Warren Buffett, Crony Capitalist?

Remember the letter that President Perry (or was it Romney) sent to the Danbury Tea Party in 2015? Here is an excerpt:

I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should "make no law respecting an establishment of business, or prohibiting the free exercise thereof," thus building a wall of separation between Economy & State.

Yeah. It's a pity that they left that bit out of the Bill of Rights. Because what we have, in Hurricane Obama, where politics and business are all mixed up, is an "establishment" or virtual nationalization of business. And just as you can't trust divines to get mixed up in politics or politicians to get mixed up in religion, surely we can all agree now that it is death to let politicians meddle with business. Just as nobody would think of letting businessmen run the government.

Exhibit A in all this is Warren Buffett, Sage of Omaha. He's just ponied up $5 billion for some preferred shares in Bank of America, currently fingered as the weakest bank. That comes a couple of weeks after Buffett penned an Obama-friendly op-ed in the New York Times and just before Buffett hosts an Obama fundraiser at the end of September.

Perfectly harmless you say? OK, let's put Republicans in all the speaking roles. Remember when old Sam Walton penned a Bush-friendly op-ed in the Wall Street Journal, then invested a few billion to rescue bankrupt Enron, then hosted a Bush fundraiser, all the time getting calls from the president on economic policy? You don't remember that? Of course not. Neither Sam Walton or the Bushies would dare to mount such an obvious staging of crony capitalism.

If I were Warren Buffett in the US in 2011, I would be hedging my political bets. Look here. Berkshire Hathaway is valued today, August 26, 2011, at $172 billion. At any moment some political aide at the White House could sicc the SEC or the Justice Department or the new Consumer Financial Protection Bureau on one of Buffett's businesses, just as the SEC and the EPA are currently hounding the horizontal "fracking" business. Right now the jackals, from New York State Attorney General Eric Schneiderman to Elizabeth Warren of the Consumer Financial Protection Bureau, are hounding Bank of America, trying to get BofA to pull the nation's mortgage chestnuts out of the fire.

How do you get the jackals to go away? Call in Warren Buffett!

Let's go back 100 years, to the aftermath of the great Crash of 1907. Back then J.P. Morgan got the richest men in America, locked them in a room, and wouldn't let them out until they had triaged the US economy. They let the insolvent firms go to the wall, the healthy ones survive on their own, and lent money to the firms they thought would survive with a bit of help. They did all this with their own money.

Fast forward a couple of years and the politicians had their progressive knickers in a twist over the "money trust." Just a few men, you see, seemed to own most of American business. Yeah. No doubt. And those were the men who, with Morgan stiffening their backs, kept their heads in the market meltdown when everyone else was losing theirs.

I'm sure that Warren Buffett is an honorable man, not a crony capitalist. But in times like these, when Hurricane Obama could rip the roof off your business just in order to narrow the odds on a marginal state next year, what businessman in his right mind would not be paying protection money to the politicians? After all, that's a nice business you got there, Mr. Billionaire. It sure would be a pity if something happened to it.

Deconstructing Sam Harris

Sam Harris is the chap who, in The End of Faith, asserts that we need to develop a "rational ethics" instead of the transcendental ethics handed down by prophets from God.

Problem is, "rational ethics" is rubbish. You can't derive ethics from reason; that's why humans invented God. Someone has to be the "decider" as President Bush used to say.

In fact, of course, Sam Harris is a conventional liberal espousing all the liberal pieties, and this week, (per Instapundit), Timothy Sandefur has his fun with Sam Harris and his rational ethics which always turn out to support the existing ruling class and its commandments. In other words, God is a liberal.

Instapundit also links to a law review article about the foundation of law, God, and little godlets. I didn't know that humor was allowed in law review articles.

Leaving aside the question of whether God exists (and my personal view is that, since the death of God, the mystery of the nature and origin of the universe only gets curiouser and curiouser) there has to be, in any society, a declaration of commandments. Someone, or some thing, such as a Constitution, speaks with the voice of God, and everyone scurries around trying to hear the voice of God.

In my view, the point of laws and constitutions and ethics is human flourishing in its widest sense. You can set up a a terrestrial paradise, such as Communism, but if it doesn't work then humans will chuck it out. But every social system is an act of faith. Our current democratic capitalism is an act of faith. We believe that the combination of free market and the circumscribed rule of the majority is the best system yet developed for human flourishing. We know, all of us except the Sam Harrises of the world, that the authoritarian welfare state version of democratic capitalism is seriously flawed; it needs reform. The Obama administration is an effort by the Sam Harrises to give the authoritarian welfare state one more college try.

But we know that the vast administrative state is a mistake. We knew it back when Charles Dickens wrote about the Circumlocution Office and its Barnacles and Stiltstockings in Little Dorrit. We were shown an alternative to the administrative state back in the 1980s when Ronald Reagan led the US out of the stagflation of the 1970s, but liberals insisted it was all a mirage.

Ben Franklin said it all: "Experience keeps a dear school, but fools will learn in no other." Now liberals are going to learn the hard way in the dear school of the 2012 elections; it will be an annus horribilis for them, but they refused to learn from the experience of the 1980s.

We can only hope that the America that emerges from the current mess is a better America.

Democrat-voting Conservatives

For some reason it is considered a bad thing that few minorities vote Republican. It's a failure of Republican outreach, or outright racism in the Republican Party.

Michael Medved tries a variant of this. He quotes the August 1 Gallup Poll that has 41 percent of American adults call themselves "conservative" against 21 percent that call themselves "liberal." How come then that President Obama won the 2008 election 53 percent to 47 percent? The reason is simple:

The voters who support Obama in spite of ideology are to a great extent black, Hispanic, and Asian conservatives who feel drawn to right-wing ideas but remain allergic to the Republican Party.

Even in 2010, "In national balloting for House seats, only 9 percent of black voters backed GOP candidates, along with 38 percent of Latinos and 40 percent of Asians."

(Wow! 38 percent of Hispanics and 40 percent of Asians? That's better than I thought.)

The reason for the low minority share for the GOP is usually attributed to white racism and the idea that the party is a "closed country club welcoming only elderly, white, Christian males." So what's the GOP going to do about it? Huh?

I think this misstates the problem. The reason that minorities vote Democratic is that the Democratic Party is a party that celebrates hyphenation. If you think of yourself more as black, or Hispanic, or gay, or feminist rather than American then the Democratic Party is the party for you. And nothing that Republicans can do will change that.

The Republican Party is the party of unhyphenated Americans, people who believe that if you get an education, get skills, work hard, and pay your taxes, then America will deliver. The Democratic Party is the party for people who believe that without governmental intervention, they are screwed.

The Republican notion is the counter-instinctive idea that grew up in the last half-millennium and is packaged in Adam Smith's idea of the "invisible hand." The natural human instinct is to trust in family and the kindred and the tribe, and to be suspicious of the chaps down the road who might launch a dawn raid on our village any day. Trust a stranger or a chap from a different ethnic group? You gotta be kidding. Yet the fact of the last 200 years is that you can trust strangers, usually. If you do, and if the stranger is indeed trustworthy then everyone benefits. And capitalism, down the decades, has developed pretty good ways of figuring out who is trustworthy and who is not.

The two most Democratic groups are blacks and Jews. They are the folks that are the most scared of Republicans: blacks because Republicans are white and Jews because Republicans are Christian. They are scared because their leaders work constantly at making them scared. Any moment black leaders say, whites will break out the white sheets and turn back the clock on civil rights. Any moment, liberal Jewish leaders insist, Christians will start a new pogrom against the Jews. The current effort to brand the Tea Party as white, Christian, and racist is transparently part of this effort. The only way to make 90 percent of any group to agree on something is to scare them witless.

The way for Republicans to detoxify the brand has to lead through this shameless fear-mongering of black and liberal Jewish leaders. Shame the black and Jewish leaders and short-circuit their fear-mongering and you'll find the numbers moving in the Republican direction.

Let's ask a different question. Why is it that 38 percent of Hispanics and 40 percent of Asians voted GOP in 2010? Could it be that their leaders don't work night and day to frighten them off the Republicans?

The Liberal Story Falls Apart

In BigHollywood.com Lawrence Meyers writes about the way that the liberal "story" dominates our lives. Here's how it grabs our eyeballs every day in movies and TV dramas:

Corporations are evil — using unwitting poor Africans for pharmaceutical testing (Constant Gardener) or dumping toxic chemicals into nature (Erin Brockovich, A Civil Action) or responsible for the end of mankind (Rise of the Planet of the Apes)... Radical Muslim terrorists are never villains. Trial lawyers are crusading do-gooders.

Humans understand everything as a story, and liberals, for the last century, have been the main story-tellers. It is their stories that dominate our culture and their stories that dominate politics.

When a criminal suspect fails to convince a jury of his innocence, we say that his story "fell apart" or "failed to hold up." It reminds us that we keep our stories until they fall apart and fail us.

Right now, the liberal story is falling apart, and just about all a conservative needs to do is point to liberal stories lying around in pieces on the floor.

Roger Kimball points to the liberal story about the recession that is cluttering up the national floor right now. Here's how you create a story that fails to hold up.

1. Make $1.5 trillion of risky loans to people you know are unlikely to repay them;
2. Allow financial instituions to slice, dice, and repackage the loans, leveraging them up to 30-1;
3. Require financial institutions to value their assets according to strict “mark-to-market” rules, thus denying businesses needed flexibiity during a crisis;
4. Impose onerous new regulations not only on financial institutions but on U.S. business across the board;
5. Keep talking about raising taxes so people and businesses pay their “fair share,” even though 43.4 percent of those who file pay no income tax at all;
6. Create an economic leviathan in the form of health care legislation that will simultaneously worsen health care in the U.S. while also making it wildly more expensive;
7. Keep emphasizing “green” jobs and “green” energy production at a time when unemployment is above 9 percent and energy costs are skyrocketing;
8. Invest billions of dollars of the taxpayers’ money into failing private businesses with huge union obligations to keep the business going for a while longer so that the unions can squeeze more money out of the taxpayers.
9. Ignore the warnings of credit-rating agencies when they warn you are spending too much money and do not have a credible plan to address your skyrocketing deficits and then blame them when, months later, they downgrade your credit rating.

I recently had a e-mail exchange with a liberal still desperately hanging on to the narrative. Here are some of his comments:

• How much are the Koch Bros and Rove paying you and other Tea Party supporters to put out this garbage?
• The REASON we paid off the huge WWII debt was the emergence of a middle class, union benefits and wages, and a GI Bill that allowed millions of GI's to go to college and fuel the industry in the 1950's and 60's
• The real beginning date of our demise was 1980. Ronald Reagan was elected, the corporations began their ascent to total power and control and now young man, we live in a corporate oligarchy.
• 34,000 lobbyists in DC. Paying for campaigns and writing bills for their employers.
• 2% of the US owns 63% of the wealth. The top 2500 corporations paid no Fed Income tax in 2010. $2.5 Trillion in corporate cash on the sidelines creating NO jobs.

It's hard to get annoyed with that sort of stuff. It is the story of the wheels coming off the liberal "whig history," the tale of social progress directed by wise legislation and socially conscious intellectual leaders that moves us closer and closer every year to a just and equal society.

It is all falling apart right before their liberal eyes, and they can't believe it.

Corporations are People

It's interesting to read The Nation's reaction to Mitt Romney's "Corporations are People" remark. John Nichols obviously thinks that the activists of Iowa Citizens for Community Involvement scored a real coup by getting Romney to admit the truth of his oligarchic agenda.

When Romney began to ruminate on how he would not “raise taxes on people,” the Iowa activists shouted: “Corporations!”

As the crowd began to cheer on the idea of taxing corporations that enjoy the benefits of government bailouts and subsidies without—in all too many cases—giving anything back, Romney became incensed.

The former corporate CEO shouted: “Corporations are people, my friend.”

The crowd shouted: “No, they’re not!”

“Of course they are,” replied Romney, with a “there, I said it…” statement that he and his staff would later confirm as his true faith.

It is curious to experience just how central to the leftist faith is the idea of corporations as evil. And that a "corporate oligarchy" rules America.

One of the central articles of faith is a conspiratorial interpretation of the mainstreaming of the limited-liability corporation in the notion of immortal "corporate personhood." Lefties think that the development in law of corporations as entities separate from their managers and owners is a deep dark conspiracy to take over the world.

But as Thomas Crump reminds us in The Age of Steam, the truth is more prosaic. Corporate personhood was invented in the usual fudge job of legislators responding to crisis. In the mid 19th century limited liability corporations were needed in the development of railways. The risks and the scale of railway development just could not be met with informal methods of incorporation where all the equity investors were liable for debts of the enterprise without limit. People wouldn't sign up for that kind of risk. The limitation of liability meant that investors could routinely put their money into speculative enterprises like railways without worrying that mistakes or malfeasance by the managers could wipe out not just their investment bu the rest of their assets. And railways dwarfed the manufacturing industry in the mid 19th century.

The curious doctrines of our lefty friends require them to construct a narrative of corporate malfeasance. If there weren't a corporate oligarchy they would have to invent it. Otherwise there is no warrant for big government.

The immense value of the Obama administration is that it seems determined to utterly delegitimize the progressive project and its monument, big, unjust government in its massive effort to tax and regulate everything that moves. The effort bids fair to destroy the free-market economy.

The problem is that until we get there, the American people are going to suffer real hardships as the whole economy gets sucked into a maelstrom of liberal folly and fantasy.

Stitching Novak and Cahoone

Michael Novak, in his book The Spirit of Democratic Capitalism, divides modern society into three sectors: political, economics, and moral/cultural. That is the spirit of democratic capitalism, a polity in which the powers and the activities of politics, economics, and culture are separated, so that no single sector dominates the others. I have called Novak's idea the Greater Separation of Powers, extending the notion of the separation of powers from governmental separation of the legislative, executive, and judicial branches to society as a whole. Separation of church and state, for sure, and also separation of economy and state.

But I've recently read Lawrence E. Cahoone's Civil Society: The Conservative Meaning of Liberal Politics. Cahoone critiques the political culture of "neutralist liberalism", the idea that "government is to remain effectively neutral in questions of substantive morality and the meaning of human existence," and develops a sophisticated outline of civil society: what it is, institutionally and culturally. I am wondering how to stitch the two notions together.

Come on, you say, surely it is obvious!

OK, I give in. Of course it is obvious. Cahoone's civil society is simply Novak's moral/cultural sector.

Cahoone writes that the conditions of civil society include: the autonomy of the social, social equality, spontaneous order, institutional pluralism, and market economy. That is, civil society needs all these conditions in order to flourish and thrive. Novak writes that democratic capitalism is a society of “three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is pluralistic and, in the largest sense, liberal." "A democratic capitalist society is, in principle, uncommitted to any one vision of a social order."(p67) Therefore moral-cultural institutions belong to the system, but they must not command the system. History is understood as "emergent probability." Community is relaxed to the notion of "free persons in voluntary association." Loose as its community is, it still extols the communitarian individual, the bourgeols that practices "fellow feeling, common sympathy, and benevolence" while pursuing self interest.

What I find in Cahoone is a sharper definition of civil society, differentiated from political and economic culture, that strengthens and extends Novak's three-sector model. He identifies principles that can be used by civil-society proponents in the great moral movement ahead. Autonomy of the social means that culture and values come from civil society and not from politics, which is about power, not living together. Spontaneous order means that we cannot have economic or moral direction from the political sector because economic and moral order arise spontaneously from people living and working together. They cannot be rationally developed in a government committee room. Institutional pluralism means that different moral and cultural traditions will be competing for the right to be taken seriously and enrolled in the cultural consensus. And this civil society must be located next to a market economy. Civil society is not itself the market economy. It needs the market ecoomy, but only abuts the market economy. "The rules of civility are not the rules of the market."

The train wreck of Obama politics and Obamanomics is about to utterly discredit the current ruling class of the educated elite. It will create an opportunity for new ideas and a new culture to replace the failed authoritarian welfare state. Just as Eastern European dissidents discussed Novak's Spirit in samizdat chapter by chapter as they were planning for the end of socialism, so we must study Novak and Cahoone so we will be ready to lead the American people to a better future.

What Can You Say?

Over the last week I've been exchanging emails with a man that identifies himself as an "ex-Goldwater Republican." He rages about the corporate oligarchy and thousands of corporate lobbyists, and generally emits left-wing political memes. In other words, this chap is a Democrat. But he's a disappointed man: at 66 he is earning half what he did ten years ago.

When I asked him what he would do about the "corporate oligarchy" he responded thus:

You either, from the ground roots, elect dedicated people that will over time rewrite laws, enlist oversight and regulations and turn this around OR as a 64 year old female client said yesterday, wonder what the reaction would be to 3 or 4 million armed people , converging on the Capital or Wall Street? There is your answer. 1790 France.

I suppose that makes sense. If you believe that corporations are stiffing the American people, rather than being the cause of raising income from $3 per day to $120 per day since 1800; if you believe that the financial system is a crock, that the wealthy should give up their wealth in redistribution, and if all the left-wing economic ideas of the last 150 years have failed, then political or revolutionary action is the only remaining option.

The problem is that government is force, politics is power, and we humans are social animals not soldier ants. Neither government or politics grow a single corn plant or produce a single stick of lumber to build a house.

I've been wondering over the last year or so about the incessant corporate exposé journalism of the left. Every left-wing magazine, almost every month, will feature an exposé of some corporate malfeasance.

I've decided that the endless attack on corporations is a necessary prop to the left-wing belief system that justifies government force. If there weren't outrageous crimes from the corporate CEOs then you couldn't justify government regulation and supervision of the private sector. You would say: well, there are bad apples, but still...

Alas, our lefty friends have trapped themselves in a closed system in which government force is always the answer. Because everything that goes wrong is an economic crime, and every crime must be met with a new law to stop it. The result is a spiral dive into economic madness, as every detail of economic life becomes dominated by government and politics instead of by the demand of the consumers.

How do you talk to such a person? How can you break the spell of the closed world of ideas? Who knows? I just try to stay polite and return insults with friendly replies.