Iraq's Civil War

On Thanksgiving Day, the Iraqi parliament approved a Status of Forces Agreement (SOFA) with the United States. This agreement replaces United Nations Resolution 1790 which authorized the US presence and permitted us to take military action in Iraq.

A key provision of the SOFA is that the deadline for withdrawal of all US troops is now December 31, 2011. This is compatible with President-elect Obama's campaign promise to remove all combat troops within a sixteen month period.

So far so good but we should not be in too much of a hurry to give thanks. For a nation to emerge into the company of civilized democracies, it appears that a necessary - although not sufficient - condition is that it hold one or more civil wars.

The medium term outcome of the SOFA may be that Iraq has agreed to schedule its first.

More on the bailout

Yesterday the Federal Reserve Bank created $800 billion out of nothing (that’s the sort of dangerous magic that Central Banks can perform) and threw it out of the proverbial helicopter.

The Fed will buy up to $600 billion of debt issued or backed by Fannie Mae, Freddie Mac, Ginnie Mae and Federal Home Loan Banks and up to $200 billion in financing to investors buying securities tied to student loans, car loans, credit-card debt and small-business loans. The intent is to jump start lending to consumers.

Given the state of the economy, and the excessive burden of debt already being carried by consumers, why would any self respecting financial institution want to lend more to people who are all too likely to fail to repay what they borrow? If they do lend, and improvident consumers default, then the taxpayer loses - again - and the cost is passed to the next generation.

Another scenario is that inflation – whether it is another asset bubble or skyrocketing wages and prices – takes off as a result of this promiscuous creation of money. If so, repayments will turn out to be worthless and our economy will pay a high price.

Just later.

Those who have lived reasonably frugal lives, saving for retirement and significant purchases, are now the ones who will suffer. Life is not fair (my mother taught me that) but trouble ensues when enough people are imposed upon by the undeserving - or at least those perceived to be undeserving. This is fertile ground for the rise of a demogogue and, unfortunately, the USA is not immune from that political disease.

Recessions are an essential part of the economic cycle. They serve to flush out capital misallocations, and other excesses, that occur during good times. Panicked attempts to avoid the inevitable will surely be negated by the Law of Unintended Consequences.

Those results are rarely to our liking.

Science, ideology and religion

There is a difference between ideology (including religious dogma) and science. Ideology is little more than opinion while religious dogmas rely on revealed truth as written by unknown scribes. Neither have much use for evidence and facts.

Science is based on theory. Theories are supported, but never proven, by facts and observations. Any true scientific theory can be disproved, at any time, by inconvenient facts and observations. Modern science, influenced by philosopher Karl Popper, now believes that, for a statement to be considered scientific - as opposed to being an ideology or a religious point of view - the premise must, in principle, be capable of being disproved.

As an example, Newton's basic Law of Gravity has survived unchallenged for over 400 years. While the law states that the force of gravity is attractive, a single observation of a single apple, flying off into space unaided, would be sufficient to disprove what we currently treat as fact.

The arrogance of ideologues, and of the perpetrators of religious dogmas, is irritating as well as often being dangerous to our health, our prosperity and even our survival. The modesty of great scientists is refreshing and offers hope for humanity.

Two Nobel Prize winners - both physicists - epitomize this modesty and the realistic view of life needed to be a scientist who is able to make great discoveries:

"There are two possible outcomes [of an experiment]: If the result confirms the hypothesis, then you've made a measurement. If the result is contrary to the hypothesis, then you've made a discovery."
Enrico Fermi

"The first principle is that you must not fool yourself – and you are the easiest person to fool. So you have to be very careful about that. After you’ve not fooled yourself, it’s easy not to fool other scientists. You just have to be honest in a conventional way after that."
Richard Feynman

If President Bush understood science and scientists, he and his administration might have made fewer wrong decisions in areas where science really does matter.

In financial difficulty - for good reason

In May 2006, I bought a new car. Since I own a small boat and tow it to various sailing events, I wanted the version with the larger engine. Needless to say, when ordering for stock, dealers only specify that engine in combination with every imaginable option and accessory.

Included in the price, among many other things for which I had very little need or desire, was a satellite radio receiver and a one year subscription to Sirius Satellite Radio. Out of curiosity, and because I had already paid for it, I activated the service.

In April 2007, I received a call from Sirius. The representative asked me if I wished to continue receiving its service. I responded that it was quite nice to have but not worth paying money for. The conversation ended - pleasantly enough - on that note.

Sirius, in spite of having merged with XM Radio, its only competitor, continues to exist but suffers many financial difficulties. Two reasons come to mind: the first is overpaying for talent - including $500 million in cash and stock to obtain the dubious services of shock-jock Howard Stern. The second is sheer incompetence as evidenced by the fact that, in spite of my refusal to pay to receive its signal, I was not cut off until October 2008 - seventeen months after my subscription expired.

This episode simply provides additional support for the hypothesis that, were the competition not as incompetent - or worse, there are few reasons for any given company to avoid bankruptcy. Having merged with its only direct competitor, that may be where Sirius is headed and, with its shares trading at 14 cents, the stock market is certainly predicting an early demise.

Bailing out the Detroit Three

Yesterday, Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid sent a letter to the Detroit Three automakers. In the letter, they lay out some the conditions to be imposed if a taxpayer funded bailout is to go ahead.

That Congress should be demanding a business plan - and some assurances that any loans can be repaid - is good. However, in spite of UAW President Ron Gettelfinger's earlier assertions that there will be no concessions, nothing in the letter supports the urgent need to rewrite the existing contracts between the companies and the union.

Will the Detroit Three CEOs dare to include contract revisions in their response to Congress? Or, given that the Democratic Party is entirely beholden to the unions, will they surrender to political correctness?

Unless the union contract issues are addressed, taxpayers are likely to lose all of their hard earned investment money while the long overdue reorganization of the domestic automobile industry will merely be deferred for a few months. Liquidation, rather than reorganization, may become the only option if the Detroit Three, Congress, and the UAW decline to face reality now.

Senator Clinton as Secretary of State

The media are full of reports that Senator Clinton will be nominated to serve as Secretary of State in the next administration. If she accepts the job, our country will be ill served and so will she.

While Senator Clinton serves on the Senate Armed Services Committee, her foreign policy experience is far from adequate. Given the natural tension between the Secretary of State and the National Security Advisor, her appointment will tilt the balance of power towards the White House.

A very wise former National Security Advisor once said: "you can't run the foreign policy of the United States with a staff of one hundred and thirty - no matter how brilliant they are. The State Department has to be a fully functioning partner."

Since there is an institutional imperative for the President, and the National Security Advisor, to concentrate power in the White House, the State Department's assets (yes, there are many - along with quite a few liabilities) are marginalized. If Senator Clinton is outmatched by the National Security Advisor, then the chances that we will have a successful foreign policy are markedly reduced.

Then, of course, there is the baggage that she would bring with her in the form of her husband, President Clinton. No more need be said on that topic!

I also believe that Senator Clinton would be making a personal mistake. Her Senate service to date has suggested that she may have the talent to become a true legislator - that is, a person with the skills to reach across the aisle and help to get bills passed.

Perhaps she, and we, would be better served if she were to follow the example of Senator Edward M. Kennedy who, after his defeat in the 1980 primaries by President Carter, refocused his ambitions on legislating. While I do not often agree with Senator Kennedy's policy positions (and have much the same regard for Senator Clinton's), he has been a useful member of the Senate during the past three decades. She can be too.

More on the Detroit Three

The CEOs of Ford, Chrysler and General Motors managed to commit yet another spectacular blunder when they traveled to Washington in their corporate jets. The irony of watching beggars claiming penury, while spending company money - not their own - like drunken sailors, is almost too much to bear. The fact that Rick Wagoner of GM received total compensation of $15.7 million in 2007 and Ford CEO Allan Mullally received $21.7 million merely compounds the irony.

If Congress (i.e. the taxpayer) is willing to bail out the domestic automobile industry, it should not do so by means of low interest rate loans that are unlikely to be repaid. It would be better, by far, for each of these companies to undergo a "prepackaged" Chapter 11 bankruptcy. As a part of exiting from Chapter 11, the taxpayer would provide funds in the form of equity. An appropriate form of equity investment would involve Convertible Preferred Shares, which pay a substantial dividend, plus Warrants to buy Common Stock. Although the prospect that any of these companies will return to profit is not high, at least taxpayers would make a substantial profit were it to occur.

Shareholders and bondholders would take the biggest hit but they largely deserve it. In addition, all members of senior management, as well as all Directors, should be replaced for lack of performance. More importantly, however, Chapter 11 would offer the opportunity to completely rewrite union contracts that are entirely unaffordable.

Auto workers, including retirees, have lived in a financial fantasy world for the last thirty five years and the day of reckoning is close at hand. The United Auto Workers Union (UAW) did its job by asking for the the sun, the moon, and most of the stars. Management's greatest failure was to surrender in the face of the short term costs of a lengthy strike. By acceding to these demands, the companies accepted a cost structure that could only be supported by the sale of large, and expensive, gas guzzlers with little practical use to most purchasers.

That the current generation of employees must suffer for the greed of previous generations - and the incompetence of management - is regrettable but reality must be faced. It will be hard for employees to accept rewritten contracts, but far harder to suffer extended unemployment with few prospects.

Gay Marriage

On May 16, 2008, the California Supreme Court found that gay marriage was a right. In response, California voters have just approved Proposition 8 which changes the State Constitution to define marriage as being between one man and one woman and denies recognition of gay marriages.

This leaves some 18,000 couples, who thought that they were legally married, in some sort of legal limbo. It is also possible that the proponents of Proposition 8 did not follow the correct procedures for making this constitutional change so the courts will be doubly busy. Perhaps Proposition 8 should have been titled 'The California Lawyers and Judges Full Employment Act of 2008'.

The problem with any discussion of gay marriage is sloppy thinking - with ideology and religious fundamentalism added for good luck. Few are willing to recognize the fact that there really are two separate issues involved.

The first issue is the fact that marriage, as defined by most religions, is a sacrament. As such, it is normally restricted to one man and one woman although the Mormon Church practiced polygamy - polyandry was never acceptable - for many years and Islam permits up to four wives. On the other hand, marriage - as defined by the State - should have no requirement for any church involvement whatsoever. In many states, judges perform more marriages than do members of the clergy.

For religious people who are opposed to gay marriage, there is a solution: mind your own business and don't marry one.

The second issue is what, for lack of a better term, might be described as the formation of a company called 'Family Economic Unit, LLC' to undertake the business of life. The government provides quite a number of legal, financial, and tax advantages to this company: the spousal exemption from estate taxes, reduced income tax rates, and the ability to determine the medical care to be provided to another member are among them.

None of these benefits depend on the religious sacrament of marriage. They are provided equally to all those whose marriages have been registered - whether or not a church was involved. This is in accordance with the First Amendment's establishment clause ("Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;"). The establishment clause certainly makes any government requirement for a marriage to be performed in a church unconstitutional. It also prohibits any requirement that a marriage conform to specific church doctrines.

That the government provides certain incentives to 'Family Economic Unit, LLC' is desirable. That the government should specify the composition of 'Family Economic Unit, LLC' may well be unconstitutional under the equal protection clause of Section I of the Fourteenth Amendment ("... nor deny to any person within its jurisdiction the equal protection of the laws.").

More importantly, we have seen much damage done by the breakdown of families. It simply makes sense to encourage more stable family relationships. Allowing gays to marry would seem to serve that cause.

By the way, I am very straight - just a campaigner for freedom, the Constitution, and common sense. Of course, there are times when these causes conflict but not, I believe, with respect to this issue.

A long line at the public trough

The Detroit Three automakers (remember when they were called the Big Three?) are up on Capitol Hill today begging the Congress for more cheap loans from the public purse.

Congress has already authorized $25 billion to help them meet the new 35 mpg fuel efficiency standards that must be met by 2020. Those loans are arguably OK. It is, however, worth noting that the private sector is not optimistic enough about the future performance of these companies to be willing to fund such a project.

The domestic automakers now want additional money to help them get through the current economic downturn. Their plan is that the taxpayer will hand another $25 billion, or more, of our money to three of the worst managed companies in the country.

Proponents attempt to justify the expenditure by talking about the effect on employment in the companies themselves, in the auto parts industry, and at dealerships. That they are able to keep a straight face verges on the miraculous.

Here are the real problems:

1. The United Auto Workers refuses to consider additional "concessions" with respect to excessively high pay rates and, worse, the disastrous work rules that reduce productivity and grossly increase costs.
2. The Detroit Three, after years of turning out poor quality vehicles that were also boring and/or ugly, have a revenue problem. The average sales price of a Ford Focus (quite a good car now) is about $3,000 less than that of a Honda Civic which is competing for the exact same market segment. Even though the Detroit Three are now making some decent cars, there are few potential customers willing to pay the premium prices that Toyota, Lexus, Honda, Acura, and BMW can command.

As a result of revenue shortfalls and high costs, the companies are burning cash at a very high rate and it is quite possible that they will all run out of cash by the end of 2009. The likelihood that they will start to enjoy positive cash flow, in the two or three years after 2009, is also low.

So, if loans are made, how will the money be repaid? This one looks like an expensive loss for the taxpayer and a short delay in the long needed reorganization of the domestic industry.

If the taxpayer is to help, then management, shareholders and UAW members are all going to have to take a very big haircut. That, however, may not be enough to save these formerly proud companies from forty years, beginning with the Chevrolet Vega, of incompetence and mismanagement.

Wall Street Bonuses (2)

Today, the Wall Street Journal http://www.blogger.com/www.wsj.com reports that the top seven executives of Goldman Sachs will receive no bonuses for 2008. Even though the company's results were better (i.e. less bad) than the rest of Wall Street, shareholders have still been hammered.

Since most of us care about absolute returns, the fact that our money managers "only" lost $40,000 of the $120,000 in our retirement accounts - rather than, say, $60,000 - provides little consolation.

The top three executives, Chief Executive Lloyd Blankenstein as well as co-presidents, Gary Cohn and Jon Winkelried, each took home $67.5 million bonuses for 2007, so this is not a trivial amount of money. Further, since the other major Wall Street players - Morgan Stanley, Lehman Brothers (in Chapter 11), Bear Stearns (bought by J.P. Morgan Chase in the first shotgun marriage of the year) and Merrill Lynch (bought by Bank of America in another shotgun marriage) - did worse, we may hope that a precedent has been set.

That zero bonuses are well deserved is clear. The situation does, however, raise the question of whether Warren Buffet (CEO of Berkshire Hathaway) is behind the curtain pulling strings. If so, it is good that a private investor, with a stellar record of placing shareholder interests above those of management, is calling the shots. (Full disclosure: I own Berkshire Hathaway shares). The far less attractive alternative is that government bureaucrats will be in charge of micro-managing compensation decisions.

Gasoline prices

When the cost of a gallon of gasoline exceeded $4.00 this summer, Americans began to make changes in their lifestyles. Public transport ridership rose, casual trips were abandoned, and sales of over sized SUVs and pickup trucks plunged. Some governments and companies even began creative programs to reduce commuting.

To ensure our long term financial health, and to reduce negative effects on the environment, a reduction in the use of energy - particularly energy derived from fossil fuels such as oil, coal and natural gas - is still a priority.

Now that the price of gasoline - at least in some places - is below $2.00 per gallon, we can soon expect a collective loss of memory about the pain inflicted by a $4.00 price tag. Really brave politicians (an endangered species unfortunately) should immediately begin raising gasoline taxes. $2.00 per gallon, say, over a four year period would be an entirely appropriate amount.

If revenue neutrality is an objective, then governments could reduce income tax or just rebate the proceeds to all. On the other hand, a strong argument can be made for investing much, or all, of the money in the development and maintenance of our transportation infrastructure.

Falling oil consumption generates two additional benefits. It deprives countries that really do not like us - Venezuela, Iran, Saudi Arabia and other third world hell holes come to mind - of our money while simultaneously creating jobs at home.

It's really hard to outsource infrastructure maintenance and investment jobs to India and China!

The economic situation...

Governments around the world are responding to the current economic situation by throwing money at large, mostly financial, corporations. Although these governments are acquiring some level of ownership, the stakes are do not seem to be large enough to compensate for the risk that some of these companies will never return to financial health. Shareholders are being protected from the consequences of their inattention to the obligations of ownership and the new owners are neglecting to insist on a wholesale replacement of incompetent management.

The result, which few want to discuss, is that profit remains privatized while risk is socialized.

Before throwing more money around, our leaders may wish to pause and think. As they engage in what may be an unfamiliar activity, they should take note of George Orwell's warning:

"[Our language] becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts."

While government (i.e. taxpayer's) cash seems to be in plentiful supply, there is a shortage of clear thinking. Both are needed.

Just another ex-customer - at least for now

Given that the time required to get through airport security is totally unpredictable, I arrived early yesterday at Washington National Airport for a flight on US Airways. As it happens, the line at security was minimal and the TSA screener, unlike some, wasn’t interested in aggravating a passenger (myself) traveling in a wheelchair.

I arrived at the gate one hour and forty five minutes before the departure of my flight. Since it was forty minutes before the departure of the next earlier flight, and it was leaving from the same gate, I asked if I could travel on the earlier flight.

The gate agent, who clearly got out of bed on the wrong side yesterday morning, told me that a) there wasn’t time to switch me to that flight and b) even if there was, I had to travel on the flight for which I had a boarding pass, and c) even if I didn’t, it would cost me $50 to change.

So I waited.

The current condition of airlines in the USA puts them close behind the Detroit Three automakers in terms of financial weakness. Given that most airlines have extensive experience with Chapter 11 of the bankruptcy code, one might expect that customer service would be high on everyone’s list as a possible strategy to avoid another episode.

Apparently not!

The last airline that pulled this stupid, customer unfriendly, stunt on me (you can’t go on the early flight – even though we have lots of empty seats) was Southwest. That was ten years ago and I haven’t flown on Southwest since.

It is sad to say that few people make a choice of airline based on the quality of customer service. Some would, perhaps, if such a thing existed but it doesn't. We are forced to make decisions with the major criteria being price and "least worst". That airlines should have become trapped in a cheap fare, zero service, business model says much about the [in]competence of management and, to be charitable, the dysfunctional economics of the airline business.

I would like to think that there is a market segment of those, like myself, who are willing to pay a bit more for decent customer service but whose budgets do not run to First Class - let alone corporate or fractional jet service.

I am not holding my breath.

Political Change

Change was the primary policy - or maybe it was just a slogan - offered by Senator Obama during the recent election campaign.

After his victory, all of us would be well advised to heed these wise words spoken by Thomas H. Huxley:

"The results of political changes are hardly ever those which their friends hope or their foes fear."

If President-elect Obama really plans radical change, let us hope that there are some in his administration who are aware of this thought from Jacob Burckhardt:

"Great historical transformations are always bought dearly, often after one has already thought that one got them at a bargain price."

Politicians are panicking about the prospects for a severe recession. Driven by public opinion, the temptation to do something - anything - is almost overwhelming. Since the Law of Unintended Consequences must always be reckoned with, caution is likely to be a safer course of action. The old proverb 'decide in haste, repent at leisure' applies to our current situation.

Computers and computing - the future

Electronic computers began their evolution as calculators and, for most science and engineering applications, are still primarily used for that purpose. When the word processor replaced the typewriter and graphics applications were created, the modern era of computing began.

Computers, however, are no longer just faster and more flexible replacements for existing tools. Only thirty years ago, computers were large and expensive boxes, in climate controlled rooms, with a "new priesthood" of IT specialists presiding over them and dictating the uses to which they may be put. Now, memory is cheap and processors are quick. Fast software to index and search documents is old news. Computers are available to all of us and have become the essential tools for storing, managing, and presenting information.

Paul Otlet, a Belgian bibliographer whose work was almost entirely ignored, came close to describing a version - albeit incomplete - of our modern computing environment. In the 'Treatise on Documentation', published in 1934, he wrote:

"The workspace is no longer cluttered with any books. In their place, a screen and a telephone within reach.

Over there, in an immense edifice, are all the books and information. From there the page to be read in order to know the answer to the question asked by telephone is made to appear on the screen.

A screen could be divided in half by four, or even by ten, if multiple texts and documents had to be consulted simultaneously. There would be a loud speaker if the image had to be complemented by oral data. This improvement could continue to the point of automating the call for onscreen data. Cinema, phonographs, radio, television, these instruments taken as substitutes for the book will in fact become the new book. The most powerful works for the diffusion of human thought. This will be the radiated library and a televised book."

Although M. Otlet did not foresee mobile computing, which includes smart phones and GPS devices as well as laptops, I do not believe that he would have been surprised. The important question, now, is to determine if there are any, among the legion of self promoting futurists, who can provide some insight into the next fifty years.

Seeing the future is always hard but one thing is certain: conventional wisdom is unlikely to provide many useful answers.

Computers and computing (2)

In this series of posts about computers and computing, it is worth considering some of the history of the technology and the way things used to be.


The first computers were real live people who solved equations and performed other lengthy calculations for scientists and engineers. The technology available to them included mechanical and electromechanical calculators as well as slide rules. The Manhattan Project employed hundreds of "computers" to support the design of the first atomic bombs.

Then came electronic computers. Even though the transistor - the most critical component of any computer - was invented in 1947, the process of miniaturisation and cost reduction took decades. By 1957, however, the cost of transistors (a "transistor radio" given to me as a birthday present that year had exactly three transistors - each the size of a thimble) had finally dropped enough that they had become competitive with vacuum tube technology.

The earliest electronic computers enabled scientists, at least in well funded applications such as nuclear weapons and reactor design, as well as the space program, to dispense with their armies of living "computers".

As much as any organization, NASA is responsible for driving computer miniaturization and improved performance during the 1960s. The cost of moving mass to orbit - and even more so to the moon - was so high that saving ounces mattered. Minimizing the use of electrical power was another critical objective. Replacing vacuum tubes with transistors saved space and mass while reducing power consumption and increasing reliability. We take the extreme miniaturization of transistors for granted now but there was no reason to do so then.

Even so, it took until the early 1970s for the first electronic calculators to become affordable for consumer use. I recall buying a basic four function calculator (with a memory) in 1974. The cost, then, was approximately $200. Using today's depreciated currency, that would be equivalent to about $800!

I bought my first personal computer in 1982. It was an Osborne 1 whose operating system was one of the many versions of CP/M. It was slow - taking as long as 15 seconds to save a ten page document - but for a writer whose typing skills were less than stellar, the ability to edit and revise a document without spending hours retyping, was the major benefit. Easy correction of spelling errors was a bonus. More important than being a word processor, however, the Osborne 1 was capable of running one of the early spreadsheet programs.

Since much of my work was, and still is now, the provision of advice and assistance to entrepreneurs, the use of this newly available tool provided me with major productivity and quality improvements. No longer was I forced to create financial projections on 14 column spreadsheet pads where, since errors were inevitable, the work was done in pencil and losing one's eraser was a disaster!

As annoying as the modern computer - and the uses to which it is put - can be, it is hard to imagine returning to the days of typewriter, pen, paper, and pencil. What we now regard as historical curiosities, with minimal capabilities, still provided major productivity improvements.

Computers and computing (1)

Not until 1945 did the term computer begin to refer to a machine. Before that, a computer was a person, for some reason generally female, who solved equations and did calculations by hand or, more often, using a mechanical calculator and a slide rule.

People as computers, although no longer referred to by that name, survived for many years after the invention of the electronic computer.

In 1965, I worked at the Special Projects Laboratory at the Zinc Corporation in Broken Hill, New South Wales. After a day running our experimental equipment, we would spend the next day, sometimes longer, calculating the results.

Two of us, using different technologies, performed the calculations. One sat at a desk, using an electromechanical calculator to do addition and subtraction while scribbling down the interim results. The other person, standing behind the desk so that he could read the interim results, would use a slide rule to do the necessary multiplications and divisions. Then the interim results from the slide rule were written down so that they could used for the next set of additions and subtractions. After a while, we switched positions.

It all took a very long time. Because of the intrinsic limits on the accuracy of a slide rule, as well as the lack of a printed record to catch input errors, the accuracy and precision of the results was usually OK but no better than that. Ensuring quality required that the calculations be repeated to check their accuracy.

Had a personal computer been available, running an early spreadsheet such as VisiCalc, only one person would have been needed. Work that formerly required two man days could have been completed in an hour or two with greater accuracy.

Those who long for the "good old days" neglect the fact that highly qualified scientists and engineers spent far too much of their time just performing very routine calculations. If they did not do the calculations themselves, then they were expensively supported by a small army of living and breathing "computers".

There are few recent innovations that have contributed as much to increased productivity - and therefore wealth - than the invention of the electronic computer and the demise of its flesh and blood predecessor.

Where next for the Republican Party?

Three obsessions come to mind when one hears the term 'Republican Party'. They are abortion, gay marriage, and tax cuts.

While opponents of the first two, and proponents of the latter, are passionate about their causes, these issues alone are far from sufficient to win elections or, having won, to govern.

All of us would rather pay less in taxes. However, even if taxes are increased to the rates proposed by President-elect Obama, the effects on incentives will be trivial. Compare his proposals to the situation that existed prior to the Kennedy tax cuts of 1964 when the top income tax rate was 91% (not a typo). The top tax rate remained at an extortionate 70% level until the Reagan tax cuts of 1981.

Abortion and gay marriage simply do not resonate with the part of the electorate which would rather have the government stay out of its personal business. Many such citizens are naturally inclined to support Republicans but regard freedom from government regulation as paramount.

That a center right electorate should entrust the Presidency to a very left of center liberal merely emphasizes the intellectual bankruptcy of the Republican Party.

Senator Barry Goldwater's defeat (losing all but six states) in 1964 was more comprehensive but marked the real beginning of an intellectual and philosophical renaissance which culminated in the election of President Reagan. The defeat of the Soviet Union and the destruction of the conventional wisdom that confiscatory taxes were legitimate can both the attributed to the fact that the Republican Party's actions and policies were underpinned by a political philosphy rather than a mere desire to wield power.

Republicans will not soon regain the White House, the Senate, or the House of Representatives until they are seen to stand for something positive. There is an almost endless list of difficult issues - relations with other nations, radical Islam and terrorism, poverty at home, health care, climate change and energy to name only a few - that demand the development of serious policies. Mere opposition to left wing conventional wisdom will not be sufficient.

It is not obvious who will lead (there is no clear successor to William F. Buckley) but there is a very big question that needs to be answered.

What do we Rebublicans believe America stands for - at home and abroad?

Enough stuff?

The election is over although some votes remain to be counted and the results of three Senate races are still unknown.

Meanwhile, the state of the economy may be indicating that old ways are coming to an end. Certainly, the tasks facing us - and our newly elected politicians - will require new ways of thinking. Albert Einstein put it well when he said: "The significant problems we face cannot be solved at the same level of thinking we were at when we created them."

Since the end of World War II, economic growth in the United States, and the developed world, has been driven by consumers. For the past twenty five years, unrestrained consumer spending has been supported by a flood of credit card and mortgage debt. The idea of "buy now, pay later" became quaint and old fashioned compared to the apparent reality of "buy now, never have to pay at all".

An economy driven by ever increasing consumer spending is a house built on sand. As shown in the retail sales numbers (almost all major chains are reporting sharply lower sales), the financial storm of excess debt is threatening to wash away the "more" culture. While there are many in our country who live in poverty, most of us have far more "stuff" than we really need. The danger that our possessions, and our expensive activities, will come to own and define us is all too real.

The transition from a society of borrowers and spenders to one of producers and savers will not be easy. If we make it successfully - and there are no guarantees - the greatest benefit will be time to spend with family and friends, or in reflection, rather than existing on a treadmill that takes us from work to store and back again.

President Eisenhower, reflecting on a past period of economic turmoil, summed up the situation this way: "Some people wanted champagne and caviar when they should have had beer and hot dogs."

Socrates, during his trial for heresy, indirectly made the case for time with this remark: "the unexamined life is not worth living."

Frugality and modesty are the heresies of the consumer culture. In the long run, however, intangibles - friendship, love, service, the acquisition of knowledge, and the time to enjoy all of these - are likely to add far more quality to our lives than the mindless acquisition of "more stuff".

After losing the election...

Many politicians concede defeat without much grace. Here are two remarks that, although lacking grace, are worth repeating:

"You may all go to hell and I will go to Texas." Davy Crockett (conceding defeat in his 1835 re-election bid for the U.S. House of Representatives from Tennessee)

"The people have spoken, the bastards." Rep. Morris Udall (on the collapse of his Presidential Campaign in 1976)

Senator McCain's concession speech demonstrated his genuine concern and love for our country. Parts of it are also worth repeating:

"Senator Obama and I have had and argued our differences, and he has prevailed. No doubt many of those differences remain. These are difficult times for our country. And I pledge to him tonight to do all in my power to help him lead us through the many challenges we face.

I urge all Americans who supported me to join me in not just congratulating him, but offering our next president our good will and earnest effort to find ways to come together to find the necessary compromises to bridge our differences and help restore our prosperity, defend our security in a dangerous world, and leave our children and grandchildren a stronger, better country than we inherited.

Whatever our differences, we are fellow Americans. And please believe me when I say no association has ever meant more to me than that. It is natural. It's natural, tonight, to feel some disappointment. But tomorrow, we must move beyond it and work together to get our country moving again."

Now that the election is over, the Republican Party must determine what it stands for and who will lead it.

President Bush and Vice President Cheney pushed socially conservative policies, exhibited an authoritarian approach to the problems of terrorism and jihad, alienated our allies, and successfully subjugated the national interest to the short term desires of large corporations - all with an irritating attitude of self-righteousness.

They have severely damaged the party and created a recipe for electoral defeat far into the future.

The Republican party could once be described as encompassing a wide range of generally conservative views. Now, as our nation appears to be more polarized than ever, old style moderate Republicans, who can also appeal to Independents and dissatisfied Democrats, appear to be increasingly unwelcome. In opposition, the party must be aware of the error, albeit on the other edge of the political spectrum, of the British Labor Party whose 1983 manifesto (platform) espoused such extreme views that it was trenchantly described as the longest political suicide note ever written.

The party also needs a leader. It is not clear who will emerge but Governor Palin, an ill-educated, uninformed, quasi-rock star with no coherent political philosophy, is not the leader that our nation, or the party, needs.

Senator Obama's victory...

It is not strictly accurate to describe Senator Obama as President-elect until after the Electoral College meets in December. Nevertheless, all else being equal, he will be our next President so, in spite of my usual insistence that words be used with a certain level of precision, I intend to grant him the courtesy of the title.

In his acceptance speech, President-elect Obama was gracious and said many of the the right things. Particularly:

So let us summon a new spirit of patriotism; of service and responsibility where each of us resolves to pitch in and work harder and look after not only ourselves, but each other. Let us remember that if this financial crisis taught us anything, it’s that we cannot have a thriving Wall Street while Main Street suffers – in this country, we rise or fall as one nation; as one people.

Let us resist the temptation to fall back on the same partisanship and pettiness and immaturity that has poisoned our politics for so long. Let us remember that it was a man from this state who first carried the banner of the Republican Party to the White House – a party founded on the values of self-reliance, individual liberty, and national unity. Those are values we all share, and while the Democratic Party has won a great victory tonight, we do so with a measure of humility and determination to heal the divides that have held back our progress.

As Lincoln said to a nation far more divided than ours, “We are not enemies, but friends…though passion may have strained it must not break our bonds of affection.” And to those Americans whose support I have yet to earn – I may not have won your vote, but I hear your voices, I need your help, and I will be your President too.

President-elect Obama is young and his political experience is limited. He will be sorely tested in the early days of his term in office and we must hope that he, his cabinet, and his staff will be up to the task. If he is serious, however, about changing the nature of American politics, he will have to pass a major test before he even takes office.

That test is whether he can bring to heel the Democratic Party's icons of the old, vicious, partisan politics.

These icons are Speaker of the House Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV). It is all too likely that they will try to ignore the reality that the size of the party's victory in the Presidential, House, and Senate races owes much to the intense disapproval of President Bush' record and little to the performance of the Congress since their party won back control in 2006.

That they will have the votes to pass number of very liberal (this is an Orwellian euphemism for left wing) programs is clear. That they will voluntarily exercise restraint is less so. We must hope that President-elect Obama can lead the whole of his party rather than just the part of it that controls the Executive Branch

The world would be well served if politicians, and citizens, were to remember that restraint is often - admittedly not always - the best course of action even when the right, the power, or the votes exist to act unilaterally.

Election Day

I voted today. The lines were long and absentee, or 'early', voting might have taken less time. On the other hand, I consider voting to be a community, not a solitary, affair.

Since the choices were quite unpalatable, I held my nose (not too hard because I didn't want to hurt myself), and voted against those that I did not like. On the other hand, in Alexandria, Virginia, we were spared the avalanche of Questions, Initiatives, and Constitutional Amendments that afflicts voters in many - mostly western - states.

We usually exhibit a spectacular lack of trust in our politicians - often expressed by permitting laws to be passed by Initiative while also requiring some spending and borrowing to be approved by the voters. That is no bad thing although obsessive single issue voters may have more influence than we might like.

The initiative process becomes a problem when Constitutional Amendments appear on the ballot. Constitutions should concern themselves with process not policy. Matters that are properly addressed by constitutions include the organization of government and its method of operation, the powers granted to the government, the limits of government power and the rights and obligations of citizens. When constitutions stray into matters of policy, trouble often ensues.

That was certainly the case when the Volstead Act, which legislated Prohibition, became nearly graven in stone with the ratification of the 18th Amendment in 1919. The damage to society caused by organized crime - and by turning ordinary citizens into criminals - was recognized quite quickly. Prohibition, however, could not end until the Congress finally proposed the 21st Amendment in February 1933 and it was ratified by the states in December 1933.

Legislation that turns out to be bad or misguided can be repealed - and the authors evicted from office. It is hard to repeal ill thought out Constitutional Amendments and even harder to hold the authors responsible. Better, then, to avoid entrenching policy decisions in Constitutions.

Upcoming election (3)

Very high turnout is predicted for our upcoming election. While many will go to be polls, at least by American standards, many other countries consider our efforts to be somewhat lacking.

There are far too many citizens who do not bother to vote because of laziness or lack of interest, work and family obligations (even though absentee or early voting is available), an inability to make a decision, a mistaken belief that their vote will not count, or just plain disgust with all of the candidates.

For an American citizen, voting is a right. As a naturalized American, I consider voting to be my duty. Even if I am appalled by every single candidates, I will still vote although I may just write "none of the above" or some other more creative insult on my ballot

See you at the polls tomorrow.

Upcoming election (2)

As the election approaches, we may be tempted to think that we are seeing the light at the end of the long dark tunnel of President Bush's miserable tenure.

Don't be so certain. There is an all too strong possibility that we are actually seeing the headlight of an oncoming locomotive.

The probability that Senator Barack Obama will be our next President is high. Although lacking age and experience, he does say some really good things. That some of those things are very politically incorrect only adds to his appeal.

He may also share President Ronald Reagan's ability to attract, and listen to, some really competent advisers. Of note are Paul Volcker (former Chairman of the Federal Reserve Board), Robert Rubin (former Treasury Secretary in the Clinton years) and Warren Buffet.

Perhaps he will be able to attract an equally strong foreign policy team. Certainly former Secretary of State Colin Powell's endorsement provides some encouragement.

The real dangers of an Obama Administration will appear if the likely results in Senate and Congressional races come to pass.

There is a high probability that the that the new Democratic majority in the House of Representatives will be such that controversial, and highly partisan, legislation can be passed without the need for serious discussion or compromise. In the Senate, it is also likely - although not guaranteed - that the Democratic Party will have a filibuster-proof majority of 60 or more votes. These majorities will permit the Democratic Party to impose its will on the nation with little need for reasoned discussion or compromise.

This sort of power, in the hands of honorable and substantial Senators and Representatives, is dangerous. When the likely wielders are highly partisan lightweights such as Speaker of the House Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Appropriations Committee Chairman Harry Byrd, the Chief Porker of Legislative Branch, we have good reason to worry.

Worse, Senator Obama, if he is President, is likely to be sparing in his use of the power to veto such legislation.

Much as I am disappointed in Senator McCain, and appalled by Governor Palin, I shall hold my nose and vote for divided government. It works at least as well as, and usually better than, a government where one party controls both the White House and Capitol Hill.

Upcoming election (1)

As we approach Election Day on Tuesday, it is important to remember that, as well as voting for President and Vice President, we also elect all of the Members of the House of Representatives and one third of the Senate.

Given the Congress's pathetically poor performance (polls give it an approval rating even lower than that of President George W. Bush) over the past eight years, Oliver Cromwell's 1649 dismissal of the Rump Parliament is worth considering:

"You have sat too long here for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go"!

If in any doubt, then, vote against the incumbent.