Romney's Capitalism

I keep going back to Romney's strange belief that "Syria is Iran's path to the sea," voiced in the last Presidential debate.  It isn't a new delusion. He's been saying this since February. Despite being repeatedly corrected, why does he keep saying it?  My only answer: because he is a CEO.  The contemporary CEO isn't accustomed to being told he is wrong.  Even when they are told, it doesn't seem to penetrate the layers and layers of exaggerated self-regard they carry around with them.  

Romney represents so many things that are wrong with contemporary American business culture.  His celebration of the "entrepreneur" and "job creators" is consistent with the modern MBA-class' idolization of the CEO.  Despite all of the evidence that successful organizations are successful because of their employees, their organizational culture, and a workplace architecture that facilitates creativity, guys like Romney continue to broadcast the idea that successful businesses are successful because of the solitary visionary occupying the executive suite.  This view provides the justification for the out-sized rewards top executives enjoy.

If you go back and reread Adam Smith you'll see that, among the many things he accomplishes in The Wealth Of Nations, Smith wants to criticize the accumulation of wealth for the mere purpose of accumulation. The problem with the aristocracy is they don't invest their wealth toward the production of improvements that increase the overall wealth of the nation. In The Wealth of Nations we find:

There is one sort of labour which adds to the value of the subject upon which it is bestowed: there is another which has no effect. The former, as it produces value, may be called productive; the latter unproductive labor.

Romney's world view, consistent with the modern investment class, is that any activity that generates wealth is productive effort.  Smith saw things differently.  For him, the aim is to increase the wealth of the nation; it is the effect of our use of capital in improving the overall well-being of society that matters.  Romney's singular dedication to increasing his own wealth - by acquiring companies and stripping them of their assets, by closing plants, by avoiding taxes, by hiding his money in off-shore accounts, where it is not reinvested in productive activity, but merely accumulates, like the enchanted objects in Bellatrix's vault - is a much more selfish impulse.

If we track the origins of our capitalist system back to Adam Smith, we see an original concern with the employment of capital to create value - not just advance personal wealth. I think the term "capitalism" is often used imprecisely. Let's be clearer. For Smith, a nation's wealth should be placed into the hands of those who will invest it - with "skill, dexterity and judgment" - in improvements in industry and production. A system or a society built upon this ideal could be called "capitalist." It seems clear that enterprises that focus mainly on wealth accumulation, rather than its productive use, aren't "capitalist" enterprises, at least not by Smith's reasoning. Such enterprises - spending exorbitant amounts on executive bonuses or luxury decor for CEO offices - are closer in spirit to the aristocracy Smith was seeking to displace. Consider this quotation from an essay by a friend of mine, Gordon Medlock:

There is an entire movement of progressive companies, business leaders, managers, and scholars who are making the case for restoring the human side of capitalism. For the past 40 years or more they have been demonstrating that successful organizations are the ones that value and respect their employees, understand the needs and requirements of their customers, create quality products and services that satisfy (and even delight) customers, that engage in continuous improvement initiatives, that run lean, that grow gradually, and that assume a long-term strategic perspective.

If Smith were to peek at the business page of a 21st century newspaper, he would agree with Medlock - this is closer to the spirit of capitalism he imagined than, say, short selling would be or Wall Street titans spending $1.2 million on a bathroom.

One of the forgotten contributions of Adam Smith is his philosophical text, The Theory of Moral Sentiments. There he laments that:

wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue.

What is virtue? For Smith:

to feel much for others and little for ourselves, to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature.

This sentiment, voiced by the father of modern capitalism, suggests how far afield many practices on Wall Street have strayed from Smith's original blueprint. Our economic system has always functioned best - and is most admirable - when capital is reinvested in ways that build value and benefit the wider society. This simple idea is utterly foreign to Mitt Romney.

Update: October 25.  An essay by Nobel Prize winning economist Joseph Stiglitz in today's New York Times makes these points (not surprisingly) better than I can.  Here's a quote from the essay that links to my blog posting yesterday: 

Tax havens discourage investment in the United States. Taxing speculators at a lower rate encourages speculation and instability — and draws our most talented young people out of more productive endeavors. The result is a distorted, inefficient economy that grows more slowly than it should. 

Romney and the Republicans are wrong: the simple accumulation of wealth, divorced from any productive use of that wealth, doesn't improve the nation's economy. It weakens it.  It removes capital from more productive uses, and draws talent away from more vital creative and productive activities.  It starves government, and prevents us from investing in research and education and other worthwhile policy and investment choices.  Romney's tax policies will reward exactly this type of selfish, wealth-accumulating behavior, and continue to bleed capital away from better uses.

Romney's 12 Step Plan

 In the second debate President Barack Obama said this:

Governor Romney doesn’t have a five-point plan; he has a one-point plan. And that plan is to make sure that folks at the top play by a different set of rules.

It's a skillful jab.  Whoever fashioned it for Obama deserves a pat on the back.  This isn't just campaign rhetoric.  It's true.  Thomas Edsall of the New York Times recently posted a fascinating essay that looks at the implications of a study from the National Bureau of Economic Research published by Northwestern economist Robert J. Gordon.  Gordon's paper argues that we may be at the end of a centuries-long arc of economic growth.  After several cycles of innovation and industrial growth, supporting growing levels of economic well-being for many of us on the planet, we may be at a crossroads, where innovation will be harder to come by, and sustained growth harder to achieve.  I'm not sure I'm convinced.  Innovation tied to biotechnology or clean energy might be able to kick start new cycles of growth.  But it is possible that our existing models for organizing economic life might be exhausted; we might need to think about redistributive models, sharing wealth to lift up those mired in poverty.  This is exactly the fear that Romney and his party share.  As Edsall puts it:

Affluent Republicans – the donor and policy base of the conservative movement — are on red alert. They want to protect and enhance their position in a future of diminished resources. What really provokes the ferocity with which the right currently fights for regressive tax and spending policies is a deeply pessimistic vision premised on a future of hard times. This vision has prompted the Republican Party to adopt a preemptive strategy that anticipates the end of growth and the onset of sustained austerity – a strategy to make sure that the size of their slice of the pie doesn’t get smaller as the pie shrinks.

This is an important observation and, I think, penetrating analysis.   I recently came across an ad for Romney which I found incredibly strange.  It uses the language of addiction to make an appeal to the American people.  It says:

I'll Deliver RECOVERY - Not DEPENDENCY

But as I thought about it, I realized there is nothing surprising here really.  Newt Gingrich and Romney, in fact the entire Republican field throughout the primaries, have been peddling this rhetoric about Obama fostering a culture of dependency.  And now it seems clear.  They think we are sick.  Addicts, depending on our fix of government-supplied money. Obama is our pusher, hanging out on the street corner, passing out food stamps and welfare and free health care.  Redistributing wealth.  

Obama was wrong.  Romney doesn't have a one-point plan.  He has a 12 step plan. He wants to put us all in rehab.   

Like Yourself, Stand Up For What You Believe, Be Righteous

I was reading the essay on the Clash in Lester Bangs' Psychotic Reactions and Carburetor Dung.  No one wrote about rock music better.  I laugh when I read Bangs, and that's a good thing.

But this time, I also saw some good advice for Barack Obama, as he prepared for his final debates with Mitt Romney, and, indeed, maps out a way to improve his connection with the average voter, not just leading up to the November election, but beyond, as he sketches out strategies for his second term.

Bangs loved the Clash.  He didn't have much of a stomach for feebleness.  Like Linda Ronstadt, who Bangs thought was a "mewly mouthed" simper-wimperer.  He didn't have any patience for punks who merely griped either, "sprawling in the muck yodeling about what a drag everything is." He was looking for a band willing to stand for something.  And he found it in the Clash.  Much of what Bangs said about the Clash can serve as a starting point for the Obama campaign as they think about how to sell what they have to offer.

The Republican Party, for all of their loud and forceful celebration of the institution of marriage, and "faith," and the Constitution and the "American spirit," in actuality, like Bangs' misanthropic punks, hates everything. Well, except money.  But they complain perpetually about the country - its character, its laziness, its neediness, its impurity.  But in the end, except for the few hard-core fanatics occupying the fringes, all of this pessimism, this rejection of everything, is a drag.  It's not what brings us into politics.  It's what makes us turn away.  That was Bangs' reaction to much of the early nihilist punk scene - it was dispiriting.

Bangs boiled it down to this:

(a) You can't like people who don't like themselves; and
(b) You gotta like people who stand up for what they believe in, as long as what they believe is
(c) Righteous.

But how do you define righteousness?

Being righteous means you're more or less on the side of the angels, waging Armageddon for the ultimate victory of the forces of Good over the Kingdom of Death, working to enlighten others as to their own possibilities rather than merely sprawling in the muck yodeling about what a drag everything is.

Like his party, Romney deplores Americans, starting with the intolerable forty-seven percent incapable of taking responsibility for their lives, living off the energy and entrepreneurial, wealth-producing gifts of better men. Aside from his uncompromising love of wealth, Romney is incapable of standing up for anything.  A moral and ethical chameleon, he has no core beliefs, adopting any position that might, for pete's sake, help him get elected.  And his appetite for office has no connection to anything righteous.  Protecting wealth is not a righteous cause, but it is his primary public mission.  The glorification of wealth, the impulse to ignore or diminish any other form of human accomplishment, to define success solely as financial achievement, is a practice that only makes sense in the Kingdom of Death.  The messy striving and stumbling and searching that characterizes normal human existence is something Romney has never known.  Yet that is what we do, it is the central feature of our lives, awkward and fearful and troubled as it may be.  That is how we accomplish things.  And I feel okay about that.  Who needs Romney to tell us all of that is insufficient?  That it doesn't count as real success? 

So how can Obama be positioned by some polls to lose to this guy?  His flat performance in the first debate, his professionalism, his sane matter-of-factness, is, for many, uninspiring.  Bangs had always heard that the Clash were vibrant live, wired, electric, yet the first night he saw them they were merely accomplished, professional, talented musicians, playing with skill.  And Bangs was bored by them.  Much of America sees Obama the same way.  They are bored by his professorial manner, his lack of drama, his talent and skill.

Several nights after being disappointed by the Clash, Bangs saw the performance he had been hoping for.  Part of it was the venue - a shit hole, that looked "like an abandoned meatpacking room - large and empty with cold stone floors and stark white walls."  Connecting with the spirit of rock and roll, one that thrives in garages and basement clubs and grimy bars, the Clash gave voice to something vital:

The politics of rock 'n' roll, in England or America or anywhere else, is that a whole lot of kids want to be fried out of their skins by the most scalding propulsion they can find, for a night they can pretend is the rest of their lives, and whether the next day they go back to working shops or to boredom on the dole or American TV doldrums in Mom 'n' Daddy's living room, nothing can cancel  the reality of that night in the revivifying flames...

That's what Obama has to find a way to capture.  He has to set aside his professionalism, even if it, like the Clash's, is in the service of righteousness.  He has to conjure those "revivifying flames," pulling people out of their doldrums, restoring them to life, as a first step toward engaging them in the struggle against the forces of the Kingdom of Death.

https://www.youtube.com/watch?v=1uXRyFo7yPk

Groan

Maybe it's watching the White Sox stumble down the stretch and blow the Central Division crown.  Or seeing the A's rebound from 16 games back at the end of June to overtake the Texas Rangers.  Or watching Barack Obama toss away the first debate.  But sure things don't seem so sure anymore.  Of course Obama will win, he is too far ahead in too many battleground states.  But things seem less comfortably certain now.

What a dispiriting debate performance by Barack Obama.  Three things tear at me.  First, Mitt Romney's performance - which was all smoke and mirrors, lies and evasions - nevertheless seemed more assured and confident than Obama's.  And that changes the dominant narrative of the last few weeks.  Romney's campaign was a campaign in free fall, stumbling from one gaffe to another, a comedy of errors.  Commentators were trying to position just how bad Romney was.  As bad as Dukakis?  Or Dole?  Worse, most seemed to say.  Even reliable Republicans like MSNBC's Joe Scarborough saw a candidate and a campaign as inept and clueless as any he could recall.  Now that reliable storyline, which had been so inescapable, that even Romney's staff had to admit he was a stumbling nincompoop on the campaign trail, has been pushed aside.  Romney is the comeback kid.

Second, as long as he was stumbling, Republican Senate candidates were racing to get away from him. Like survivors who didn't want to get pulled down by the Titanic as it sank, Scott Brown and Tommy Thompson and Linda McMahon were distancing themselves from Romney.  Creating dissent and discord in the Party, putting a wedge between these candidates and true-blue ideological donors and tea party leaning voters.  Brown and Thompson and McMahon's numbers dropped as Romney's did. What now, with Romney back on his feet?

Third, why didn't Obama discuss the auto industry?  In the long discussion about jobs, Obama could have taken back the momentum of the debate.  Here's what he needed to say.  Romney wanted the auto industry to fail.  As a captain of the investment class, Romney views the world as a simple landscape of winners and losers.  You bet on the winners, and cut your losses on the losers.  Walk away from them.    That's how Romney saw the auto industry, and that's how he viewed home-owners underwater on their mortgages.  Losers.  Walk away.  But that's not how responsible public officials should see things.  Unless you are the most rigid Randian Objectivist, public officials seek to mediate the impact of business cycles, cushion the fall, provide aid.  That's just what Obama did when the auto industry was teetering on the edge of collapse.  He engineered aid, and saved the industry, and all the jobs it provides.  General Motors is alive because of that.  Why didn't Obama tell that story?

Political Order in Changing Societies

The cluelessness of Republican neo-cons  - and Mitt Romney, whose foreign policy team is staffed by Bush-era neo-cons - never fails to amaze me.  In the wake of Barack Obama's speech at the U.N., Charles Krauthammer has predictably pouted that Obama groveled and pleaded to the U.N. General Assembly, asking the rest of the world to treat us "nicely." Krauthammer, like Romney and the rest of the Republican foreign policy establishment, would prefer a more muscular response.  They ask: are we or are we not a superpower? If we are, then let's act like it.  Put aside mamby-pamby responses like foreign aid, and march in there, instead, like a nation that knows how to land a punch.

Or something.  It isn't clear exactly what Krauthammer would do.  The war in Iraq, the great campaign of modern Republican neo-conservative thought, was designed to show our capability to use our military to replace leaders we didn't like, and to intervene in Middle Eastern politics in muscular, assertive ways that better served our interests.  That didn't go so well.  With that disaster behind them, neo-cons like Krauthammer get a little clammy and quivery when it comes time to map out alternatives to Obama's foreign policy; quick to criticize it, they can't really offer anything in its place.

As I said in a previous post, Obama is clearly mapping out a foreign policy response to the Arab Spring that is designed to support the emergence of civil society and democratic institutions.  In an address to the Group of 8, Hillary Clinton was specific:

The recent riots and protests throughout the region have brought the challenge of transition into sharp relief.  Extremists are clearly determined to hijack these wars and revolutions to further their agendas and ideology, so our partnership must empower those who would see their nations emerge as true democracies.

This perspective isn't new, and it hasn't always been viewed as a sign of weakness or liberal limp-wristedness that we would use foreign policy and international aid to assist countries in their transition to democracy.  

One of the most influential foreign policy books of the late 1960s was Samuel Huntington's Political Order in Changing Societies.  Huntington was an influential Harvard political scientist, whose views were more conservative than his peers'. In Political Order in Changing Societies, Huntington argued:

Most later modernizing countries lack traditional political institutions capable of successful adaptation to the needs of the modern state.  Hence minimizing the likelihood of political instability resulting from the expansion of political consciousness and involvement requires the creation of political institutions, i.e., political parties, early in the process of modernization.

This seems hard to argue with, although I think it makes sense to expand the focus beyond parties, to include other organizations and mediating forces common to contemporary politics.  The goal should be to develop civil society, the institutionalized network of groups that take grievances and political desires and refashion them into attainable agendas.  Huntington captures this idea elsewhere in the book:

Political modernization involves the expansion of political consciousness to new social groups and the mobilization of these groups into politics.  Political development involves the creation of political institutions sufficiently adaptable, complex, autonomous, and coherent to absorb and order the participation of these new groups and to promote social and economic change in the society.

Again, exactly right.  What Huntington got wrong was his insistence that our policy should be to aid the military in democratizing countries as a way of creating order during the transition.  As we saw throughout the southern cone of South America through the 1960s and 1970s, once given the keys to the palace, the military is reluctant to give them up.  Huntington's views, like those of many in his generation, were shaped by his fear of communist expansion.  In his view, communists possessed many of the attributes political parties needed to succeed in the transitional period leading to wider mass political participation.  They had a temporary advantage. The military, as the only "modern" institution in these developing societies, could protect and cultivate less radical political parties, while suppressing the communists long enough to allow more acceptable alternatives to mature.  I think it should go without saying, any U.S. approach to the Arab Spring formulated along these assumptions would be doomed to failure.

Romney's approach, if we take the effort to try to discern one from the fog of his imprecision and evasion, is equally misguided.  At his recent address at the Clinton Global Initiative, Romney argued for replacing American foreign aid strategies with a new effort to funnel money to "innovators" and "entrepreneurs."  Like his view of domestic policy, Romney seems to believe the only problem in Egypt and Libya is that we don't drop enough money into the laps of the wealthy.  Huntington, himself, argued against this simplistic vision.  Countries aren't unstable because they are poor, they become unstable as they become wealthier and more developed.  One thing actors fight over in unstable, transitional societies is the growing inequality of wealth.  And, again wearing his anti-communist lenses, Huntington sees this as formidable challenge.  By focusing on inequality, radical voices gain an advantage in societies with vast gaps in income.  In a Romney presidency, where we repurpose our foreign aid machinery to drop bags of cash into the hands of foreign plutocrats, we would see growing instability as the masses struggle to find political solutions without the benefit of successfully institutionalized parties and electoral systems.  It seems clear that poverty and poor educational systems and economic backwardness creates misery and desperation in some Arab countries.  But the solution isn't to make the wealthy richer.  The solution is to build political institutions capable of giving a voice to all across the political spectrum, in ways that allow productive conversations about policy options.  How we respond to the Arab Spring opens up an opportunity to create policy models we can put in place elsewhere, for example, in responding to the upcoming challenges we will certainly see in Africa over the next few years. 

Update: For an additional comment on Romney's incomprehensible Foreign policy views, read Roger Cohen's recent column from the New York Times.