POLITICAL DIVISION

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

Jefferson and Hamilton: The Rivalry That Forged a NationJEFFERSON AND HAMILTON

Written by: John Ferling

Narration by:  Stephen McLaughlin

JOHN FERLING (HISTORIAN AND WRITER, PROFESSOR EMERITUS OF HISTORY @ UNIVERSITY OF WEST GEORGIA)
JOHN FERLING (HISTORIAN AND WRITER, PROFESSOR EMERITUS OF HISTORY @ UNIVERSITY OF WEST GEORGIA)

John Ferling’s “Jefferson and Hamilton” illustrates the value of political division in the history of American government.  In 2016 a man and woman were vying for the highest office in the land.  Though Jefferson and Hamilton have no gender difference, they represent the boon and bane of political division today.

Today’s political conflict is over Covid relief.  Lines are drawn between leaders of two political parties–who wins?  John Ferling’s history implies it is the American people–as a result of compromise.

In the formative years of government, Ferling shows “Jefferson and Hamilton” as representatives of opposing parties who have a great deal to do with forging the future of America.

Both Jefferson and Hamilton are shown to be highly intelligent leaders with philosophies shaped by entirely different life experiences. Both are patriots but each sees the role of a national government differently.  Ferling notes that Jefferson is raised in an intellectual and upper middle-class environment while Hamilton is raised in the school of hard knocks.  Jefferson’s brilliance and farsighted thought is evident in his authorship of the “Declaration of Independence”.  Hamilton’s brilliance and farsighted thought is evident in his role as the first Secretary of the Treasury.

ALEXANDER HAMILTON (1755 OR 1757-1804)
ALEXANDER HAMILTON (1755 OR 1757-1804, 1st SECRETARY OF THE TREASURY)
THOMAS JEFFERSON (1743-1825, 3RD PRESIDENT OF U.S., PAINTING OF IN 1786)
THOMAS JEFFERSON (1743-1825, 3RD PRESIDENT OF U.S., PAINTING OF IN 1786)
THOMAS JEFFERSON AND SLAVERY
Though Jefferson is against slavery, he believes blacks are inherently inferior.  Jefferson slaves are property and, with the exception of the Hemming’s offspring, Jefferson refuses to release any slaves during his lifetime.

The fascinating value of Ferling’s book is how these two men, and their beliefs are built on life experiences that formed their characters.   Jefferson, through marriage and inheritance, becomes a wealthy landowner but lives life as a profligate who squanders his family fortune.  Jefferson graduates from William and Mary and becomes a lawyer.   Ferling explains that Jefferson believes his years as an American diplomat in Paris are the best years of his life.  Though Jefferson leaves Paris in 1789, he supports France’s revolution; even as it murders the royal family who supported America’s war for independence.  Jefferson believes periodic revolution is a good thing; despite the near-term consequence of “The Terror” in France (its human butchery and property destruction).

18th CENTURY MERCHANTS
Hamilton works for a merchant in the West Indies and becomes acquainted with mercantilism and the importance of business.  Because of Hamilton’s hard work ethic, he is supported by his West Indies employer as an émigré to America.

In contrast to Jefferson’s birth into a conventional American family, Hamilton is born out-of-wedlock in the West Indies.  Because of Hamilton’s hard work ethic, he is supported by his West Indies employer as an émigré to America.  Hamilton exhibits an extraordinary ability to get things done. With his West Indies employer’s financial assistance, Hamilton enrolls in King’s college.  He becomes a lawyer with ambition to participate in the formation of the American nation.

Both Jefferson and Hamilton are shown by Ferling to be in direct conflict on the purpose of the federal government.  Jefferson emphasizes State’s rights while Hamilton argues for strong Federal oversight.  Jefferson looks to the States for national defense while Hamilton argues for a standing army.  Jefferson opposes creation of a national bank while Hamilton insists on federalized control of the value of money.  Jefferson believes the economic future of America is dependent upon farming while Hamilton believes mercantilism. industrialization, and trade should be at the center of economic growth.

STATES' RIGHTS VERSUS FEDERALISM
STATES’ RIGHTS VERSUS FEDERALISM

Ferling’s characterization of these two scions of America implies Jefferson is a thinker while Hamilton is a doer.  Jefferson uses his formidable intellect to rationalize his racist beliefs while insisting slavery is a sin against man.  Jefferson seeks a life of tranquility and believes it lies in an agrarian way of life; i.e. away from war and urbanization. His ambition for high public office is hidden but surreptitiously pursued through association with like-minded Americans.  In contrast, Hamilton is a risk taker and pines for military command in the revolutionary army.

WASHINGTON, A LIFE
Ferling suggests both Jefferson and Hamilton underestimate Washington’s inherent ability to measure the value of subordinates and get things done through other people.

Washington chooses Hamilton as his military aide because of his organizational ability.  Hamilton resents Washington’s aloof treatment of him but sees Washington as a ticket to fame; i.e. a seat at the table in the formation of a new nation.  Hamilton appreciates Washington’s bravery under fire but considers him a poor strategist in war.  Hamilton’s relationship with Washington is utilitarian in the sense that Washington’s renown is a tool for Hamilton to accomplish his life ambition.  

Ferling contrasts Jefferson’s and Hamilton’s personalities.  Both are sensitive to slights.  Both act surreptitiously to accomplish their objectives.  Both have what some call libertine leanings with illicit female relationships.  However, Jefferson is reserved and patrician in conduct while Hamilton is outgoing and vociferous in public.  Jefferson is inclined to theorize while Hamilton acts.  The consequence of acting versus theorizing is exemplified by the duel with Burr that ends Hamilton’s life and allows Jefferson to become the third President of the United States.

SECREACYBoth Jefferson and Hamilton suffer from their secretive way of getting things done.  Jefferson loses his relationship with Washington by writing correspondence to a friend that is critical of Washington’s presidency.  Hamilton is openly hated and vilified by President Adams for his secretive manipulation of his only term as President.  Adams’ hate is magnified by Hamilton’s interference in Adams’ attempted re-election.

DONALD TRUMP (REPUBLICAN NOMINEE FOR PRESIDENT OF THE U.S. 2016)Ferling makes a strong case for the importance of both Jefferson and Hamilton in forging the American nation.  One is reminded of the humanness of all leaders.  Trump is no Jefferson or Hamilton.  He is neither charismatic nor intellectual.  Like Jefferson, Trump is raised as an elitist, but without the intellect of either Jefferson or Hamilton.

 

After reading John Ferling’s book about “Jefferson and Hamilton”, one is convinced that America will prevail, even in the worst of times, which, to some, may be today.

FEAR ITSELF IS CLICHE

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

Fear Itself: The New Deal and the Origins of Our Time

Written by: Ira Katznelson

Narration by:  Scott Brick

IRA KATZNELSON (AUTHOR, AMERICAN POLITICAL SCIENTIST AND HISTORIAN)

IRA KATZNELSON (AUTHOR, AMERICAN POLITICAL SCIENTIST AND HISTORIAN)

“Fear Itself” has become cliché and authors of FDR’s administration are as plentiful as pixels on an HD screen.  However, Ira Katznelson offers a sharpened image of a past and present that threatens American democracy.  Don’t succumb to panic. Life is life. It demands compromise.

The Biden/Trump differences in governance are legion. Today’s political climate is reminiscent of America’s civil war and great depression. Though Biden may or may not be up to the task, the nation needs a healer and leader more like Lincoln or FDR, than Andrew Johnson or Jackson.

SLAVE TREATMENT

Katznelson argues that FDR’s New Deal to pull America out of depression would have never passed Congress without support of the segregated south. He implies that FDR views murder and discrimination of blacks a lesser threat to American Democracy than failure of the American economy.

The threat posed by the fictional “House of Cards” President, Frank Underwood,
plays out in fiction and reality. One might argue that FDR sacrifices black America to gain political clout. America’s benighted pretender to a throne, Donald Trump, seems to endorse a similar morality.

Katznelson suggests economic stimulus from the New Deal accelerates recognition of black equality.

Maybe, but that is similar to President Trump’s rationalization for Saudi Arabia’s assassination of Khashoggi.

To assure the south’s support FDR ignores lynching and degradation of black Americans during his first years as President.  Similarly, President Trump willfully disregards the murder of Jamal Khashoggi.

Because the south believes the New Deal poses no threat to their belief in white supremacy, they voted as a near unanimous block to support FDR’s administration.  Black discrimination and murder did not disappear then (or now) but the New Deal changes the course of history.

MARTIN LUTHER KING (1929-1968, PROMOTING EDUCATION IN THE 1950 S)

Some argue the New Deal bends the arc of the moral universe toward justice (a pronouncement in 1860 by Theodore Parker and made famous by Martin Luther King). Other’s may argue it prolongs discrimination.

Katznelson argues that the great depression and FDR’s response raises the power of labor through job creation and unionization.  A consequence is to create a march for labor’s special interests that influence public policy in a way that endorses democratic ideals of free trade and competition. 

Unions eventually get a seat at the table of major corporations and public policy boards.  With that seat, arguably, the arc bends toward justice.  Of course, there are many seats at the table that frequently out vote minority interests. However, as Katznelson notes–the door for Union influence is opened as a result of FDR’s administration.

Katznelson’s point is that principles of Adam Smith, promulgated for the private sector, are translated into the public sector as a result of the New Deal and America’s mobilization for WWII.  The myth of the invisible hand is extended to government.

Of course, the addition of competition to the public sector is dual edged.  Though it helps level the playing field between public and private interests, it opens a Pandora’s box of problems.  As the myth of Pandora’s box is known, only hope remains when emptied of its content.

The invisible hand is largely a myth, but competition is real. As labor and minorities gain power, their seat at the table allows them to be heard.  On the one hand being heard is a first step in bending the curve toward justice. On the other, the mythical invisible hand favors industry over labor.

MONEY

Money is power.  Most special interests that sit at a public policy table are focused on singular (usually corporate); not general public interests. 

Government agencies can have their funding cut at the behest of elected officials.  Katznelson notes how the southern bloc in the FDR years fails to support many social reforms because of their interest in separation of the races.

Only the fear of a common enemy seems to mitigate (not eliminate) discrimination in the United States. The “common enemy” trope is two edged. It is as likely to mislead as lead to moral and/or ethical decisions.

As an example of misleading the public, President Trump uses the “common enemy” trope to exaggerate immigrant criminality.

Southern Democrats begin siding with Republicans to combat unionization and equal opportunity for all.  Many of FDR’s attempts to create jobs are sidelined because they compete with private sector manufacture or offer equal opportunity for employment to minorities. 

Katznelson explains how the Department of Labor is stymied by Republican opposition and Southern representatives.  By insisting on State’s rights, the South can continue discriminating against minorities and private sector entrepreneurs can subvert federal interference in employment law.

WINSTON CHURCHILL (1874-1965_

Churchill’s “Iron Curtain” speech in Truman’s home town sets the table (a common enemy trope) for an American black list that ruins a number of American lives. 

JOSEPH McCARTHY (1908-1957)

Now that government policy is influenced by special interests, communist hunters like Senator McCarthy look for ways to exploit American fear of a communist takeover. 

The seeds for the Red Scare and the rise of McCarthyism are planted with the beginning of the cold war.

Katznelson’s theme is “Fear Itself” and how it is used to interfere with the moral universe’s curve toward justice. Katznelson explains how important a role the south plays in determining public policy. 

“Fear Itself” is Donald Trump’s hole card, his uncovered ace in a game of chance.  Trump gambles with the fate of America by creating fear of terrorism, Muslims, Mexicans, and immigration.

DONALD TRUMP (REPUBLICAN NOMINEE FOR PRESIDENT OF THE U.S. 2016)

Terrorism is real but Trump’s use of fear is disingenuous.  His ambition is the power and prestige of office; not protection of America from terrorism.  Trump is the Senator McCarthy of our time. 

Katznelson is another historian proving the irrelevance of history because we keep repeating ourselves.  We forget the past and blunder down the same path, tripping and falling, leaving more blood and pain borne by the children of our future.

America needs to invest in its future. A 3.5 trillion dollar investment today will raise the standard of living for all those who have lost their jobs in manufacturing. They are not just tech jobs. They are jobs for infrastructure repairs, helping working families cope with the rising costs of child care, jobs for care of ageing parents’ health, work force’ retraining jobs, and jobs in education for future generations.

The world is adjusting from an industrial to a technological revolution. That transition requires investment in those who have lost their jobs in industry. Child care, elder care, and training for new jobs in a changing employment environment is worth much more than a 3.5 trillion dollar investment.

MORE OR LESS FREE

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.com

Privacy, Property, and Free Speech: Law and the Constitution in the 21st Century

The Great Courses Series

Lectures by: Professor Jeffrey Rosen

JEFFREY ROSEN (AUTHOR, AMERICAN ACADEMIC, LEGAL HISTORIAN, PROFESSOR AT GEORGE WASHINGTON UNIVERSITY LAW SCHOOL)

JEFFREY ROSEN (AUTHOR, AMERICAN ACADEMIC, LEGAL HISTORIAN, PROFESSOR AT GEORGE WASHINGTON UNIVERSITY LAW SCHOOL)

The public sector continually revises laws regarding the internet.  Laws passed by government attempt to regulate internet use, ownership, and censorship by redefining freedom of speech and expression, the freedom of religion, and the freedom from want and fear. Technology encroaches on privacy with internet access by the public and private sectors. 

Are Americans more or less free in the 21st Century? 

Professor Jeffrey Rosen in “Privacy, Property and Free Speech” leaves the question unanswered.  However, he clearly frames the question for listeners to draw their own conclusion.  It is difficult to give a definitive answer for three reasons.  One, new technology redefines freedom.  Two, September 11, 2001 redefines security.  Three, globalization redefines nationalism.

Government classifies organizations and decides which can legally access the internet.  Government is in the process of defining who can own the internet and how access can be regulated.  Government has the power to censor information that it views detrimental to the freedoms historically held by Americans.  Control of internet use, ownership, and censorship by the government encroaches on freedom.

WOMEN'S RIGHTS MOVEMENT

Women, in some men’s lives, are expected to bear children, be silent, cook and clean house, be dependent on their husbands, and respect males in all circumstances of life.

Professor Rosen addresses the issue of property by lecturing on women’s rights and the right of government to claim eminent domain on property owned privately that can be taken for the public good.  In addressing women’s rights, Rosen reviews the history of Roe v. Wade and implies that the judicial system may have acted too quickly by not allowing the States and the general public to fully address the issue.

Rosen is equally conflicted by the government’s right to claim eminent domain.  He notes how confiscation of private property at fair market value has a spotted history of success when claimed by the government for the public good.  In some cases, the taking has resulted in failed projects; in others, like Baltimore’s revitalized harbor, the taking revitalized a neglected and deteriorated landmark.

EMINENT DOMAIN

Rosen notes how confiscation of private property has a spotted history of success when claimed by the government for the public good.

The American judicial system encroaches on the freedom of women to choose and the fifth amendment clause says private property shall not be taken for public use, without just compensation.

The private sector uses the internet to define consumers.  What an internet user purchases becomes a profile factoid used to pander to consumer desires.  The detailed profile can affect the price advertised and the personalized pitch made by a retailer.  Private sector search engines use consumer profiles to pitch private sector businesses for advertising.  Consumer manipulation by the private sector encroaches on freedom.  Web-based profiling steers the public by profiling individuals and algorithmically congregating personal information.

ONLINE PRIVACY

What an internet user purchases becomes a profile factoid used to pander to consumer desires.


Terrorism is like lighting in a storm; i.e. it is a force of nature that can strike anyone at any time.  Governments have changed the world of travel by invading the privacy of minds and bodies to reduce the chance of a terrorist act.

9.11.01TRADE CENTER ATTACK

The Trade Center tragedy redefines security for America and the world.  September 11th convinces the world that there are no unbreachable terrorist constraints. 

GUANTANAMO

Rosen suggests governments cross the line when citizens are detained or incarcerated for what they think rather than what they do.  The fear one has is that thought becomes grounds for prosecution. 

To the extent that terrorism is like lightning in a storm, one can only wait for the storm to pass.  Invading one’s privacy and arresting citizens for what they think is a slippery slope to totalitarianism.

PREHISTORIC HUMAN KIND

When the first man and woman joined together as a couple; when the first tribe became a hunting and gathering troop, and when the first hunter-gatherers became part of a farming community, freedom diminished

There is less and less room for nation-state nationalism.  Encroachment on privacy, property, and free speech are inevitable in the 21st century (and beyond).  Freedom’s encroachment is an inherent part of civilization. 

Despite Brexit and nationalist sentiment of Trump supporters, all human beings are citizens of one world.

The last lecture in Rosen’s series is about the right to be forgotten.  Now, we are citizens of nation-states; tomorrow we will be citizens of the world.  With each regrouping, there is diminished freedom. 

The last bastion of freedom will be “the right to be forgotten”. 

It will be a programming code designed to volition-ally erase one’s identity.  This volitional reboot will be with less rather than more freedom because of the nature of becoming part of a larger human congregation.

Professor Rosen offers an excellent and informative outline of America’s history of privacy, property, and free speech.  A listener will draw their own conclusions about present and future freedoms from Rosen’s lectures.  My view is that freedom has always been thankfully limited.

A MODERN MACHIAVELLI

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.com

Human Action (A Treatise on Economics)

Written by: Ludwig von Mises

Narrated by: Jeff Riggenbach

LUDWIG von MISES (1881-1973, THEORETICAL ECONOMIST OF THE AUSTRIAN SCHOOLD, INFLUENCED HAYEK AND FRIEDMAN)
LUDWIG von MISES (1881-1973, THEORETICAL ECONOMIST OF THE AUSTRIAN SCHOOLD, INFLUENCED HAYEK AND FRIEDMAN)

America is on the threshold of the largest tax change since Ronald Reagan’s presidency.  If past is prologue, trickle down economics will not work, the deficit will rise, and the poorest will  be victimized.  The genesis of the delusion of trickle down economics comes from interpretations of a modern Machiavelli.

Ludwig von Mises is a twentieth century Machiavelli.  This near 48-hour audio book details a theory of economics that will offend modern liberals, expose weakness of libertarians, and vilify the new American President’s nationalist policies.  The venality of treating government as a business is a mistake of monumental proportion.

Approaching von Mises as a devil incarnate is unfair.  His beliefs are pilloried by today’s liberals as loudly as aristocrats and rulers vilified Machiavelli in the 16th century.  Like Machiavelli, von Mises looks at the world as it is; not as it ought to be.  His observations cut at modern liberal, as well as anarchic, views of highly regarded liberals like Ralph Nader, Martin Luther King, Norm Chomsky, and alleged conservatives-like President Trump.

In von Mises book, Roosevelt’s New Deal is vilified.  Additionally, von Mises vociferously disagrees with the liberal John Maynard Keynes’s

JOHN MAYNARD KEYNES (1883-1946)
JOHN MAYNARD KEYNES (1883-1946)

economic interventionist creed. Ironically, Donald Trump may be the most interventionist President since FDR with a scatter brained economic plan that von Mises would equally vilify.

Von Mises observations have historical credibility.  What they do not have is social conscience.  In fact, he suggests social conscience is a fiction perpetrated by populists to distort the value of capitalist economies.  Like Machiavelli, von Mises observes the nature of human beings, and recognizes their inherent irrationality and moral weakness.  Von Mises illustrates numerous examples of human irrationality; beginning with market consumption, and ending with entrepreneurial ambition.  Donald Trump exemplifies von Mises argument that humans are irrational, greedy, power-hungry, and vain.  For President Trump to believe taxing imports by 20% makes Mexico pay for a useless five-billion-dollar wall is absurd.  The American consumer will pay for that wall in increased cost of Mexican produce and manufactured goods.TRUMP AND FREE TRADE

Von Mises criticizes famous economists like David Ricardo for introducing politics into economics.  Von Mises argues that the drive for money, power, and prestige are inherent in an entrepreneurial capitalist system.  Von Mises argues that government officials who profess social conscience distort free enterprise by picking winners and losers.  When politicians pass legislation that aids one entrepreneur over another, it distorts the driving force of capitalist economies.  He equally vilifies government leaders who impose tariffs on international trade.  Von Mises explains that the fallacy of government leaders who pass favoring legislation is that the real mover of the economy is the consumer; not the producer.

FRENCH REVOLUTION
Von Mises believes labor has a choice.  They can work for low wages or remain idle.  The fallacy of that argument is the inherent unfairness of not having enough income to live creates revolutionary discontent.

The logical extension of von Mises’ theory is that any government planning or action that affects an entrepreneur’s willingness to take a risk to produce product, or service a customer’s perceived needs, is bad for society.  To von Mises, efforts to organize labor is an interference with capitalist entrepreneurs because labor is not taking a risk. Von Mises argues that labor costs will find its own level by being an automated tool of the entrepreneur; subject to hunger and deprivation if they choose not to participate.  Von Mises point is that the entrepreneur will pay what he/she must to have labor available, but no more than what the end-product consumer is willing to pay.  Von Mises believes labor has a choice.  They can work for low wages or remain idle.  The fallacy of that argument is the inherent unfairness of not having enough income to live creates revolutionary discontent.

UNION MOVEMENTUnions offer a vehicle for leveling the power between businesses and labor.  To not allow unionization is tantamount to favoring businesses that are no longer competitive but are today recognized as an economic equivalent of individuals.  Not to give unions a place “at the table” is morally, ethically, and economically unfair; particularly in industries that are no longer entrepreneurial.

Another von Mises’ observational theory is that government policy should have no role in subsidizing new inventions, new drugs, the ecology of the world, or the elimination of slavery because such policies interfere with pure capitalism. This reinforces absurdist arguments of libertarians.

NATIONAL INSTITUTE OF HEALTH
NATIONAL INSTITUTE OF HEALTH (RESEARCH INSTITUTE FINANCED BY THE GOVERNMENT.)

American creativity has historically been benefited by government subsidization of technological advances.  (President Putin noted in a 60 Minutes’ interview that creativity is his most admired quality in the American economy.) The speed of improvements in health, education, and welfare historically increased with government subsidization of drug research, public education, and the energy industry.

THE CIVIL WARThe fallacy of von Mises’ theory lies in the framework of theorists.  It ignores human existence by hiding behind the unquantifiable nature of society.  One may argue that America’s Civil War had nothing to do with the elimination of slavery.  (Von Mises suggests that slavery was abolished because it became too expensive; not because it was morally and ethically reprehensible.)  One may argue that Roosevelt’s New Deal was a failure.  One may argue that the Marshall Plan after WWII rewarded failed nations.  One may argue that George Bush’s and Barrack Obama’s decisions to bail out the American economy interfered with pure capitalism. History suggests von Mises is wrong.  Government intervention can be good as well as bad.  (Bush unilaterally agreed to lend $17.4 billion of taxpayers’ money to General Motors and Chrysler, of which $13.4 billion was to be extended immediately.)

Von Mises lived into the 1970 s.  How could he ignore the moral and ethical iniquity of slavery, the value of the Marshall Plan, government subsidization of the American banking system, financial incentives for the energy industry, and the billions spent to advance technological inventions?  Those are good examples of government intervention.  On the other hand, building a wall between Mexico and the U.S. and levying a 20% import tax is a bad government intervention.TRUMP'S WALL 2

American capitalism works because of the checks and balances written in the Constitution.  Von Mises theory is based on valid observations but social conscience, whether statistically measurable or not, must be a part of decisions that affect the lives of millions.  Mistakes will be made, and have been made, but economic statistics cannot be substituted for pragmatism.

POLITICS AND ADMINISTRATION

Audio-book Review
By Chet Yarbrough

(Blog:awalkingdelight)
Website: chetyarbrough.blog

The Courage to Act: A Memoir of a Crisis and Its Aftermath

Written by: Ben S. Bernanke

Narrated by: Grover Gardner

Ben Bernanke (Author, Former Chairman of the Federal Reserve.)

THE FEDERAL RESERVE

Politics and administration is a marriage of necessity.  Ben Bernanke writes a “nuts and bolts version” of the role of the Federal Reserve in the United States during the economic crises of 2007.  Bernanke is the chairman of the Federal Reserve during the near collapse of the world economy.  The story Bernanke tells is consistent with most details revealed by Tim Geithner and Henry Paulson (the former Department of the Treasury Secretaries) during the worst part of America’s 2007-2008 global financial crises.

BREAD LINES IN NEW YORK 1933

BREAD LINES IN NEW YORK 1933

What Bernanke adds to Geithner’s and Paulson’s version of events is a more transparent understanding of how American politics and administration dealt with the greatest economic crises since 1929. These three managers, along with elected officials and other public administrators, cussed, discussed, agreed, and disagreed on actions taken to stabilize the American economy.  Without a level of cooperation between politics and public administration, it is entirely possible America would be in the middle of a second great depression.

THE BLACK SWAN

The mortgage crises of 2007 is a “Black Swan” event in American history.  A “Black Swan” is a metaphor for an event that is generally unforeseen that changes the direction of history.

The packaging of real estate and home mortgages of varying levels of security leads to the mistaken belief that housing and commercial land prices will always increase as the economy expands.  This false belief led to sales throughout the world of figurative IEDs (Improvised Explosive Devices”) that bankrupted individuals, corporations, and Nation-State economies.  The shock waves of these instruments of economic mass destruction continue to impact the world economy.

QUANTS

QUANTS–COMPUTER TECHNICIANS WHO CREATED MORTGAGE BACKED DERIVATIVES.

With the advent of computer technology, the added assets in derivative instruments became so complex that individual human judgement of value is clouded.

With each individual asset added to a conglomeration of houses, property, and/or stocks–value changes.  The change is meant to spread risk and increase the financial stability of combined assets.  However, as similarity of combined assets accumulate, the created aggregate becomes more (rather than less) vulnerable to market change.

MORTGAGE RATING COMPANY LOGOS

The rising risk of these combined securities is compounded by “independent” rating agencies.  If vulnerabilities are not clearly understood, sellers of these security conglomerations rely on ratings from analysts that underestimate volatility.  That misunderstanding is harmful, because both sellers and buyers are incentivised to buy and sell a security that is not clearly understood. 

When one of the derivative assets begins to lose value; particularly if the asset is related (like land and vertical construction), all assets in the packaged security are infected by loss of value.

Further, rating companies lose their objectivity.  They may be incentivized by the same companies they are evaluating; or they may be paid for their review productivity rather than the quality of their investigation. Greed takes over both buyer and seller.

Though this explanation of derivatives is undoubtedly too simply described in this review, it is shown in Bernanke’s, Paulson’s, and Geithner’s books to have been a proximate cause for the loss of trillions of dollars in the world economy.

What makes Bernanke’s book interesting is his explanation of how politics and public administration worked together to right America’s sinking economy.  Even today, recovery is not complete but the ship-of-state did not sink.  “Working together” is a qualified description of what happened based on Bernanke’s view.  There were bitter disagreements among elected and administrative agents that could only be resolved with an appreciation and exercise of politics.

Politics have become synonymous with lying and misrepresentation in the modern world.  Some say President Trump exemplifies that belief. 

Democrats were not listening to middle class America.  Politics represent the will of people who are being governed.  Without politics, the best intentions of administration devolve into ineffective and autocratic actions that fail to serve the needs of a country’s citizens.

Not to defend Trump, but his election is a consequence of ignoring the importance of politics in determining what is right or wrong in America’s democracy.

CHECKS AND BALANCES

On many occasions, Bernanke shows how elected officials remind administrators of the real-world impact of their policy actions.  The give and take of politics is the bridge between a bureaucratic idea and citizen impact. 

The Affordable Care Act is not perfect because of politics but modifications made are the result of political input from the constituents of American Democracy.

Those constituents are companies, professions, and individual citizens represented by elected officials who work with government agencies responsible for administration.  It is a messy process, but politics is a bridge between thought and deed that can only be replaced by autocratic dictatorship; i.e. a dictatorship that inevitably has unintended consequences; that ignores politics, and dictates what is good.

Parenthetically, the crises of 2007 is repeatable.  Today’s political climate is to deregulate the economy.  The political intent of deregulation is to unleash capitalism.  However, deregulation gives reign to both good and bad qualities of human nature.  As Mark Twain noted, history does not repeat, but it does rhyme.

The Federal Reserve, the Departments of Treasury, and America’s elected officials successfully saved America from a second Great Depression. 

It is politics; i.e., the political interface between President Bush, President Obama, Treasury Secretaries Paulson and Geithner, Federal Reserve Chairman Bernanke, Senators and Representatives of Congress, and the Supreme Court saved America.