banks, but it seems too late for that).  Bankruptcy allows them to take much of the hit, reduces the company’s ongoing obligations and clears the deck for new investors to come in if and when things turn around.

The unions are getting a lot of flack too, and it seems inevitable that they will have to make some concessions.  But compared to management, which most analysts seem to agree should be junked (along with their corporate jets), I think labor is getting scapegoated to some degree.  Their deal looks generous largely because it is being compared to the poor compensation and benefit plans available to the vast majority of American workers (other than those on Wall Street, that is).

But the real issue with autos is the need to rapidly shift away from the use of fossil fuels to run them.  It may already be too late to stop catastrophic climate change, but it’s hard to argue that we shouldn’t still try.  Thankfully, our President-elect is on board.  And we have a blueprint for making this transition, using plug-in hybrid technology, paired with the construction of a new “smart” electric grid and the large scale development of wind, solar and geothermal electric power generation.  The auto industry’s struggles represent a golden opportunity to radically restructure the entire sector.  

Business as usual, even with a Federal bail-out for Detroit, isn’t going to get the job done, as this piece in today’s Washington Post points out.  The full cost of burning fossil fuels is not being priced into the economy, making their use artificially cheap.  That must change, via a carbon tax or strict cap and trade system.  Additionally, major subsidies will be needed to promote a rapid transition to a new fleet of green cars.  We’ve managed similarly daunting challenges in the past, but only with a fully mobilized populace.  Can Obama rally sufficient numbers to this cause?  At least the financial crisis gives him a chance to try.

As always, due to compliance restrictions deriving from my position as an Investment Advisory Representative of the First Affirmative Financial Network, LLC, I regret that I cannot currently accept direct comments on this blog, but I welcome your email replies or any other financial inquiries you may have. Mention of specific securities should not be considered an offer to buy or sell that security.  For information on the suitability of any investment for your portfolio please contact your investment adviser.