As I may have mentioned previously, some years ago I was involved in the construction of AIG's market risk management system and also had visibility into AIG's evolving approach to credit risk management. Accordingly, I have some unique insights about AIG and how it got into the mess it's in. There are actually a small number of guilty parties, and it's quite possible that previous government action contributed unintentionally to the firms demise - I refer to Spitzer's pursuit of Hank Greenberg(founder, and former CEO & Chairman of AIG) which didn't yield even an indictment, no less a conviction, but did force Greenberg out with threats and hyperbole. I'm left wondering what would have happened if Hank had still been there. I have to think that he would have kept a stronger reign on the cowboys at AIG Financial products - where these losses came from, for those of you not keeping up with the blow by blow. Yet another 'victory' for Eliot Spitzer. It's so great that the arrogant jerk got his just desserts, although I can't help but wonder how the Feds got wind of his measly wire transfers to begin with, but I digress...
Let's talk about bonuses. For those of you who've never made six figures or more, the sums of money that are being discussed may seem excessive, but rest assured, these size bonuses are commonplace on Wall Street for elite traders/executives who've spent their careers generating profits in the capital markets (for every one of these folks who made it to this elite level, many have failed). So you have to set aside your reflexive jealousy. It's no different than someone making minimum wage being jealous of someone who makes 60k per year. In order to see this for what it is, you have to set aside your own envy. The facts are that these specific bonuses were to keep people in place to manage and wind down the positions that AIG FP had already lost on. This is a very technically demanding skill and folks who are good at it would typically have other employment prospects if they chose to leave. Put yourself in one of these folks shoes. The business goes to hell and you are faced with staying at AIG where you could lose your job any day, and you'll make peanuts for staying around. Typically the pay packages of these types of folks in capital markets are largely comprised of bonus. You might have a salary of 200-500k but receive a bonus in a year where you are profitable of several million. So, these folks don't stay in place for just a base salary and the prospect of zero bonus. They are getting offers from other firms that usually include a first year guaranteed bonus payout versus the certainty of a zero bonus payout from AIG. We are talking about a few of hundred people here who are key to operating a portfolio comprised of trillions of dollars in notional principal. These complex instruments take quite a bit of care and feeding just to maintain, not to mention the skill involved to possibly trade the position to improved profitability as the markets move. These folks - whether they were directly responsible for the losses or not - are critical to ensuring that the losses are minimized and managed to the best degree possible. One has to offer some incentive to keep these folks around, otherwise you'd be recruiting a new team to manage the operations and make good decisions about trading the portfolio without any knowledge and possibly no chance to learn from the existing staff because they left. In point of fact, you'd probably have to offer even greater signing bonuses to new employees to get them to join such a mess since AIG definitely has no future in the derivatives business. Remember, these folks have marketable skills that they can take elsewhere. The risk and cost to AIG of losing key AIG FP employees in fact makes it imperative to keep them until the portfolio is unwound. I would venture so far as to say that it would be irresponsible of management to not pay these key employees retention bonuses.
As we are finding out, it's clear that Geithner, Summers and Emmanuel, as well as Dodd et al in the congress, all knew about the bonus payment issue. They rightly made the distasteful call to accept them, going as far as inserting specific language in the TARP bill to accommodate these bonuses. What you're seeing now, by my way of thinking, is the use of this issue to fire up Obama's popular support as we move into the budget battle. He knows that his budget is up against much greater opposition in his own party and he needs to create a mood that will scare politicians. You see, the AIG story is part of a much greater narrative that Obama and his progressive ilk have about the U.S. Executive compensation is an issue they've been bitching about for years. They think CEO's have it easy I guess and that they just fly around in jets to meet each other for golf or perhaps decide how to enslave the working class. They don't respect market economics and the capital markets are the ultimate extreme of the market at work. It's unfair and brutal too, something else that strikes them as at odds with their 'Social Justice' agenda. And finally - and you cannot discount this - the enemy is a bunch of white guys in suits, currently a favorite boogey man to bash by almost all parties (I even enjoy it sometimes).
It's rhetorical genius to employ these emotional tactics to manipulate the masses, but unfortunately, it doesn't makes for rational decision making in terms of the actual equities involved. But hey, they are fighting for a just cause, right? So the ends justify the means, right? Feign indignation and outrage, throw some people under the bus, I mean screw 'em, they're Wall Street scum, aren't they? They're the guys who screwed the whole country over, after all? So let's take all their pay - just because we don't like them. Not because it's a good business decision or actually serves some public good, no let's do it because we want to get the 'Greedy Bastards', as the New York Post called them, right? LET'S GET 'EM NOW!!
Just hope it isn't you caught up in the next witch hunt. Just hope the government doesn't come after your paycheck, breaking your contract and retroactively changing the law just to screw you. Just hope that you aren't in an industry that the government decides it needs to invest in like, say, health care, education or energy for example? Once they get their hooks in you can bet your life that there will be new villains. Insurance companies, 'Big Pharma' - energy companies like Mobil, do you think that for a second these power hungry, self-righteous dilettantes will hesitate to string the 'fat cats' of these industries up to the nearest lamp post? Wait and see, Obama and compay are just getting started.
Let me put it in "Progressive-Speak" for those of you who still think this is a good idea. It's so easy to look at AIG as 'them'. I thought Obama and co. were the guys who were so against us defining groups of people as 'the other'. I'm not sure our newly minted 'Progressive Era' is going to be all that much fun after all, at least not if you're successful financially.
Monday, March 23, 2009
Monday, January 19, 2009
The Bush Legacy and Freedom
I've been thinking about the impact of the Bush presidency on the agenda of freedom and democracy here and abroad. I think in order to start to understand it, one needs to take a broad, historical perspective.
I see the ascent of Reagan as a reassertion of the righteousness of the libertarian streak the Republican party. Remember, he came to power before the rise of the religious right and inherited a post-Nixon party that was run by corporatist patricians of the Bush Sr. ilk. His victory and policies drew their legitimacy and power from the idea of American individualism and exceptionalism. He believed that were more than just another empire, struggling to advance our interests in the world. He thought that America stood for something more both at home and abroad. He rightly saw the struggle with the Soviet Union in moral terms and clearly opposed them by standing for freedom whether it was for the Poles, Scharansky's "Refusenik" movement or by backing the Contras in El Salvador with something more than empty rhetoric. Domestically, he drove us in the direction of getting the goverment off the backs of people and saw individual freedom as a right and responsibility for Americans, invariably in conflict with an expansionist view of government. His rhetoric was more like JFK's than Nixon's, and people across the political spectrum responded to it.
Bush the elder was never comfortable with this strong ideology and called for a "kinder gentler" form of Republicanism. That made him a one term, forgettable president, giving us Clinton, who's ideological roots were never clear. His presidency can be seen as an ideological holding pattern as he never introduced a new idea of what it is to be American or how the government should operate in response to that idea. His was a skill that sought maximum advantage for him and his politics of the moment, pushing whatever bill or issue that happened to be important at the time, but he never made any lasting impression on the American psyche in terms of ideology.
The 2000 election included no big ideas, fought around the edges of special interest politics and resulted in a dead heat, not coincidentally. Each side only sought enough favor to get it elected, state by state. It's positions weren't infused by a great set of ideas. The Republicans did still have the lasting legacy of Reagan to rest on, and Bush Jr. seemed very comfortable with much of his rhetoric. Notably, he infused his right wing ideology with greater spiritual fervor than Reagan ever did, but early on in office didn't propose any radical action to support his agenda.
9/11 gave rise to big ideas and the application of these ideas to policy. Freedom and democracy were seen and promoted by Bush Jr. as the long term cure to what ailed the radicals in the Muslim world. But we can see that outcome of that adventure. On a net basis, one has to conclude that we've only further radicalized the Jihadis and added new urgency to their cause. They are more powerful than ever. States in the region, including Egypt, Lebanon, Pakistan, Iran and others are more radicalized than ever. Our only claim of victory is over Libya and possibly Iraq (we won't really know until we leave whether democracy will really take root there). Bush's squandering of these ideas, pursuing them so glibly and in such a ham-handed fashion didn't move or inspire people. Compare it to Reagan's actions and rhetoric in supporting Glasnost within the Soviet Union or the Solidarity movement in Poland freedom in Afghanistan semi-covertly. These were deft touches, strategically and ideologically out-maneuvering the Soviet Union, combined with a rhetorical clarity that made clear what we were up to. You will recall that there were many cries against Reagan's various efforts, but it became clear that he was right in short order, silencing his critics in large measure.
Bush Jr. can hope for no such validation. I laugh at those who say history will be his judge. What, will we see a collapse of the global Jihadi movement any time soon? Have we moved an iota closer to that goal? Quite to the contrary, the global Jihadi movement has gained traction and power around the world making great strides in even many western countries. There is nobody speaking clearly and credibly about this struggle, making the case for freedom and democracy in a compelling way. At home, his expansionist governmental policies, including "faith based" initiatives, have seen the power of government increase - which is axiomatically accompanied by a reduction in individual liberty. Rhetorically, he's surrendered the moral high ground to the left, who's class warfare rhetoric dominates the public sphere, with Republican's left arguing how large the trillion dollar deficits that are coming should be. Can you imagine what Reagan would have to say about this? We are in a hole created largely by debt and government intervention. I imaging Reagan would suggest the best thing to do when you find yourself in a hole is to stop digging. But the Republicn party has given up this ideological high ground, so there is nobody left to argue for the power of individual liberty and all that it entails.
So, what does this say for Bush's legacy? Let's just say that he held the door open for Obama. This past election was more about the ideological bankruptcy of the Republican party. Can you think of a less ideologically sound candidate than McCain? He offered nothing new, relying on jingoism and a some vague throwaway lines about markets that no one really think he even believed. Bush had a chance, with a Republican congress and the tailwind of 9/11 to formulate a new strategy for the U.S. globally that would be based on freedom, but he failed miserably to do so. In my estimation, rarely have I seen someone with such a great opportunity to lead fall so woefully short.
Finally, to those of you who would argue with about his legacy, citing details, that is not the point of this article. I'm talking about the the big picture. If you really think that history will judge him kindly, I ask you only to listen to Bush himself. He is a shadow of a man, rhetorically unable to summon up remotely inspiring ideas or a coherent defense of himself beyond answering the call of 9/11. There was much more at stake that he failed to grasp and the American ideal will suffer because of it.
I see the ascent of Reagan as a reassertion of the righteousness of the libertarian streak the Republican party. Remember, he came to power before the rise of the religious right and inherited a post-Nixon party that was run by corporatist patricians of the Bush Sr. ilk. His victory and policies drew their legitimacy and power from the idea of American individualism and exceptionalism. He believed that were more than just another empire, struggling to advance our interests in the world. He thought that America stood for something more both at home and abroad. He rightly saw the struggle with the Soviet Union in moral terms and clearly opposed them by standing for freedom whether it was for the Poles, Scharansky's "Refusenik" movement or by backing the Contras in El Salvador with something more than empty rhetoric. Domestically, he drove us in the direction of getting the goverment off the backs of people and saw individual freedom as a right and responsibility for Americans, invariably in conflict with an expansionist view of government. His rhetoric was more like JFK's than Nixon's, and people across the political spectrum responded to it.
Bush the elder was never comfortable with this strong ideology and called for a "kinder gentler" form of Republicanism. That made him a one term, forgettable president, giving us Clinton, who's ideological roots were never clear. His presidency can be seen as an ideological holding pattern as he never introduced a new idea of what it is to be American or how the government should operate in response to that idea. His was a skill that sought maximum advantage for him and his politics of the moment, pushing whatever bill or issue that happened to be important at the time, but he never made any lasting impression on the American psyche in terms of ideology.
The 2000 election included no big ideas, fought around the edges of special interest politics and resulted in a dead heat, not coincidentally. Each side only sought enough favor to get it elected, state by state. It's positions weren't infused by a great set of ideas. The Republicans did still have the lasting legacy of Reagan to rest on, and Bush Jr. seemed very comfortable with much of his rhetoric. Notably, he infused his right wing ideology with greater spiritual fervor than Reagan ever did, but early on in office didn't propose any radical action to support his agenda.
9/11 gave rise to big ideas and the application of these ideas to policy. Freedom and democracy were seen and promoted by Bush Jr. as the long term cure to what ailed the radicals in the Muslim world. But we can see that outcome of that adventure. On a net basis, one has to conclude that we've only further radicalized the Jihadis and added new urgency to their cause. They are more powerful than ever. States in the region, including Egypt, Lebanon, Pakistan, Iran and others are more radicalized than ever. Our only claim of victory is over Libya and possibly Iraq (we won't really know until we leave whether democracy will really take root there). Bush's squandering of these ideas, pursuing them so glibly and in such a ham-handed fashion didn't move or inspire people. Compare it to Reagan's actions and rhetoric in supporting Glasnost within the Soviet Union or the Solidarity movement in Poland freedom in Afghanistan semi-covertly. These were deft touches, strategically and ideologically out-maneuvering the Soviet Union, combined with a rhetorical clarity that made clear what we were up to. You will recall that there were many cries against Reagan's various efforts, but it became clear that he was right in short order, silencing his critics in large measure.
Bush Jr. can hope for no such validation. I laugh at those who say history will be his judge. What, will we see a collapse of the global Jihadi movement any time soon? Have we moved an iota closer to that goal? Quite to the contrary, the global Jihadi movement has gained traction and power around the world making great strides in even many western countries. There is nobody speaking clearly and credibly about this struggle, making the case for freedom and democracy in a compelling way. At home, his expansionist governmental policies, including "faith based" initiatives, have seen the power of government increase - which is axiomatically accompanied by a reduction in individual liberty. Rhetorically, he's surrendered the moral high ground to the left, who's class warfare rhetoric dominates the public sphere, with Republican's left arguing how large the trillion dollar deficits that are coming should be. Can you imagine what Reagan would have to say about this? We are in a hole created largely by debt and government intervention. I imaging Reagan would suggest the best thing to do when you find yourself in a hole is to stop digging. But the Republicn party has given up this ideological high ground, so there is nobody left to argue for the power of individual liberty and all that it entails.
So, what does this say for Bush's legacy? Let's just say that he held the door open for Obama. This past election was more about the ideological bankruptcy of the Republican party. Can you think of a less ideologically sound candidate than McCain? He offered nothing new, relying on jingoism and a some vague throwaway lines about markets that no one really think he even believed. Bush had a chance, with a Republican congress and the tailwind of 9/11 to formulate a new strategy for the U.S. globally that would be based on freedom, but he failed miserably to do so. In my estimation, rarely have I seen someone with such a great opportunity to lead fall so woefully short.
Finally, to those of you who would argue with about his legacy, citing details, that is not the point of this article. I'm talking about the the big picture. If you really think that history will judge him kindly, I ask you only to listen to Bush himself. He is a shadow of a man, rhetorically unable to summon up remotely inspiring ideas or a coherent defense of himself beyond answering the call of 9/11. There was much more at stake that he failed to grasp and the American ideal will suffer because of it.
Thursday, January 01, 2009
What happened to reason?
“Whoever you are, you who are hearing me now, I am speaking to whatever living remnant is left uncorrupted within you, to the remnant of the human, to your mind, and I say: There is a morality of reason, a morality proper to man, and Man’s Life is its standard of value.” - Atlas Shrugged, Ayn Rand
I come to you today in a state of great concern for the future of our nation, indeed, for the future of modern liberal society. I see it's bulwarks sagging all around me and from it's pulpits I hear strong voices cheering its downfall, giddy at the prospect of its collapse. The very foundation of what forms our freedom is now being being threatened, and truthfully has been for some time, but the tipping point has been reached and the coming darkness will make us all miss the light we have been living in, purchased for us by the blood, wisdom and treasure of our forefathers, only to be squandered by us in an orgy of selfishness and stupidity.
At its core is an intellectual rot that I know most of you will admit exists, privately, to yourselves, whether or not it suits your public political posturing. We have abandoned reason, critical thinking, tough mindedness, the very reason which gave rise to the notion of individual sovereignty which in turn ushered in the great age of modernity and freedom in which we live. At its core, U.S. democracy celebrates the individual. It puts government in service to individual freedom for the first time, or at least in the clearest way to date, and that freedom unleashed a creative explosion unlike any in recorded history. While the entire world can rightly lay claim to the idea of individual freedom, never was it so perfected as in the U.S. constitution and Declaration of Independence. These ideas have allowed us to freely associate with each other to create a world worth living in and yet, we seem all to ready to throw out the very idea that gave birth to our greatness.
What threats do I see? I believe that we are rushing headlong into a statist and socialist form of government, one that confirms that our best days are behind us. I believe that the media and the intellectual leadership of our universities believe that our economic system is fundamentally corrupt, that our purpose in the world at large is evil, that our country has as its very foundation racism, sexism, and exploitation and that we should tear down much of what we have built. In every newspaper and journal that I read I see calls for huge levels of government intervention into peoples lives. Crises are everywhere and there is a would be government program poised to solve every woe. Can't pay your mortgage? Don't have a job? Can't run your car company? Want to go to the doctor? The federal government is here to save the day. Let's spend another trillion, who cares?
But its not the expansion of government per se that is so pernicious. It's the idea that we as individuals and that we, freely associating with each other cannot solve these material problems. No, we need compulsory plans designed by technocrats - and implemented by the force of law. American ingenuity? - when is the last time you heard anyone use that term, ehh - no that's not good enough. People can't manage their own lives. We need a program to help everyone now, affirmative action showed us how helpful a government program can be, why not just do more of it? After all, you are powerless against these mean, bad capitalists and corporations and hey, it's just too complicated for you poor schmucks to figure out anyway. This collectivist thinking eats away at that special American confidence, that "can do" attitude which made us great to begin with.
Don't for a minute think any of this is by accident. The left - which became the "new left" in the early '70's calculated that it couldn't overthrow this country by revolution. No, it would do so by overtaking it's institutions. Very deliberately, those on the left who wanted to make real change concentrated their efforts on education and the media. This is how you change people's minds you see. Do most of you even know the all pervasive radical leftism, and feminism, and black nationalism, and Islamic Jihadism - and most of all, the all encompassing anti-Americanism that dominates today's universities? Are you aware that it's accepted pedagogy that being white is de facto being exploitative? That in the minds of most of the media elite, being a Republican, conservative or libertarian rules you out of getting a job (aside from Rupert Murdoch companies)?The New Left's victory is very nearly complete in these fields. Ideology has trumped reason, without a doubt. I was reading the American Social Work Curriculum standards the other day and it actually says that believing in Social Justice (a political theory) is required for all students in all accredited Social Work programs. In other words it's now an accepted truth throughout the entire field of social work that progressive ideology is morally superior to all other forms of thought. These are the folks who run social programs in government.
This is how you win a war without firing a shot. And now the left has the perfect storm. Between our economic problems, the collapse of the Republican party, the Iraq war, the hysteria around global warming (45% of the worlds climatologists don't agree that anthropogenic global warming is a fact, btw), our health care problems (which every nation on earth is facing due to the incredible increases in demand for health care) and every other malady which can be thought up, there seems to be no alternative to their solutions. As Rahm Emmanuel says, "every crisis is an opportunity" (I'm paraphrasing - but that's exactly what he means) and here they come with solutions.
It's kind of appealing, isn't it? Like slipping into a warm bath. I don't need to worry about paying for the doctor. I don't need to worry about finding a job. I don't have to start a company. I can just go to the employment office and they'll send me somewhere. I won't have to worry about saving for retirement - the money will just appear out of thin air. We'll just tax and spend our way into happiness and equality.
It would be nice to have ever problem be solved by some invisible hand of government, but alas,none of it works. Look at western Europe. Their socialism has already crushed their individual will to reproduce - at current reproduction rates Italy won't even exist in 75 years - in fact all of Europe will likely be dominated by Muslims by that time. They already cannot afford their social systems, particularly welfare and retirement which all go broke in the next 20-30 years. We aren't far behind them on that count, btw. Their health care systems are no picnic either, yes ours needs reform, but there are great free market ideas out there which can make our system so much better. The current thinking - did you see Sicko? - lays the problems in our system at the feet of the profit motive. Let me just ask you one question. If profit is so bad, why don't we nationalize food production and housing too? I mean you'll die faster without food or shelter than you will by being without health care, right? One problem though, I bet you wouldn't have 10 stores within 20 miles of your home with 30 brands of cheap cereal to pick from if the food production system was government run.
I'm sure by this point, if anyone has stuck with me this far, you're saying yeah, yeah, just another right wing rant. NO! I'm not a right winger. I'm an atheist, hedonist, objectivist and libertarian if you must put labels on me. I believe that I am so fortunate to live in a world where it's my choice to live as I choose - where my goal is to pursue my own interests and be proud of that, and to expect others to pursue theirs. A world where I'm free to fail (and yes, the government should provide a safety net to the truly unfortunate or unable), where I take the risks of my choosing and have the dignity and pride that comes with making my way in the world, a world where I feel I can influence outcomes and the world at large, a world where I'm powerful and my purpose is to use my talents and energy productively. I don't want to live in a world where it's up to some faceless GS 13 government employee to decides my fate. Do you?
Okay, I know, it's a pretty alarmist. But I have to say what I think. If you've taken the time to listen, thank you.
Happy New Year!
Thursday, November 06, 2008
Hope is not a strategy
Those of you who know me well understand that I voted for neither Obama nor McCain. I gave my vote to Bob Barr as a protest vote. My current strategy is to support the growth of a third party in this country that actually celebrates individual liberty, free markets, rugged self-reliance and limited government. So, my views on Obama aren't positive from a policy perspective yet they aren't driven by partisan two-party politics either. I'm going to speculate as to what a President Obama means for our liberty and how his plans may impact that liberty. Btw, I'm intentionally leaving the issue of race aside for this post. While I think it's very notable, it isn't relevant to my analysis of his stated policies and their potential impact on our liberty.
First, the good news. While, strangely, the facts are hard to find, turnout was very high, hearkening back to the elections of the early 60's. This election has brought new people to the ballot, and with that hopefully comes a responsibility and thoughtfulness that will accrue to the benefit of our country. Democracy without a reasonably high participation rate by the citizenry is not really any kind of democracy at all. The growth in turnout is a continuing trend - 2004 saw increasing turnout too. We've also reached record voter registration rates. Turnout was not as high in some groups as it was hoped it would be - youth turnout only increased slightly and the modest, twenty percent increase in black voter turnout only brings their participation in the voting population up to par with their percentage of the electorate. We did make substantial progress though, which I find heartening.
Voting, however, in and of itself is not the only measure of an effective democracy. The German people voted Hitler in, after all. My measure is based on what people are voting for and on that count, we are are sadly at a deficit in my opinion. When you scrape away all the lofty rhetoric and get down to policies, it's clear that Obama stands for a significant expansion of the role, power and reach of government into the citizenry's lives. He sees government as a director of outcomes in society, hewing to a "social justice" agenda, although he wisely didn't call it out as such in the campaign. For those of you who are curious, click here to read up on one of the principal theorists of social justice http://en.wikipedia.org/wiki/John_Rawls . From a first principle perspective, he varies from the thinking of John Locke (developed the theory of matural rights, which in large part informed the American concept of freedom) mainly in the area of property rights and economic egalitarianism, injecting a new concept of the equality of circumstances into which one is exposed into the concept of liberty. Put simply, he doesn't see property rights as absolute, and he envisions the proper role of government to essentially level the playing field with respect to opportunity. A glimpse of this thinking came out in the infamous "spread the wealth around"comment by Obama. He makes this view much more plain in his writings and this fundamental concept drives much progressive thinking today.
So what's my beef with "social justice"? Very simply, I believe that property rights are fundamental to being free - and that this is enshrined in our constitution. Whatever the government lays claim to, it does so at gunpoint. Basic libertarian fare, but sadly our elections don't seem to ever contain this kind of dialogue so I'm hoping some of you find this illustrative. The libertarian position, simply put, is that the more property the government takes(taxes and regulation on your use of property) the less free you are - period. One could argue that we already do this, but my argument is about to what end and degree are we willing to give up our freedom for such beneficial outcomes? Who decides what the limits of the desired outcomes are and what equal opportunity is? We've had a small taste of this with affirmative action, but "social justice" takes things to a new level. The previous "deal" Americans have agreed to is that government was responsible for a "safety net" for those who couldn't care for themselves or were unfortunate, but left most economic outcomes to sort themselves out. Progressive taxation was seen as a fair way to apportion the responsibility for this safety net to those most able to support it - not primarily as a punitive redistribution scheme with the implicit assumption that those who have wealth were somehow more privileged. Welfare, social security, medicaid, medicare, these were all part of a societal agreement to not let folks fall into destitution, so we agreed to contribute taxes to support these programs. As a very important aside, note how wildly these programs have spiraled out of control with respect to cost. These initially modest programs now take big chunks of the GDP of our country. The "social justice" agenda asserts that equal opportunity is far more than equal treatment under the law. It opens up all of society for an examination of what causes equal outcomes, as though this was ever possible to truly understand in the first place and that it was desirable in any event. Let's look at a simple example. In education it's axiomatic that early childhood reading, being read to that is, is highly correlated with intelligence. A child who is read to daily, by the age of five has a huge advantage over a child who isn't in terms of future educational and economic performance. What's worse is that it's very hard for a child to catch up. Here is a perfect scenario where a progressive wants the government to intervene. Hence, early learning programs are needed to create equal opportunity for the innocent child. Sounds fair, right? Except in practice it's very hard to remedy. This part of childhood development is the province of parents and intervening in the family is a very tricky - oh yeah, and expensive - proposition (maybe that's why Marx called for the destruction of the family?). More to my point, advocates of "social justice" have many such examples of these kind of conditions that they would like to remedy. The question is where are the boundaries? Answer, there are none and this is where social justice conflates itself with Marxism and socialism. Essentially, the governments right to create desirous social outcomes overrides your individual rights, so unlimited intrusion into your life becomes warranted. In practice, wealth and the power to distribute it fairly is the responsibility of government, essentially giving goverment the ownnership of all wealth. Forget the notion of limiting government to it's enumerated powers, or the notion of individual responsibility. Let the smart people in government determine how to create "good citizens" and the right outcomes. That's how communist re-education camps were justified and how the eugenics movement - which was a brainchild of the original "progressives", btw, - led to the Nazi's Aryan aspirations.
It's not that I don't agree with the progressive movement's concerns about problems in society - and that's all Obama's positions are, btw. He proposes no "post ideological" or "pragmatic" new set of policies that differ substantially from the progressive agenda. I just think that the unintended consequences of this kind of social engineering are very dangerous. It's also clear that our constitution doesn't imbue the federal government with this kind of power - to the contrary, it explicitly forbids it. I do believe that Obama and his followers are truly well intentioned - and that's the scariest kind of fanatic, btw. I also think that this kind of government will (and already does) undermine the notion of individual responsibility in our society and I believe that the individualism enshrined in the constitution has been a core driver of the U.S.'s greatness. So I have to sadly give Obama a failing assessment with respect to the prospects for our liberty under his administration. I wish him well and hope for the best, but as my favorite book on sales is entitled, Hope is not a strategy.
First, the good news. While, strangely, the facts are hard to find, turnout was very high, hearkening back to the elections of the early 60's. This election has brought new people to the ballot, and with that hopefully comes a responsibility and thoughtfulness that will accrue to the benefit of our country. Democracy without a reasonably high participation rate by the citizenry is not really any kind of democracy at all. The growth in turnout is a continuing trend - 2004 saw increasing turnout too. We've also reached record voter registration rates. Turnout was not as high in some groups as it was hoped it would be - youth turnout only increased slightly and the modest, twenty percent increase in black voter turnout only brings their participation in the voting population up to par with their percentage of the electorate. We did make substantial progress though, which I find heartening.
Voting, however, in and of itself is not the only measure of an effective democracy. The German people voted Hitler in, after all. My measure is based on what people are voting for and on that count, we are are sadly at a deficit in my opinion. When you scrape away all the lofty rhetoric and get down to policies, it's clear that Obama stands for a significant expansion of the role, power and reach of government into the citizenry's lives. He sees government as a director of outcomes in society, hewing to a "social justice" agenda, although he wisely didn't call it out as such in the campaign. For those of you who are curious, click here to read up on one of the principal theorists of social justice http://en.wikipedia.org/wiki/John_Rawls . From a first principle perspective, he varies from the thinking of John Locke (developed the theory of matural rights, which in large part informed the American concept of freedom) mainly in the area of property rights and economic egalitarianism, injecting a new concept of the equality of circumstances into which one is exposed into the concept of liberty. Put simply, he doesn't see property rights as absolute, and he envisions the proper role of government to essentially level the playing field with respect to opportunity. A glimpse of this thinking came out in the infamous "spread the wealth around"comment by Obama. He makes this view much more plain in his writings and this fundamental concept drives much progressive thinking today.
So what's my beef with "social justice"? Very simply, I believe that property rights are fundamental to being free - and that this is enshrined in our constitution. Whatever the government lays claim to, it does so at gunpoint. Basic libertarian fare, but sadly our elections don't seem to ever contain this kind of dialogue so I'm hoping some of you find this illustrative. The libertarian position, simply put, is that the more property the government takes(taxes and regulation on your use of property) the less free you are - period. One could argue that we already do this, but my argument is about to what end and degree are we willing to give up our freedom for such beneficial outcomes? Who decides what the limits of the desired outcomes are and what equal opportunity is? We've had a small taste of this with affirmative action, but "social justice" takes things to a new level. The previous "deal" Americans have agreed to is that government was responsible for a "safety net" for those who couldn't care for themselves or were unfortunate, but left most economic outcomes to sort themselves out. Progressive taxation was seen as a fair way to apportion the responsibility for this safety net to those most able to support it - not primarily as a punitive redistribution scheme with the implicit assumption that those who have wealth were somehow more privileged. Welfare, social security, medicaid, medicare, these were all part of a societal agreement to not let folks fall into destitution, so we agreed to contribute taxes to support these programs. As a very important aside, note how wildly these programs have spiraled out of control with respect to cost. These initially modest programs now take big chunks of the GDP of our country. The "social justice" agenda asserts that equal opportunity is far more than equal treatment under the law. It opens up all of society for an examination of what causes equal outcomes, as though this was ever possible to truly understand in the first place and that it was desirable in any event. Let's look at a simple example. In education it's axiomatic that early childhood reading, being read to that is, is highly correlated with intelligence. A child who is read to daily, by the age of five has a huge advantage over a child who isn't in terms of future educational and economic performance. What's worse is that it's very hard for a child to catch up. Here is a perfect scenario where a progressive wants the government to intervene. Hence, early learning programs are needed to create equal opportunity for the innocent child. Sounds fair, right? Except in practice it's very hard to remedy. This part of childhood development is the province of parents and intervening in the family is a very tricky - oh yeah, and expensive - proposition (maybe that's why Marx called for the destruction of the family?). More to my point, advocates of "social justice" have many such examples of these kind of conditions that they would like to remedy. The question is where are the boundaries? Answer, there are none and this is where social justice conflates itself with Marxism and socialism. Essentially, the governments right to create desirous social outcomes overrides your individual rights, so unlimited intrusion into your life becomes warranted. In practice, wealth and the power to distribute it fairly is the responsibility of government, essentially giving goverment the ownnership of all wealth. Forget the notion of limiting government to it's enumerated powers, or the notion of individual responsibility. Let the smart people in government determine how to create "good citizens" and the right outcomes. That's how communist re-education camps were justified and how the eugenics movement - which was a brainchild of the original "progressives", btw, - led to the Nazi's Aryan aspirations.
It's not that I don't agree with the progressive movement's concerns about problems in society - and that's all Obama's positions are, btw. He proposes no "post ideological" or "pragmatic" new set of policies that differ substantially from the progressive agenda. I just think that the unintended consequences of this kind of social engineering are very dangerous. It's also clear that our constitution doesn't imbue the federal government with this kind of power - to the contrary, it explicitly forbids it. I do believe that Obama and his followers are truly well intentioned - and that's the scariest kind of fanatic, btw. I also think that this kind of government will (and already does) undermine the notion of individual responsibility in our society and I believe that the individualism enshrined in the constitution has been a core driver of the U.S.'s greatness. So I have to sadly give Obama a failing assessment with respect to the prospects for our liberty under his administration. I wish him well and hope for the best, but as my favorite book on sales is entitled, Hope is not a strategy.
Friday, October 31, 2008
The Pornification of our Politics
I watched Obama's infomercial in abject astonishment. It was a masterpiece, a shining example of the "state of the art" in visual communication - such as it is. I was enthralled by his pitch perfect speaking abilities and the images he presented, so obviously created with great care and intent, while simultaneously horrified by what passes for substance in our times.
Did you notice that his presentation was uncluttered by facts and figures, statistics and charts? No, he's not in need of any such dross. Oh yeah, for those of you getting ready to say, "Well neither does McCain", please save your breath. I'm no fan of that erratic, dimwitted fool. If he had the abilities that Obama possesses, he would use them in the same, or perhaps in even more craven, ways. No, this is not another polemic article, seeking to sway you with half truths and supercilious righteousness. My task tonight is a more subtle one, and I think more important than that.
Don't get me wrong, I do agree with much of Obama's assessment of what's not working well in our country (although I couldn't help but notice the late model SUVs that the folks he sympathized with were driving or wondering about how much was spent on that child's football gear and league). What I'm enraged about is the substance free diagnosis of what's really ailing us. Does he think we are too dumb to understand? Some part of me was hoping that he'd carved out thirty minutes of uninterrupted time with the American people for a serious discussion about his priorities and governing philosophy. But instead I was treated to carefully selected words and images designed to inflame the class warfare that is already destroying our great nation.
What specifically am I referring to? Let's just look at the issue of health care. At no time did he mention the growth of the demand for health care in this country. The woman who was on twelve medications for arthritis, I wonder how much those medications cost each month? Did those treatments exist twenty years ago, or even ten? Or, dare I mention, how much did his mother's cancer treatment cost? Would he challenge us with the fact that 75% of all health care spending in the U.S. is for chronic care? That a Dartmouth study has concluded that at least a third of that spending may be unnecessary? That the current government controlled insurance system (already fifty percent of health care costs are paid by government in the U.S.) encourages patients and doctors to over-treat many illnesses, while other care goes undelivered due to lack of funds? Did he bother to mention that we face tough choices about how and when we should extend life with the breakthrough technologies that are being developed?
I'll stop there because my it isn't my intent to write a piece about health care, it is to point out the difference between the reasoned discussion of a problem versus the use imagery to manipulate the masses. We live in an image drenched society. Everywhere we turn we are being served up ideas as pictures. They're 'worth a thousand words', right? Maybe not. Everything is simplified into an image for us by the media, and a moving one is even more captivating. These moving images have been used by our masters in the media to tell us stories - whether they are news stories or sitcoms. Over time we have become trained to look for the story, the beginning and the end, the good guys and the bad guys, the conflict and the resolution, all neatly packaged up and easy to digest. I think we are more than trained, I think we are addicted to it now. We demand it! We need it! Don't bore us with dry policy discussions or analysis. We want to be entertained, dammit! Just like sex has been objectified by porn, and sexual behavior is now reflecting porn - so is our politics now reflecting the images we are being sold.
I don't need to give you any more examples. Please, just think for yourself. What's really going on in our country, in our world? In my mind, the most important thing to note is that most of the problems Obama is highlighting are complex and don't easily yield themselves to ideologically driven, sound-bite policy prescriptions - from the left or the right. Btw, I hope I don't need to keep pointing that out. I know you've all been trained to be amateur policy wonks with your ideologically drenched positions well defended and at the ready always, but try to resist the temptation to see this from a conservative or "progressive" point of view. Our TV driven culture is turning us into simpering idiots and unless we realize that we are being manipulated there is no hope for us.
I was tempted to take a different perspective in this piece, to say that it's sad that Obama has to dumb down his message for the masses to get through to them and to castigate all of you for making him do this. But I don't think that's true. I think about the people I know. So many of them are smart enough to understand complex problems and are able to make difficult decisions. The truth is that his "message" works best when kept dumbed down. If you don't believe that, I'll leave you with a question. Did George Bush or Barack Obama have more individual contributors that gave less than two hundred dollars to his campaign? I bet you Obamaniacs already have a sinking feeling in your stomach, knowing that your illusions about him are going to be smashed yet again. Yes, folks, it's true, George Bush in '04 had more donors who gave him two hundred dollars or less than Obama has had. My source is Brooks and Shields, Jim Lehrer News Hour on NPR, no enemy of Obama's. If you don't believe me, download the podcast, dated 10/24 . I know it hurts to see the truth, but it's there if you are willing to see it. Obama isn't a 'man of the people'. He's no different than the rest, he's just another political hack being packaged up by the power elite to be just acceptable to enough to get elected, using populist rhetoric as his primary tool. Don't be fooled by his silken speech or his good looks. Haven't you ever seen the way a porn star looks into the camera for the money shot, so full of desire and lust for you? Just because it looks like the real thing doesn't make it so.
Did you notice that his presentation was uncluttered by facts and figures, statistics and charts? No, he's not in need of any such dross. Oh yeah, for those of you getting ready to say, "Well neither does McCain", please save your breath. I'm no fan of that erratic, dimwitted fool. If he had the abilities that Obama possesses, he would use them in the same, or perhaps in even more craven, ways. No, this is not another polemic article, seeking to sway you with half truths and supercilious righteousness. My task tonight is a more subtle one, and I think more important than that.
Don't get me wrong, I do agree with much of Obama's assessment of what's not working well in our country (although I couldn't help but notice the late model SUVs that the folks he sympathized with were driving or wondering about how much was spent on that child's football gear and league). What I'm enraged about is the substance free diagnosis of what's really ailing us. Does he think we are too dumb to understand? Some part of me was hoping that he'd carved out thirty minutes of uninterrupted time with the American people for a serious discussion about his priorities and governing philosophy. But instead I was treated to carefully selected words and images designed to inflame the class warfare that is already destroying our great nation.
What specifically am I referring to? Let's just look at the issue of health care. At no time did he mention the growth of the demand for health care in this country. The woman who was on twelve medications for arthritis, I wonder how much those medications cost each month? Did those treatments exist twenty years ago, or even ten? Or, dare I mention, how much did his mother's cancer treatment cost? Would he challenge us with the fact that 75% of all health care spending in the U.S. is for chronic care? That a Dartmouth study has concluded that at least a third of that spending may be unnecessary? That the current government controlled insurance system (already fifty percent of health care costs are paid by government in the U.S.) encourages patients and doctors to over-treat many illnesses, while other care goes undelivered due to lack of funds? Did he bother to mention that we face tough choices about how and when we should extend life with the breakthrough technologies that are being developed?
I'll stop there because my it isn't my intent to write a piece about health care, it is to point out the difference between the reasoned discussion of a problem versus the use imagery to manipulate the masses. We live in an image drenched society. Everywhere we turn we are being served up ideas as pictures. They're 'worth a thousand words', right? Maybe not. Everything is simplified into an image for us by the media, and a moving one is even more captivating. These moving images have been used by our masters in the media to tell us stories - whether they are news stories or sitcoms. Over time we have become trained to look for the story, the beginning and the end, the good guys and the bad guys, the conflict and the resolution, all neatly packaged up and easy to digest. I think we are more than trained, I think we are addicted to it now. We demand it! We need it! Don't bore us with dry policy discussions or analysis. We want to be entertained, dammit! Just like sex has been objectified by porn, and sexual behavior is now reflecting porn - so is our politics now reflecting the images we are being sold.
I don't need to give you any more examples. Please, just think for yourself. What's really going on in our country, in our world? In my mind, the most important thing to note is that most of the problems Obama is highlighting are complex and don't easily yield themselves to ideologically driven, sound-bite policy prescriptions - from the left or the right. Btw, I hope I don't need to keep pointing that out. I know you've all been trained to be amateur policy wonks with your ideologically drenched positions well defended and at the ready always, but try to resist the temptation to see this from a conservative or "progressive" point of view. Our TV driven culture is turning us into simpering idiots and unless we realize that we are being manipulated there is no hope for us.
I was tempted to take a different perspective in this piece, to say that it's sad that Obama has to dumb down his message for the masses to get through to them and to castigate all of you for making him do this. But I don't think that's true. I think about the people I know. So many of them are smart enough to understand complex problems and are able to make difficult decisions. The truth is that his "message" works best when kept dumbed down. If you don't believe that, I'll leave you with a question. Did George Bush or Barack Obama have more individual contributors that gave less than two hundred dollars to his campaign? I bet you Obamaniacs already have a sinking feeling in your stomach, knowing that your illusions about him are going to be smashed yet again. Yes, folks, it's true, George Bush in '04 had more donors who gave him two hundred dollars or less than Obama has had. My source is Brooks and Shields, Jim Lehrer News Hour on NPR, no enemy of Obama's. If you don't believe me, download the podcast, dated 10/24 . I know it hurts to see the truth, but it's there if you are willing to see it. Obama isn't a 'man of the people'. He's no different than the rest, he's just another political hack being packaged up by the power elite to be just acceptable to enough to get elected, using populist rhetoric as his primary tool. Don't be fooled by his silken speech or his good looks. Haven't you ever seen the way a porn star looks into the camera for the money shot, so full of desire and lust for you? Just because it looks like the real thing doesn't make it so.
Sunday, September 28, 2008
Freedom to Fail
Am I alone in seeing the collapse of our capital markets as a "canary in the mine", warning of a much greater decay at work in our society? The hortatory efforts of our leaders - from both the left and the right - have cowed us into believing that we "have to do something" or doomsday will be upon us. They tell us that now isn't the time for blame or finger-pointing, that can be addressed later, but that we must act now! And that the best course of action is bailing out the interest rate markets. It's essentially being sold to us - the folks paying the bills - as something that we don't/can't understand, but we have to do or else. Well folks, I'm here to do some 'splainin'. As some of you know, I have a background in market and credit risk management, actually having sold AIG their risk management system. I think we all have to think a bit about what's really happening, and more importantly, learn the lesson that I believe we all must learn from this catastrophe.
Consider the chart above, from the British Bankers Association Derivatives Survey, 2006 Data. Ah, ah - I can feel you wanting to click to something more interesting - DON'T YOU DARE!! THESE SOBs MAY DESTROY THE ENTIRE GLOBAL FINANCIAL SYSTEM IF WE DON'T STOP THEM, SO PLEASE TAKE A MINUTE TO UNDERSTAND SOMETHING A LITTLE MORE COMPLICATED THAN YOUR LATEST OBAMA PLATITUDE OR RALLYING BEHIND SARAH PALIN.
The "interest derivatives market" has exploded in the past 5 years. 2008 notional principal outstanding of just "credit default swaps" was forecast to be somewhere around 60 trillion usd. Just to put that in perspective , Global GDP for '08 is forecast to be about 64 trillion usd. So, just this market (which is a minority of the estimated 500 trillion plus OTC derivatives market) is trading massive, unimaginably large quantities of capital. And it's not as though these trading firms and hedge funds actually have that much capital - no, they've borrowed it. There is so much leverage in these markets that the participants can't possibly ride out "gaps" in the market - gaps that are inevitable, btw. "Gaps" are discontinuities, sudden variations in the rate of change that are statistically improbable but also hard to predict the frequency of, particularly given the newness of this market. Given the leverage involved, a cascade of what essentially look like margin calls in an ordinary brokerage account, have brought the global debt markets to it's knees from a "technical" standpoint, meaning that due to the rapid change in credit quality of both sellers and buyers of credit/debt/interest rate products and the related pricing of these securities, having moved to ridiculous price levels in search of buyers and sellers, there are essentially no buyers or sellers in these markets. In fact, if they did liquidate these positions, many participants would become instantly insolvent. It's like you bought IBM stock, paid for the trade with borrowed money, which is all you had because your actual net worth was 3-4 cents per dollar of capital you are trading. Only remember, you could never do that. Lehman Brothers, for example, would have never let you borrow anywhere near that much to trade with in your account, while all the while they are leveraged 30 - 1. It's very simple at a certain point. The investment geniuses in the derivatives market went crazy. Oh yeah, and don't for a minute think they didn't know what they were doing. During my time in the derivatives market, it was pretty clear to most folks involved that they were going to blow up the global financial system someday, it was only a question of when. Well that day has come.
What's truly galling about it all is that due to the resultant systemic risk, there does have to be some kind of intervention or we will face a global depression of a large magnitude which is simply unacceptable, so these guys will get bailed out to some degree versus being laughed out of the market, treated as the greedy, pathetic and ultimately stupid fools that they are (when are we going to learn that an ivy league degree is just proof of just about nothing?)
But the cretins on Wall Street aren't the only culprits, not by a long shot. Let's talk about John Q. Citizen, happily taking out mortgage after mortgage, buying house after house, with higher and higher prices. It was a classic speculative bubble. So many people bought houses that they knew they wouldn't be able to afford in a couple of years, based on the reset structure of the interest rates of the mortgages they signed for. Yes, these folks were abetted by a Federal Reserve ladling easy money out, trying to ward off a needed recession, by government agencies promoting relaxed lending standards and by a greedy mortgage industry selling the mortgages as fast as they could. But nonetheless, at the moment of truth, there is incredibly clear disclosure of the costs of a mortgage for an individual borrower. Those of you who have taken a mortgage recently can surely testify to the pages and pages of warnings and disclosures incorporated in mortgage documents. It's simply not plausible to now claim that somehow a significant percentage of these borrowers have been duped. Nope, people gladly got in line, smugly playing this Ponzi scheme out, pushing from their minds any concern of actually paying the mortgage off. They were going to borrow again at a later date, after they'd bought the new car, boat, vacation home, paid their kids private school tuition, built the salt water swimming pool - whatever luxury they'd imagined they were entitled to after watching too much TV. Now, surprise - they can't pay, so they are walking away. These people were stupid and greedy and now we are seeing record defaults, creating a huge devaluation in the securities created out of these mortgages, which has been the tripwire of the credit derivatives market meltdown. Shame on you people, shame on you for what you've done. You are just as guilty as the investment bankers, letting greed guide you, while simultaneously exercising some kind of mass blindness, willfully ignoring risks that were all to plainly laid out for you.
I'm tempted to continue to explain how Freddie Mac and Fannie Mae were manipulated, largely by Democrats, at the behest of those "housing activists" who are fellow travelers of Barak Obama, to encourage "access to the American dream" and other such platitudes, chief amongst them Senators Barney Frank and Chris Dodd (who has a sweetheart mortgage deal from now defunct Countrywide Financial). Or the Republicans who all too gladly go along with the anti-regulatory crowd on Wall Street, letting the largest securities market in the world - the OTC derivatives market - operate largely without oversight. But that's a different article, and would distract from my key point, which is what the hell is wrong with our society? How could we collectively act with such bad and corrupt judgement? Willfully ignoring the consequences of our actions, just grabbing the short term gratification while damning our future? That's not how this great country was built.
Folks, our collective freedom and prosperity are a reflection of of our individual behavior in our personal, professional and civic affairs. I see an unmistakable pattern of greed and short term thinking in this debacle that goes to the very core of our society, crossing ALL PARTY LINES - you Democrats out there, don't for a second take any comfort in this. Your folks are as guilty as anyone in all this. To put this on Bush is to simply not understand what is happening - btw, he and his cronies have been trying to reign in Freddie Mac and Fannie Mae since '01, viciously opposed by Democrats, as the foolhardiness of their policies was evident even then. This is not to offer comfort to the right either, who need to once and for all drop their reflexive anti-regulatory posture. Capitalism can't function without adequate regulation - wake up!
Here's my conclusion, and what I really want all of you to think about. We live in such unbelievable prosperity that I think many of us believe a continuation of these conditions is somehow inevitable. That's not the history of other great nations, in fact the history of most great nations is decay from within. We all need to act more prudently in our lives. Let's consider the future consequences of today's actions and of the bigger picture, individually and I suspect that thinking will be reflected collectively in our politics. Let those thoughts be reflected in your personal, professional and civic actions. If we don't, who will? Congress? The President? Take a good look at these folks. They aren't the "b" or even the "c" team. How many of them would make it through a job interview where you work? How much do they even understand about capital markets and economics? How do we have such knaves and fools leading us? I say that's the first place to start. Let's get rid of all these clowns and start over. Let's not be swayed by their glib promises of ever-expanding horizons and limitless prosperity for all. It's just not so. How about we elect someone who will encourage us to live within our means and be careful stewards of this precious gift freedom? Oh, snap, none of them are about any of that. We are well and truly screwed folks if we don't change, it's just a matter of when - not if - our great nations will collapse if we keep on the track we're on.
You know the toughest thing about democracy? Ultimately, we get exactly the leadership we want. It's up to us to change, folks, not them, they're just doing what makes us vote for them, which seems to currently be short term gain at the expense of the very foundation of our society. That should scare the living daylights out of all of us. It sure scares me.
Sunday, August 24, 2008
Beijing Gets Over on the World
Don't let the magnificent closing ceremonies confuse you. The Olympics just took place in the country where half of the least free people in the world live (see Freedomhouse's annual rankings of freedom at http://www.freedomhouse.org/ for more on this). Somehow, the repression of the press, free speech, reproductive rights (that's right - you are only allowed to have one child in China - where's the uproar from the "pro-choice crowd?) and so many other basic freedoms that we take for granted was just swept under the rug for the past month. I'd be remiss if I didn't also mention China's widespread use of torture in its prisons and political re-education camps, since this topic is so top-of-mind for the worlds human rights activists. Where is the world's outrage at China? Or is that special, hate-filled vitriol only reserved for the United States? Btw, with democracy breaking out all over Iraq, one would think that the "progressives" would be looking for a new focus. Why wasn't an international showcase for the world largest repressive dictatorship a compelling rallying point for the do-gooder crowd?
You - the average person - are far too busy with your lives to know why the press has shut their mouths. The answer is very simple. If you want access in China, you have to play by the Chinese government's rules, which they've made explicit. Here are the guidelines for press coverage issued by the Chinese Government Propaganda Office, as reported by the Sydney Morning Herald on August 14th.
THE 21 EDICTS FROM THE CHINESE GOVERNMENT'S PROPAGANDA UNIT
1. The telecast of sports events will be live [but] in case of emergencies, no print is allowed to report on it.
2. From August 1, most of the previously accessible overseas websites will be unblocked. No coverage is allowed on this development. There's also no need to use stories published overseas on this matter and [website] operators should not provide any superlinks on their pages.
3. Be careful with religious and ethnic subjects.
4. Don't make fuss about foreign leaders at the opening ceremony, especially in relation to seat arrangements or their private lives.
5. We have to put special emphasis on ethnic equality. Any perceived racist terms as "black athlete" or "white athlete" is not allowed. During the official telecast, we can refer to Taiwan as "Chinese Taipei". In ordinary times, refer to Taiwanese athletes as "those from the precious island Taiwan....." In case of any pro Taiwan-independence related incident inside the venue, you shall follow restrictions listed in item 1.
6. For those ethnic Chinese coaches and athletes who come back to Beijing to compete on behalf of other countries, don't play up their "patriotism" since that could backfire with their adopted countries.
7. As for the Pro-Tibetan independence and East Turkistan movements, no coverage is allowed. There's also no need to make fuss about our anti-terrorism efforts.
8. All food saftey issues, such as cancer-causing mineral water, is off-limits.
9. In regard to the three protest parks, no interviews and coverage is allowed.
10. No fuss about the rehearsals on August 2,5. No negative comments about the opening ceremony.
11.No mention of the Lai Changxing case.
12.No mention of those who illegally enter China.
13.On international matters, follow the official line. For instance, follow the official propaganda line on the North Korean nuclear issue; be objective when it comes to the Middle East issue and play it down as much as possible; no fuss about the Darfur question; No fuss about UN reform; be careful with Cuba. If any emergency occurs, please report to the foreign ministry.
14. If anything related to territorial dispute happens, make no fuss about it. Play down the Myanmar issue; play down the Takeshima island dispute.
15. Regarding diplomatic ties between China and certain nations, don't do interviews on your own and don't use online stories. Instead, adopt Xinhua stories only. Particularly on the Doha round negotiation, US elections, China-Iran co-operation, China-Aussie co-operation, China-Zimbabwe co-operation, China-Paraguay co-operation.
16.Be very careful with TV ratings, only use domestic body's figures. Play it down when rating goes down.
17. In case of an emergency involving foreign tourists, please follow the official line. If there's no official line, stay away from it.
18. Re possible subway accidents in the capital, please follow the official line.
19.Be positive on security measures.
20. Be very careful with stock market coverage during the Games.
21.Properly handle coverage of the Chinese sports delegation:
A.don't criticise the selection process
B.don't overhype gold medals; don't issue predictions on gold medal numbers; don't make fuss about cash rewards for athletes.
C.don't make a fuss about isolated misconducts by athletes.
D.enforce the publicity of our anti-doping measures.
E. put emphasis on government efforts to secure the retirement life of atheletes.
F. keep a cool head on the Chinese performance. Be prepared for possible fluctations in the medal race.
G. refrain from publishing opinion pieces at odds with the official propangada line of the Chinese delegation.
That's all a western news organization had to do in order to stay on friendly terms with the Chinese government - or else. Can you imagine if a western democracy had issued such an edict? Or engaged in the kind of repressive practices that go on every day in China? The politics would have obscured the event. So instead, China gets to hold itself out as a world-class nation, somehow on the same moral footing as the democracies of the world, when it's simply a dictatorial repressive sweatshop gulag. The victims here are the Chinese people. If you don't think that they were hoping the Olympics would put pressure on the Chinese government to liberalize something - anything - than you don't understand the hopes and dreams of a truly unfree people. But hey, at least Michael Phelps has eight new necklaces.
You - the average person - are far too busy with your lives to know why the press has shut their mouths. The answer is very simple. If you want access in China, you have to play by the Chinese government's rules, which they've made explicit. Here are the guidelines for press coverage issued by the Chinese Government Propaganda Office, as reported by the Sydney Morning Herald on August 14th.
THE 21 EDICTS FROM THE CHINESE GOVERNMENT'S PROPAGANDA UNIT
1. The telecast of sports events will be live [but] in case of emergencies, no print is allowed to report on it.
2. From August 1, most of the previously accessible overseas websites will be unblocked. No coverage is allowed on this development. There's also no need to use stories published overseas on this matter and [website] operators should not provide any superlinks on their pages.
3. Be careful with religious and ethnic subjects.
4. Don't make fuss about foreign leaders at the opening ceremony, especially in relation to seat arrangements or their private lives.
5. We have to put special emphasis on ethnic equality. Any perceived racist terms as "black athlete" or "white athlete" is not allowed. During the official telecast, we can refer to Taiwan as "Chinese Taipei". In ordinary times, refer to Taiwanese athletes as "those from the precious island Taiwan....." In case of any pro Taiwan-independence related incident inside the venue, you shall follow restrictions listed in item 1.
6. For those ethnic Chinese coaches and athletes who come back to Beijing to compete on behalf of other countries, don't play up their "patriotism" since that could backfire with their adopted countries.
7. As for the Pro-Tibetan independence and East Turkistan movements, no coverage is allowed. There's also no need to make fuss about our anti-terrorism efforts.
8. All food saftey issues, such as cancer-causing mineral water, is off-limits.
9. In regard to the three protest parks, no interviews and coverage is allowed.
10. No fuss about the rehearsals on August 2,5. No negative comments about the opening ceremony.
11.No mention of the Lai Changxing case.
12.No mention of those who illegally enter China.
13.On international matters, follow the official line. For instance, follow the official propaganda line on the North Korean nuclear issue; be objective when it comes to the Middle East issue and play it down as much as possible; no fuss about the Darfur question; No fuss about UN reform; be careful with Cuba. If any emergency occurs, please report to the foreign ministry.
14. If anything related to territorial dispute happens, make no fuss about it. Play down the Myanmar issue; play down the Takeshima island dispute.
15. Regarding diplomatic ties between China and certain nations, don't do interviews on your own and don't use online stories. Instead, adopt Xinhua stories only. Particularly on the Doha round negotiation, US elections, China-Iran co-operation, China-Aussie co-operation, China-Zimbabwe co-operation, China-Paraguay co-operation.
16.Be very careful with TV ratings, only use domestic body's figures. Play it down when rating goes down.
17. In case of an emergency involving foreign tourists, please follow the official line. If there's no official line, stay away from it.
18. Re possible subway accidents in the capital, please follow the official line.
19.Be positive on security measures.
20. Be very careful with stock market coverage during the Games.
21.Properly handle coverage of the Chinese sports delegation:
A.don't criticise the selection process
B.don't overhype gold medals; don't issue predictions on gold medal numbers; don't make fuss about cash rewards for athletes.
C.don't make a fuss about isolated misconducts by athletes.
D.enforce the publicity of our anti-doping measures.
E. put emphasis on government efforts to secure the retirement life of atheletes.
F. keep a cool head on the Chinese performance. Be prepared for possible fluctations in the medal race.
G. refrain from publishing opinion pieces at odds with the official propangada line of the Chinese delegation.
That's all a western news organization had to do in order to stay on friendly terms with the Chinese government - or else. Can you imagine if a western democracy had issued such an edict? Or engaged in the kind of repressive practices that go on every day in China? The politics would have obscured the event. So instead, China gets to hold itself out as a world-class nation, somehow on the same moral footing as the democracies of the world, when it's simply a dictatorial repressive sweatshop gulag. The victims here are the Chinese people. If you don't think that they were hoping the Olympics would put pressure on the Chinese government to liberalize something - anything - than you don't understand the hopes and dreams of a truly unfree people. But hey, at least Michael Phelps has eight new necklaces.
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