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NEH, right on! As an engineer and manager, and sometimes economist, myself I always do precisely what you suggest. As an engineer you will also further recognize that solving any problem always consists of balancing a whole bunch of positives and negatives. And absolutely yes, and as also suggested by Chris, as you say the “Same applies to any Socio-Politico-Economic System.” But remember, solving any problem and the solutions are always positive endeavors, thus the importance of accentuating the positive.


Xavier: Of course I see good where it presents itself. As one with a mechanical bent it pleases me greatly to see a machine, engine or process humming away smoothly and efficiently. When confronted with less, I have to plead guilty, as NEH, and the progressives who've brought us this far, to size up the problem, round up the needed tools and go to work.

As for Chris's (edict?) "Each possible social or political improvement’ has its own set of trade-offs and unforeseen consequences."

....It appears that it is he signing on as such a gloomy defeatist that "good" can not only never be achieved, but that even the pursuit of such is sheer folly. I'm glad that those coming before, including our founders, did not throw up their hands and declare improvement over what came before fruitless.

"They can only be managed, to some degree. They can never be completely controlled much less overcome."

..... Well that's much of the issue of governing ourselves isn't it? Have we ever had a more costly lesson in the need to govern and control our capitalist engine than that dealt by the wholesale corruption of our financial sector that has tanked the economies of the entire world? Indeed! The task of mending fences and protecting the hen house from hungry foxes is never finished.

But, contrary to the litany of today's "conservatives" of more incentives and tax benefits being essential to get those of the topmost tiers to "produce" (but NOT those of the lower tiers??) "good" does exist and there are, fortunately, many who produce without intent to maximize there own self-interest.

Ha! your "Marx" paragraph is a real piece of work! I reveal above what motivates me, but being a mariner that lives in Alaska where it's currently avalanche season I do my best at preventing icy waters out of my "egotistical calculations".

BTW I thought Marx prescient in those early days of designing the engine known as capitalism to have, accurately, predicted that with capital being a stronger force than labor it's practitioners would suffer the economic constipation of all of the capital consolidating in the hands of the very few, never "trickling down" with revolution by the starving peasants being the only recourse.

Of course Marx left us long before the last time his prediction came true and capitalism was nearly jettisoned in favor of the socialism adopted, in response, by England and a quite a flirtation with communism. Fortunately, collective bargaining and the work rules of a "nanny state" including those of protecting our children from being indentured to then prevalent sweat shops were implemented.

And! here we are again, with the same level of income and wealth consolidation, and economy STARVED by lack of demand, NO "trickle down" only more consolidation, with those claiming to be the "conservative protectors" of a past culture being no closer to understanding the role of collective bargaining or work and safety rules imposed by us -- yes WE the people -- through a sluggish but still responsive governing body. DO nothing as the destructive trend of consolidation continues? Hope?


Please don't take my chidings as insults, and as for our weary glass filled half with liquids and the rest with vapors, after long experiment I'm nearly certain that the quality of the drink is at least as important as is its volume.

Lastly, as this is just a place for us to anonymously and honestly discuss things, would you agree that the self-serving mess parading as "conservatism" today bears no resemblance to the ideals of your books?

Cheers, and hopes of muddling through....


Jack, three points. First, I never cease to be amazed by how you contradict yourself from one sentence or paragraph to the next; e.g. you actually and surprisingly knock old labor's ascendancy in England seemingly because of its too close association with socialism, communism and Marx, only to bemoan the inequalities of trickle down in the next paragraph. Make up your mind. Let's get positive. How would you solve the problem of inequality? All I hear from you is England’s cleansed labor approach but without any balancing; e.g. you hate the power of capital but you see no harm in excessive power for labor. Excessive is only bad when it doesn’t serve your purposes? Isn’t that some form of egotism? My way or the highway?

(You are so predictable that you will now tear me apart for being such a nasty person, according to you a conservative who will get rid of unions so that he can exploit labor without mercy. If you yourself don’t balance the good with the bad how can others possibly be doing it, particularly conservatives or anyone with a good word for anything remotely conservative.)

Another contradiction, this one even within the same sentence is your sixth paragraph. The top one percent already pays, what is it, some fifty percent of the taxes (or am I confusing it with a statement by Bloomberg that in New York City the top 500 pay fifty percent of the taxes?), and the bottom half no income tax, yet you want even more incentives for that half at the expense of the top? Pray tell, where is the balance, how much is enough? You want it to be all labor and no capital? Is that where it should be? (In New York Bloomberg is rightly afraid that too many of the already few 500 may leave the city.)

Second, it is in fact quite sad how you limit your horizons by your seeming aversion to conservatives, the right, and all of those other nasty people. Unlike you, I learn from every source available. How could I do otherwise if I am to honor the balance that NEH rightly considers so important and demands of me? Too bad you don’t. You are missing a lot. There is good and bad in every view.

Indeed, I bet you didn’t even see the irony of the point made by Marx and Engels in my earlier quote from the Communist Manifesto, and that’s my third point. Even they seem to have found something positive in conservatism. They were very very smart dudes. But how could you if you only knock the right but are careful not to be associated with someone like Marx. Gosh, how horrible that would be. So where do you get your wisdom? You are rediscovering the ground walked? You do make smart points, other than when you are contradicting yourself or spewing venom.

Finally, and another contradiction, is your question “would you agree that the self-serving mess parading as "conservatism" today bears no resemblance to the ideals of your books?” Only “today?” Somewhere I think I read that you consider(ed?) yourself some sort of conservative; was it “pragmatic conservatism” that you called it? Never heard of it, what is it? But back to the “mess…today.” You have knocked practically everything Christopher Graves proposes even from books by some of the more respected conservative thinkers of yesterday. So today only?!


PS. Where you say “I thought Marx prescient in those early days of designing the engine known as capitalism to have, accurately, predicted…”, what did you mean by the part alone that reads “Marx…in those early days of designing the engine known as capitalism”? I am having trouble understanding what you are saying or trying to say with that part alone.


Xavier --- Geez, these stretches can hardly be good for your health! Seems I didn't mention "old labor" of England at all, and largely warned of the political changes risked when capitalism's inherent tendency to consolidate wealth, income and political power in the hands of the few. (As depicted in the graphs)

Do you have nothing to say about the 40 year consolidation other than commenting on, my, and the vast majority of American's "bemoaning" the dangerous, economy tanking trend?

Not sure about this "Get positive" stuff. If I see a problem and suggest a remedy is that ........... negative?

As for "excessive power for labor" it does seem there's a "debate" (Koch Bros attack?) on the unions of our public servants, among the few left standing, but you'd have a TOUGH time telling the Federally subsidized employees of one of the world's richest corporations, Walmart, that their woefully underpaid millions of "associates" have "excessive" market power. (In a group of honest conservatives, one would think you'd also have a tough time condoning a pay scale so low that it triggers over a billion in federal transfer payments each year)

As for discerning excessive "market" (corporate) power, mebbe look over the graphs this time?


If the movement and dramatic changes to the culture of 98% of our workforce over the last 40 years seems "conservatively" justifiable to you?? how much more of the same trend do you think what's left of the American standard of living can tolerate?

As for those favoring getting rid of collective bargaining that the inherent market power of capitalism CAN further consolidate the gleanings (and unaffordable tax bennies ladled out by the Bush admin) I'm not sure "nasty" is the right term, though the terms "obsessive greed" come to mind in regard to right wing propagandists of the Koch Bros ilk, while protection of entitlement and station seemed to underly the "conservativism" of the late Wm Buckley. As would be said by a Mafia don "It's just business" and those of us having lost the "class war" of the last half century really ought to get cracking to fix things up before the roof caves in........... again.

Ha! As for trotting out the tired and tiresome lament of the "top 1% paying yadda taxes, I'd remind you of the arithmetical fact of no one paying over a third to the Feds, while those carving off billions from "hedge funds" (that do not really hedge anything and perform no useful economic function) pay only 15% about what the guy changing your oil might pay of his meager wages. (Please note that these rates and scams were NOT ordained by a higher being.)

As for learning from "conservatives?" What is there to learn these days? I'd kinda like it if we COULD put the Feds on the 18% of GDP diet they were on before: A. Having to pay an extra 2% for the DEBT ginned up by 20 years of failed "supply sider/ constant Keynesian spurring experiment B. Lowering taxes while expanding spending as was the case for the Bush admin's first year. C. Ginning up optional wars and NOT passing the hat to help pay for them and the rapacious war profiteering. D. Allowing the sacred cow of militarism to fatten on a larger share of GDP.

If an honest conservative showed up who actually favored a competitive landscape I'd sure be willing to talk! We could probably spot him from far off spouting slogans of "Right sizing" the military with some Ike-isms thrown in for good measure. And dare one hope he'd attack the costly ethanol subsidy before taking Sesame Street and Lerher away from rural towns?
Here’s the bottom line for the ethanol tax credits additive to the White House-GOP tax compromise:
• $6 billion in subsidies for 2011.
• $10 per extra gallon of ethanol.
• $14 million per extra job.
• $1.2 billion to attract one extra Senate vote.
In a season of giving in Washington, the ethanol lobby may come away with even more than it hoped for and its ardent defenders sought. …
Extending ethanol subsidies at a cost of $6 billion for one year would result in an extra 600 million gallons, putting the subsidy at $10 per incremental gallon, according to recent projections from Iowa State University’s Center for Agricultural and Rural Development. …
[Iowa State University's Center for Agricultural and Rural Development] director Bruce Babcock said in an e-mail that each 100 million gallons of ethanol creates 70 jobs. Thus, 600 million gallons would result in 420 jobs, or about $14 million per job.

And......... Consider capping the mortgage interest deduction at $500,000 or so? For ONE home?

The Congressional Budget Office, in its 2009 budget options (page 187), made some practical proposals. First, reduce the maximum amount of mortgage debt on which interest is deductible from the current $1.1 million to $500,000 by 2018. The tax increase: $41 billion over 10 years.

And why does the "right" always haul out Marx and Engels? Is that the standard tactic for opposing enough collective bargaining and min wage increases that we might attain JFK's "rising tide that lifts ALL of the boats? Such a tide of increased productivity and the attendant wealth would surely provide a larger and glossier yacht for the topmost, but would tend to keep the skiffs and dinghies afloat.

Ahh! My pragmatic conservatism? Easy, as I strongly favor harnessing the power of, honest, capitalism to provide for the general welfare of ALL of our citizens and deploy ever scarce resources efficiently. Today? Our capitalism is so shot through with economic distortions as to be hardly recognizable and even the "debate" is bankrupt. Examples abound, but consider just one: The compensation for an already grossly overpaid CEO can and will be quickly raised by a million at one stroke by fellow, interlocking, good old boy, board members, next? they send for an ex-congressman who has completed the ten years to fully fund his retirement and has now become a $1,000/hour K-Street lobbyist to make sure the $7 min wage does not even increase by the rate of inflation, much less participate in the "rising tide".

Now to a pragmatist it seems as silly to expect to use the labors of a human below maintenance costs, as it is to expect to use a truck or factory at below capital and operational costs. Does it strike you that "something" is wrong when CEO pay has soared from 50 times working folk's pay to over 400 times while those nearest the bottom have lost purchasing power? while most of the rest of us have made little to no gains? Would our honest conservative favor patching this up with a dab of food stamps? an EITC? housing subsidies that restrict individual choice?

Pragmatism on the social side? 40 years after Roe Wade established the pragmatic and only way the often tough abortion decision can be made, the "right" still uses the issue to sway votes by whining and lamenting the number of abortions (and often opposing education and planning clinics) In the same forty years they've NEVER proposed anything more workable than the Roe Wade status quo, leaving Clinton and myself to favor making it "safe, legal and rare". It's the best we can do. Pragmatic.

As for Marx' prescience in the mid-1800's:

In fact, Marx's view of capitalism was two sided.[3][83] On one hand, Marx, in 19th century deepest critique of dehumanizing aspects of this system, noted that defining features of capitalism include alienation, exploitation and reoccurring, cyclical depressions leading to mass unemployment;

............ Indeed! au currant, eh?

......... And to be fair he too appreciated the power of capitalism:

on the other hand capitalism is also characterized by "revolutionizing, industrializing and universalizing qualities of development, growth and progressivity" (by which Marx meant industrialization, urbanization, technological progress, increased productivity and growth, rationality and scientific revolution), that are responsible for progress.[3][83][107] In fact Marx considered the capitalist class to be one of the most revolutionary in history, because it constantly improved the means of production, more so than any other class in history, and was responsible for the overthrow of feudalism and its transition to capitalism.[110][128] Capitalism can stimulate considerable growth because the capitalist can, and has an incentive to, reinvest profits in new technologies and capital equipment.[119]

.......... so what would he, or I, see today? Well, banks and industry have $4 trillion investables on the sidelines. We've a ready and willing 18% of our workforce either under or unemployed. Certainly not all of our "wants and needs" are satisfied but the economy is stagnant. What's up? We've obviously a shortage of demand -- ie wants combined with dollars to spend. The "jobs" being "created" pay too little to have spendable surpluses. Thus! we may well have arrived at the formerly science fiction point of structural unemployment as something less than the full workforce can and is supplying all that is demanded by those with a ready checkbook.

So what's next asks the pragmatist? In an economy 70% dependent on consumer spending, that top 1% or .1% the "conservatives" continue to want to protect simply can't drive that many cars or sip that many lattes. By one means or another the incomes of the middle and lower income groups have to rise, or the consumer society that is the engine of the world continues to stagnate.

Want the numbers? Had the rising tide lifted all of the boats with a similar ratio of wage distribution of 1980 the most numerous of "middle class" households would have an extra $10,000 a year to save or spend. Bingo! No SS "problem", outrageous H/C increases more manageable, and more with which to "go shopping". Pragmatic eh?

Christopher Graves

Thanks for your more comments, Jack. First, yes, I am a pessimist on the humanity. My view is similar to that of Adam Smith who might be described as an optimistic pessimist concerning the human condition since he believed a fallen human nature could not be fundamentally changed for the better, but whose flaws could be harnessed to serve a greater good. But a commercial society, which Smith proposes to harness what would otherwise be socially destructive impulses, itself is not permanently stable. Here is a book review that addresses these issues from Smith's perspective:


As for my own view relating to religion, I do believe that given our fallen nature, we must give some free play to our fallenness or else create a bridle cast iron yoke for ourselves. At the same time that we accommodate our desires that can so easily become unbalanced, we must seek to contain them as we bring them back into harmony. Consider both Smith and Aristotle as well as the Restoration's Anglicanism in reaction to the Puritanical Commonwealth in Seventeenth Century England on these matters.

Moving to your next response to my previous post, yes, I agree that the diversity, of sorts, in the United States is a good thing. At the same time, you must admit there is a lot of commonality as well. I do love the diversity of the various American sub-cultures. But I seek to preserve and enhance them by limiting the homogenizing trends of both the Federal government and businesses that seek a grinding, artificial uniformity. One thing that irritates me is the push to homogenize accents. We see this especially in news broadcasts in the U.S. as well as in many businesses that train people to lose their regional accents, especially Southern ones. Accents reflect the way of life unique to localities and regions that also bind us with specific people within our nation. This is exactly why Federalism and devolution of centralized political power to the states is an American conservative doctrine. I am puzzled why British conservatives seem to have a blind spot on this issue while the Labor Party has been good to work to devolve power to Scotland and Wales.

To your next point, yes, I do admire the Japanese culture, not simply their industriousness. I think their way of life fits their people, their land, their climate, their history. I do not agree with everything done in the history of Japan or any other nation. As Xavier pointed out in my defense, I accept that people are fallen and there is no perfect society in human history. When Japan failed to show respect for other cultures, they were failing to act as conservatives. Rather they were giving in to evil impulses to dominate and subjugate others that conservatism seeks to limit or channel in different directions. But I think your comments on the dangers of chauvinism reflect a big fear of folks on the left. But in seeking to minimize or eliminate pride and attachment to one's own people, we are throwing "the baby out with the bathwater" with no good, realistic alternative. Internationalist statism of the sort proposed by Strobe Talbot, for example, is not a practical political paradigm nor would it provide for the liberty of the individual and an amenable social context necessary for the individual to flourish within.

On to your next point in reply to my thoughts laid out above. Again, I have studies that show diversity in close quarters does not work. As for the military being an exception, I would challenge that claim. There is a lot of racial and ethnic tension in the American military. I can cite my father's stories from WWII where young men from different regions of the country and different ethnicities were at each other's throats continuously. As James Q. Wilson points out in his discussion of Robert Putnam's study on diversity close-up, a lot of this tension is suppressed or covered up in the military in a way that it cannot be in society at large. Here is a link to Wilson's review of Putnam's work on this issue:


Finally, I was not saying that Nazis were leftists. In fact, they had elements of both the left and the right with their own perverted twist on both sides of the spectrum. And, yes, I am talking about a "theoretical" conservatism that was articulated not as a speculative philosophy, but as a hard-headed but true-to-principle doctrine by a practical legislator, Edmund Burke. Burke argued that we must take abstract truths and implement them in a historically and culturally contextual way in order to actually put them in effect in a practicable way.

If you and others are not familiar with conservative writers, I would suggest the links provided above by Xavier and me as well as this one on Burke from the *Stanford Encyclopedia of Philosophy.*


Christopher Graves

NEH, instead of thinking of legislation and social reform as an engineering problem, I would suggest conceiving of society and its supporting culture and economy as a delicate eco-system that we do have to cultivate, but in the process carefully preserve. Webs of complex informal social structures cannot be dismantled and replaced with removable parts as if it were a machine. This is why the reductionist methodology of the physical sciences is inappropriate for the social sciences, much less acting from on-high from such a perspective.

Christopher Graves

Correction to latest post in reply to Jack. The word 'more' in the first line should be replaced with 'follow-up.'


Chris, You're at least thirty years behind the times. May I suggest the seminal, "An Operating Manual for Space Ship Earth" by Buckminster Fuller and any of the works by the Technocracy Inc. group. ;)

Returning to the point at hand, "The Economic Implications of the Japanses Earthquake, and now Myanmar, and earlier Australia", For Japan alone cleanup and repair of the world's third largest economy, is estimated in excess of three hundred billion dollars. Myanmar? Boost the estimate. Australia? Boost it even more. Looking at the International Supply Chain, there is going to be major shifting occuring due to the inability of Japan to supply various sub-components and supplies to the various assembly points around the Globe. As an example, the U.S. Auto Industry may very well reap benefits as American Parts Manufacturers begin to pick up the short fall. That is, if they can start back up again due to all the Outsourcing and Offshoring of the past twenty or thirty years. This applies equally to all Industrial concerns. As the D.O.D. has been saying for years, "How do we maintain the defense and security of the Country if the production supply networks are disrupted"? This is an oppurtunity Agriculturally, Industrially, Commercially. Now, if only, we're smart enough to take advantage of the oppurtunity.

Hopefully, it will be good for us, in the return of productive capacity back home. We might even be able too balance the Trade Deficit and our Domestic Budget. Finally...

Xavier L. Simon aka Xavier

To answer my critics and help further explain my comments of the last few weeks, let me put forward the paradox below. As to anonymity, I will lift the veil temporarily. Judge Posner and Prof. Becker know who I am. I have presented to them the whole hypothesis and model that outline the structure, properties and process with which I explain the dynamic of the changes below, and to which I return at the bottom.

In 1776 two momentous events took place. James Watt introduced the steam engine that would revolutionize the world in ways and at a pace never seen before. That brought about the need for equally rapid and continuing change in the rules under which man lived and governed himself, which in turn required unusual flexibility and capacity to experiment and adapt to that change. So also in 1776 was born a country with what would become, at least during its first 120 years, and more haltingly for 50 years afterwards, the most flexible form of government, the United States.

Fifty years ago I took a course in Russian history at MIT, yes, of all places at MIT. On the first day the professor, whose name I regret forgetting, said he would not start the course until we got one fact straight, the United States was not afraid of Marxism. One of the most Marxist countries in the world, if not the most Marxist, was the United States and what it was really afraid of was the Red Army. I remember the class being shocked and then trashing that idea around for a whole week. My own reaction was to compare Russia and the US by the ten points of the Communist Manifesto, and I was in fact surprised to learn how far the US had moved along the ten.

Yet I didn’t realize how Marxist the US really has become until I read, from an altitude of 5,000 feet, about the social change wrought by the industrial revolution in Ian Morris’ sweeping 16,000 year narrative in “Why the West Rules—For Now.” Even while they got some of their conclusions and recommendations wrong, Marx and Engels were among the first to attempt a systematic diagnosis and analysis of the massive social effects of the industrial revolution that Watt made possible. And while thankfully the United States did not follow the concrete recommendations of the two, it being the most flexible country after 1787, together with the visionary and also relatively flexible government of Queen Victoria in the United Kingdom, it brought about through organic evolution some of the most sweeping reforms in the history of man to address the very issues identified by Marx and Engels.

The key was flexibility and adaptability to change. As economic and social change accelerate even further what we need most is the flexibility to continue adapting the rules by which we live and govern ourselves. Without that flexibility we are bound to make bigger mistakes, slow down that development, bring it to a halt, or even cause another potential catastrophe like with the recent financial crisis. Yet we seem to be moving in the opposite direction. Man has been responding to the consequences of change with ever more rigid centralized laws, rules and regulations. While this seems wise at first sight, it is actually very foolhardy.

As society becomes larger and more complex it becomes increasingly difficult to understand the unintended consequences of new rules, and by making them too rigid we run the risk of locking in undesirable consequences and effects. So what then is the answer? Unfortunately one of the effects of the very rapid pace of change has been to abandon some of the traditional sources of man’s values. Yet by providing us with internal lighthouses those values obviated the need for ever more numerous and potentially constraining laws, rules, and regulations.

What we need is a return to those values, together with a restoration of the flexibility that was inherent in the extensive checks-and-balances of the Constitution, or the Roman Republic for that matter. This is of course easier said than done but the alternative is the slow but inexorable path towards an ever larger and strong central government deciding for all of us what is best for each. Do we want to solve the problems that Marx and Engels identified and were among the first to analyze in depth through a flexible system of government and continued internal evolution guided by a set of values like those of the Founding Fathers, or do we prefer to let an ever more powerful and supposedly “wise” government, a government in collusion with other big economic powers, whether representing labor or capital or both, do it for us?

I am considering the above as the preface of an essay I am writing that analyses the change above and proposes structures, properties and a process that explain its dynamic. That model seems to work well for explaining any change that involves man, including the change, development, and growth of man’s economy and societies, and, surprisingly, of man himself as an individual. It explains why the Soviet Union failed while the United States and Europe, as well as Asian societies and China today, continue to grow and thrive. It also explains the slower growth of economies and societies like those of Latin America, the Middle East and Africa, the first plagued with a history of stop and go bursts that slow its overall development, and the latter two seemingly unable to get their economies moving.

Moreover, by analyzing and explaining the underlying dynamic, I think my model is able to extend Max Weber’s observations about Protestantism and capitalism to other cultures like Japan and other Asian countries. On this I think Christopher Graves is very much on the right track and I am learning a lot from him, and even from you Jack!


Xavier, I agree to a certain extent. Although, I'm not too sure about some of the examples. Flexibility and the knowledge of "Good and Evil, Right and Wrong, Virtue and Vice" is the key though. Via a Pragmatic Pluralism and Progressive attitude to try and carry out the new in response to new problems that transcend the old (like National Health Care). It also allows for the recognition of failure and the ability to correct such failures (like the current Financial Deregulation fiasco). Something which seems to be sorely lacking in our modern ideologically driven public debates. As one A.Lincoln was want to say, "We must disenthrall ourselves and learn to think anew and act anew". Something we clearly need to relearn and act on.

Xavier L. Simon aka Xavier

NEH, the financial deregulation fiasco presents a very interesting case of balancing. I happen to know a bit about financial markets and crises having worked for ten years trying to understand the source of such crises in emerging economies and helping them arrive at possible solutions. With some of those insights I did an analysis and wrote a paper about the recent crisis. It is too long to post here, but I’ve actually posted some of the conclusions in the last few weeks.

One of the things I came up with, somewhat speculatively but with a lot of strong anecdotal evidence, is that while the financial and housing finance sectors, particularly the latter, became under-regulated owing in part to interest group pressures, but also to a vision at the higher echelons of government where too much power is concentrated. At the same time other sectors of the economy became too rigid through a combination of regulation and also interest group pressures.

Then in the first part of the last decade there was a huge flow of foreign savings into the US, in the trillions of dollars, that resulted from the emerging economies reversing past policies that had led them into so many crises—by one count 125 in the 25 years prior to the 1997/98 crisis that spread throughout the world. Those trillions had to go somewhere and I argue, again speculatively but with historical trends and anecdotal evidence backing me, that if they had been invested more evenly throughout the economy the financial crisis would not have been as harsh. Instead most of it went into housing where the regulatory straitjacket was weakest, and the rest is history.

Societies learn to adjust to change, including the change that comes with growth, by trial and error. The reason why I would try to increase flexibility is to allow that change and adjustment to happen more smoothly. Hopefully without bumps as large as the recent crisis. And I would increase the flexibility by slowly and carefully easing on the regulation, instead of constantly increasing it. Housing is a good example of going too far too fast and only in one sector. Both too much deregulation and the unevenness of it in the economy is one reason why I think we saw such a large crisis. Because instead the regulation persists and even increases, I am not too bullish on the recovery although I am sure some will happen.

More importantly, other emerging economies that have found ways of being economically more flexible, even if unfortunately at some social sacrifice—but there are no free rides on anything—may be beginning to overtake the US in at least some sectors. As I see it the US has some very hard choices to make, and the people have to decide what these are, who makes them and how.

That is what I think is at the heart of the current ideological debate. In my case I have tried to stay removed from that debate and instead attempted to analyze coldly and objectively the properties, structures and processes that determine when and how change happens and when not. And I haven’t touched on values. Like it or not they are one of the major determinants and regulators of human and thus societal behavior. I give them a whole section in my essay on the financial crisis. I find them to be very important but, just as politics, they tend to stir too much emotion so I stay away from mentioning them out of context and without sufficient space to elaborate the analysis.


Xavier....... You're hardly the first to execute a tap dancing apologia for the wholesale corruption of the "financial sector" using the "gobs of easy money made me do it" plea. But sorry, no sale.

Goldman, AIG, the (formerly big) brokerage houses have legions of bright financiers and gamblers who make their living carefully assessing risk/reward ratios. Where would one find a CEO worthy of the title or a board that would leverage flaky loans at 30 times capital? And IF gobs of capital WERE "the problem" why would anyone have to leverage at maniacal ratios?

Further? What caused those in charge of SP, Moody's, AM Best and a couple other bond rating firms to KNOWINGLY hock reputations built up over most of the last century? Please tell me that those having graduated from Wharton with honors with a dozen years or into rating all manner of bonds were just "thrown" by the "complex derivatives" coming through on conveyor belts at billions per package from outfits leveraged 30:1 and stamped the Triple A on the basis of housing prices accelerating at inexplicable, soaring rates not backed up by a similar increase in rental incomes, never making a correction?

Wait! I left out new ones being built at an utterly unsustainable 2.5 million/year with median prices departing wildly from the long term relationship with median incomes --- that is dictated by normal banking practices of lending being tied to income ratios.

Too much dereg for certain! When I walked into the lobby of the Wells-Fargo, growing like a cancer since banking across state lines enabled a few strong banks to gobble the rest, and saw an insurance counter, I knew we were in for trouble. Though the seem a lot alike and perhaps good cell mates, banking is based on carefully lending depositors money at 10 times assets and with FDIC and Fed backing it's they're well prepared to weather a pull back of 10% or more. Insurance? Well they could have naively insured a nice little nukie power plant in Japan of long, problem free history. Neither depositors or FDIC are set up to deal with it all.

AEI (right wing outfit) was on with reforms recently, ALL of their suggestions were nothing more than scurrying back to the banking standards that served us well for most of the last century. While some of their game is that of taking over the territory of the GSE's and sticking it to us a bit more vigorously (to make up for C-Card reform?) most of their suggestions were simply what banking has typically done.

You touch on corpo-lobbiest rent-seeking "dereg" and come close to splashing much needed bathwater on Sen Gramm who slipped in the repeal of Glass-Steagal in the dead-duck period of post T-Day Congress before he and equally culpable Wendy scuttled off to enjoy the plentiful fruits of the very "investment banking" his actions allowed free reign of the henhouse. He SHOULD be hauled up on charges and join a host of other "bond raters" and "financiers" in prison.


As the Astronauts at NASA like to put it, " Uh... Houston? We have a problem"! Same applies to any Socio-Politico-Economic System. This is not the time to rest on Laurels, accentuate the positive, and continue to travel down a road as if nothing is wrong or screwed up. In order to solve problems you must first recognize you have problems and to see those problems clearly...

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Japan is the 3rd economic superpower in the world. The Japanese people will get out of this crisis sooner than we think. They are strong, they have faith, they will overcome the tragedy.


NEH -- I had the good fortune of seeing Bucky in a classroom size seminar here in Anchorage several years before his passing. In addition to all the other thoughts tumbling out at breakneck speed, he was excited to tell us about his map, with the N. Pole as its center, and how it put Alaska in the center of things.

With a large air base here for that very reason and Anchorage being "The Air Crossroads" with passengers and flight crews from many nations enlivening our small burg we already knew that, but he made it a lot more exciting and visionary. Years later a huge Fed-Ex transhipment facility became one of our very big commercial enterprises with lots of windowless 747's from China and other nations landing daily.

There are a fair number of Bucky's geodesic domes out in the rural recreation areas as guys could prefab all those angled panels inside during the winter that were small enough to haul to a roadless lakeside site with snow machines, sleds or even back pack them in the summer where they could be quickly erected. He was an amazing and inspiring genius.

Ha! I was in a Ford agency this week, not even looking for a new gashog, and one of the salesmen, a bit sleazily, was already sawing away at Toyota's difficulties. One of the things that came out in the auto rescue was that of -- still standing -- Ford favoring the bailout as they all share some of the same supply chains. I'd not be at all surprised if some of those were Japanese.

I hadn't heard those damage estimates; a huge hit for Japan. But I think they'll come back quickly for a couple of reasons; One is having been there in the mid-60's, just 20 years after the war and being impressed by super modern buildings, subways, trains and beautifully landscaped parks. There was no visible sign of Tokyo having been flattened by fire bombing that did more damage than did the atomic bombs. I suspect institutional knowledge of rebuilding is still around.

The other is that of the "Japan, Inc." we used to read about during their "amazing success" era that apparently provided lots of capital for worthy ventures targeting markets around the world.

Speaking of H/C and its criminally belated reform, I was at the VA for a six month check up today. The beautiful new building (surely part of our deficit, but easily a 100 year asset.) is almost without pen and paper.

With name and last 4 digits of SS my records for the last 10 years immediately appear on screen replete with all the notes from various doctors seen over those years, prescriptions I take, procedures done, a colored graph charting my weight, etc. At the end of the check over a few meds were prescribed.

A few doors down I take a number to see the pharmacist who double checks the prescriptions and makes sure I know the amount to take. We discussed drug allergies and a question about one was quickly answered by checking the records from OK during some time I spent there. I was done in five minutes and less than 20 minutes from when the Doc sent the prescription down by computer the order was filled and I was on my way. Later, refills will be efficiently processed in Kansas and sent by mail. There's a website where I can check on the refills and other info. When there are routine follow ups or things to be monitored I receive a robo-call notice the day before the appointment.

The long wait at this government run facility? We call in to a clerk of our medical team who handles a triage system. For some minor prescription problem, a question etc. we might see the nurse immediately, who'll check with the Doc if need be and fix it. For something of little urgency, or to see a specialist, there might be a wait of a few weeks, but for something that needs attention we might go in for labs immediately and see the Doc next day.

For 24/7 emergencies there's the Air Force hospital which also has immediate access to the electronic records.

As I read of some medical group spending $100 million or much more on IT and electronic records that may or may not interface with those of other groups, and several thousand different insurance companies, I wonder why the Vets don't give their efficient system to the other medical providers. I suspect part of the answer has a lot to do with their being several thousand different insurance companies each with their complex and differing criteria for payment that has us using 11 medical clerks to Canada's one.

As one who didn't always have VA and once amassed a thick file over several months while getting dunned by unpaid Docs etc, before getting BlueX to pay a valid claim they finally did pay, I can attest that it's really a treat to be a member of this government run system that works so well and doesn't fill my mail box with a myriad of cryptic billings, varying copays and mistakes leading to phone calls, being put on hold before getting to argue with a army of clerks and their supervisors. It's hard to imagine why anyone would not want to reform such a mess.

Xavier L. Simon aka Xavier

Jack, interesting how in your response to me you make my point. Then in responding to NEH you tell us what is your choice. And that is the way the country seems to be going, trying to make every government agency and then some work like the VA, finally, after so many decades of stumbling. Now all we have to do is apply the lessons there to the rest of the government, particularly the financial sector; take away from the latter all of the whizz kids to which you refer and have them work for the government instead. For the sake of my grandchildren I hope you are right. It’s bucking many millennia of history and man’s nature but one never knows!

Xavier L. Simon aka Xavier

PS. The irony of my last entry is also interesting, for that makes you the optimist, Jack, and me the pessimist!

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