We need to make something!

I wrote this in August of '07:

"So today we find ourselves where the two humors of government and enterprise are out of sorts. Our state has ceased to invest in its people and places with the vigor that made us competitive, and our enterprise is at the beginnings of producing either inferior or non-existent products. Over the past month the world's stock market has plunged across the world as we are coming to the startling realization that the past decade's growth has been leveraged almost entirely on credit, with all production stemming from what looks increasingly like bad debt. This is really bad. We're good at spending money but we just don't make anything anymore."

...the only thing that's changed since then is the disharmony between government and the private sector. All of the sudden they seem to be getting along just fine. The public may not be comfortable with a $700 billion bailout package for financiers, but this is not the same as bailing out your screw-up brother for the fourth time. Without credit, we've got nothing. Without the credibility of the dollar we are (at best) a well-to-do banana republic.

The bailout is not such a bad thing in itself.

First of all, most of the $700 billion is good debt. In those bundles of mortgage-backed securities are many, many 30-year loans, and even adjustable mortgages where people are on time every month. Imagine what would happen to those securities if credit dried up, and those same people lost their jobs as employers' access to capital disappears. Most of that $700 billion will come back to the treasury; compare that to the potential losses in revenue if everyone is unemployed, no one pays property taxes, and foreign creditors start getting behind the Euro.

Second, moral hazard is an issue, yes, but even your screw-up brother can be coerced into straightening out. Tough love isn't the only way. Consider the bailout a girlfriend who your brother gets pregnant, and who wants to move in and settle down. It's a gamechanger, especially if she makes him get a job and stop going to poker games and online betting sites in the Caymans.

Third, the American taxpayer is the only group aside from the IMF that could come close to fronting this kind of cash, and it is the only entity that has the authority to enact real, enforceable reforms.

The biggest problem to me is around restructuring our economy to produce more than it consumes. We've all had in the back of our minds for years the latent fear that American buying power is leveraged entirely by credit, as opposed to people getting paid more for the value of their work and then choosing to reinvest that money back into purchases at WalMart and CarMax. It's like our whole system of production revolved around trading baseball cards.

It's not enough for the American consumer just to consume. That much is clear. We've got to make something, and make something the world needs. Anything else is a shell game. The rest of the world now sees the risk in predicating their own growth prospects on the US Treasury. Any rational producer of goods and services abroad must be scrambling to make sure their assets are diversified.

There needs to be investment in our education, infrastructure, health care system and of course, our industrial base. All of those areas attract business, foreign and domestic. Think of all of the American entrepreneurs just waiting to take a chance on their million dollar idea if only they could get a loan, hire 5 well-educated employees and provide them and their families with good health coverage. It is time for economic policy to work from the demand side for a while. Government doesn't need to front the costs of all of this investment, but it has a role in creating environments conducive to the success of American firms and American taxpayers alike.

Our greatest strengths are our optimism and our inventiveness. Government has a role in actively supporting both of those virtues, and coordinating them to serve the maximum number of people possible. Tax incentives, R&D grants, and even direct state investment in private enterprise are legitimate roles of the state. They also help to ensure that it is the American people who benefit, and not just the highest bidder in a game of market warfare.

The government can be a nag and a drag, but it keeps things from getting out of control. We need it just as much as the screw-up brother needs someone to tell him what to do.

To do nothing is an option, but it is a stupid one. To do nothing places ideology above seeking the best possible solution to a difficult problem. This crisis will not be without its losers. I think we're headed for some austere years, but that's OK. I think we needed it, and I think we'll come away as the dynamic, prosperous nation that we pride ourselves to be. Doing nothing is not enough, nor is just repairing the credit market. We've got to repair America. We've got to do everything.

Paper Tigress

I'll put my cards on the table now, before events have played out too far and say I think Sarah Palin will be a net negative on the Republican ticket. For all of the talk of suburban moms running out to get their hair cut the same way and mocking community organizers, there's just nothing there. There's nothing behind their own campaign aside from oil interests and a newly coopted (though not gullible) evangelical political establishment. On issue after issue after issue they are on the wrong side of American opinion.

In '04 the big issues were Iraq and terrorism. Reasonable people could disagree on what to do i.e., the policy debate. In '04 reasonable people could disagree on whose candidacy gave them more confidence in America, i.e., the emotional debate that Republicans are supposed to be good at, even though it's gotten them a slim, sometimes contested majority of delegates in the past two elections and nothing before that since Reagan and Willie Horton. In '08 the big issues are the economy, housing, energy, the environment, and yes, Iraq and terrorism. With the possible exception of energy American views heavily favor the Democratic positions. And at least some people actually like the Democratic ticket. Nobody liked Kerry and people's plastic detectors went off at Edwards.

I have never heard so much hair shirt wearing self flagellation as I've heard over the past week since McCain picked his running mate. Never has there been so much despair around an opponent's vice presidential nominee. Who cares if throngs of housewives show up at rallies, or if the Christian Right is suddenly energized by her candidacy? Neither are the voting bloc they once were. Neither women nor Christian evangelicals are that easy to pigeonhole or patronize. What's more, for those who are so easily swayed, they probably were waiting for an excuse to vote for McCain anyway, the so-called shy Tory, or the "Silent Majority". Now they've been flushed out, a known quantity, and not too bad. Meanwhile, Republican leaders are jubilant, telling America that Obama should have picked Hillary, spinning the yarn that personality will win over issues. Well coulda woulda shoulda. As if their candidates' personalities are automatically appealing while the other guy's aren't. What unbelievable hubris. Reminds me of Achilles.

For the remaining independents susceptible to this sort of identity politics, just wait until real flaws and doubts arise, as exist for McCain, Obama, Biden, both Clintons and both Bushes, and anyone else who has spent any time in the spotlight of a national campaign. Once her image is sullied by some offhanded comment, some sly gesture, something, adoration will shift either to resignation or revulsion; neither of which are good for turn-out. Obama was placed on a pedestal by many of his disciples, attaining feverish cult status that does not befit a democratic society. He was put on high and has since been taken back down to earth. Having it happen even before the convention will prove to be a blessing. Buyer's remorse has happened already for Obama, and the candidate survived in good shape. With just over 50 days to go, the Obama campaign can only trend up, while the McCain campaign will hold steady at best. People will become galvanized to his candidacy, but that would have happened anyway, or else we could have expected a blow-out, which no one ever expected.

Turnout matters too. Democrats have been at it for months, with bigger operations and more money than ever before. Republicans have one popular spokesperson they hired last week.

Even if Palin does well in the debates and public appearances, she won't be perfect, she won't appeal to everyone, and at the end of the campaign, she won't be president. Voters will vote for McCain, not her. We've seen the top of their game. That's all they've got. Expect more smears.

For any number of reasons, this race isn't over, but it won't be won or lost over who's on the ticket for vice president.

Who Me? Elitist?!

Reading Paul Krugman's column today in the New York Times about the decades of deft Republican maneuvering around people's resentment of the educated, urban classes, it hit me hard that many Democrats are still missing the point on a matter of human nature.

People don't like it when someone comes off as better than themselves, their families, their lifestyles. Krugman writes,

"What the G.O.P. is selling, in other words, is the pure politics of resentment; you’re supposed to vote Republican to stick it to an elite that thinks it’s better than you. Or to put it another way, the G.O.P. is still the party of Nixon."

...all true in my opinion, but it only captures half of the phenomenon in play in the presidential politics of our era. On one hand, the GOP has become masterful at presenting the public with "salt of the earth" candidates who look and sound appealing; walking tall about family values, religion, the flag. On the other hand, the GOP has all but abandoned American conservatism, such as it was, for the wholesale auction of our infrastructure, natural resources, labor market, and government services. Lots of talk about leaving us alone to determine our own fate as pioneers of the land, masters of our fate, as they take our civil liberties and pillage our nation's coffers. But I digress. I haven't even gotten in the same zip code as my point.

Sure, the Republicans are all of those things. But Democrats, especially the urban, highly educated ones like myself and the people I know, need to do a little self examination. Maybe we do look down our noses at the poor, or at least at the less educated, more uncouth among us.

Many are the times that I've been at a party surrounded by like-minded liberals who serve the public interest as activists, environmentalists, health policy types and general academics, and who haven't spoken to someone with a twangy accent beyond stopping at a Cracker Barrel off the interstate on their way to California.

Many are the times that I have been at New York cocktail parties with those "elites"; people who want to do good, people who chose not to go to Wall Street in favor of one non-profit pursuit or another. They aren't bad people. They have good ideas. But they are genuinely out of touch with even the suburban wage slaves among us, let alone rural people.

Many are the times I've heard comments about someone or something being "redneck" or "white trash", somebody making backhanded comments about my living in Atlanta, as if this were Mississippi in 1956. They may mean well, but they really have nothing to say to someone who didn't go to college.

On the flip side:

Many are the times where some guy in a golf shirt thinks I'm "one of them" and lets loose on how poor people are stupid and don't deserve any help if they can't help themselves.

Many are the times that I've encountered someone who comes off as "one of us" but truly detests their Mexican help, and goes to work for no other reason than to make money, and treats the poor with charitable condescention.

Many are the times that I've heard wanting to be left alone as an excuse for slovenly selfishness, and many are the times that I've heard piety used to judge others and control that individuality that is so important to the American psyche.

I work in rural health care with rural people every day. Most of them are nurses or administrators, some of them are just people who have worked hard to help their communities. A good number of the would call themselves Republican, conservative, pro-life. Coming to these towns with my grad school ideas and my expensive accent I need to be aware at every moment. I need to practice true humility, and just listen, find things in common, make small talk, come off as "normal". I need (and want) to do these things because otherwise people would shut down. In doing so, I've learned that there are greater virtues than being smart, other ways to live beyond the i-phone/indy-rock/liberal arts school track. It's been wonderful to see America past the interstates. There are excellent people everywhere.

It is a universal truth that the highly educated and urban will intimidate the less educated and provincial.
It is also true that intimidation often leads to resentment.
It is also-also true that resentment makes people not want to vote for those who intimidate.

Any perceived difference in education and sophistication runs the risk of that resentment.

For a party that wishes to destroy the rights of workers, the environment, wages and welfare, this knowledge is the ultimate political Trojan Horse, built by Nixon, run through the walls of belief by Reagan, and slaying Troy by Bush. The ultimate gift-turned-force-of-destruction.

Democrats need to be more savvy about this in their political strategy. They also need to ask themselves what it is that makes them judge the very people they wish to help. Emotion matters. People care what you think of them. Policy is justified only later. Elections are won on these truths. Republicans have proven time and again that it's not how rich your family is, how many houses you own, or what stocks are in your portfolio. It's how you relate. FDR was rich as sin but he genuinely cared about people. He genuinely helped. Clinton was born poor, and became a slick, underhanded, and successful politician, but he cares about people.

Democrats: tell the country that the other guy doesn't care. Tell them that you do. Then shut up and listen.