What can they possibly be thinking? This is not the sort of thing I normally write about, but I have to say that if I had any say in the matter I would most strenuously oppose removing or ‘diminishing” Alexander Hamilton’s portrait from the ten-dollar bill. He never made president, of course, but only George Washington and perhaps Abraham Lincoln could possible have a greater claim on the loyalty and gratitude of Americans, and while it is all fine and good (and true) to say that Alexander Hamilton’s monument is the United States itself, there is no question that along with being possibly the greatest of Americans, he is by far the least recognized.
I used to think Hamilton was easily the single most important person in consolidating and directing the mixed group of colonies that ultimately became the United States until I read Ron Chernow’s absolutely brilliant biography of George Washington, which convinced me that Washington was more than the well-meaning, slow-witted patriot I always thought he was, whose greatness consisted mainly of recognizing the genius of Hamilton and of stepping down just at the moment when the United States was poised to become either a new kind of monarchy or a true democracy.
Chernow’s book made me see that Washington was far more than that. Washington was an astonishing leader without whom the US could have never survived and prospered, but all that means is that if Hamilton is not easily the greatest of all Americans, then he is among the top two.
Hamilton’s greatest enemy was Thomas Jefferson, a man I used to despise for his hypocrisy. He demanded freedom for all men but never quite got around to freeing his slaves. He hated banks and debt and yet spent his whole life borrowing money, dying heavily in debt. He loved the sturdy common man but always either at a distance or when that sturdiness was being employed usefully in beautifying Monticello. He raged against the elite of birth and yet was a thoroughgoing aristocrat who managed to fall in love with another aristocrat – a wealthier one at that, although surely that was just a lucky coincidence. He was a fiery supporter of violent revolution, demanding that we have one every twenty years, because, of course, “the tree of liberty must be refreshed from time to time with the blood of patriots and tyrants”, and yet when the British marched on Richmond, Charlottesville, or Monticello, Jefferson, with such deceitfulness and suavity, managed never to be there, although unlike the much more loveable Macavity he shirked his responsibilities and allowed the British access to information they certainly found useful.
As I have aged and mellowed my opinions about Jefferson have too. He was an astonishingly brilliant man for all his maliciousness and hypocrisy, and I recognize how lucky the US was to have him. Twenty years ago I used to get into a rage walking into a major bookshop in New York and finding over a dozen books and some times far more, on Thomas Jefferson, with, at best, one book on Hamilton. That’s changed, although clearly not enough.
With age, and the prodding of my friend Bruce Wolfson, I have also learned to appreciate and respect John Adams, another man who loathed Hamilton, and while Adams could be nasty to many (Washington’s success, it seemed, was due mainly to his “handsome face”, “tall stature”, and the “reverence granted to great fortune”) but he truly hated Hamilton, who he dismissed with his arriviste snobbery as “that bastard brat of a Scottish pedlar (sic)!
His ambition, his restlessness and all his grandiose schemes come, I’m convinced, from a superabundance of secretions, which he couldn’t find enough whores to absorb!
Yes, Hamilton may have had a weakness for pretty young women who needed help, even when they were out to blackmail him, but Hamilton’s real sin was to find corruption so much more horrifying than adultery that he confessed to the latter in order to dispel rumors of the former (rumors that were gleefully propagated by Jefferson and Adams even as they publically frowned upon anyone who would be so base as to acknowledge Hamilton’s’ immorality).
But what about Hamilton himself – why is he the greatest American? It is almost impossible to believe the sheer daring of his imagination. He envisaged a United States of America that was improbable beyond reason, and then set about systematically putting into place the conditions that made his astonishing vision a reality. I cannot even begin to describe the greatness of the man, and suggest that anyone who is interested read Richard Brookhiser’s 2000 biography, Ron Chernow’s 2005 biography, or Willard Sterne Randall’s 2014 biography. If I had to recommend only one, I suppose I would recommend Chernow’s, but anyone whose appetite for Hamilton is as insatiable as mine will always have a hard time choosing.
For those especially interested in Hamilton’s economic policies, I have always loved Forrest McDonald’s Alexander Hamilton: A Biography (1982) and of course there is Clinton Lawrence Rossiter’s brilliant Alexander Hamilton and the Constitution (1964). I also understand that Charles A. Conant wrote a biography in 1901, which I have never read, but would love to.
But aside from the books, here is the shortest of lists of his accomplishments and his claim to being the greatest American:
- The Federalist Papers is in my opinion the greatest and most subtle American book of political philosophy and one of the greatest in history. It was dashed off in a short period of time by Alexander Hamilton, James Madison and John Jay, and of the 85 essays, 51 were written by Hamilton and another two were probably written jointly by Hamilton and Madison. It is a truly universal book – I remember several years ago one of my smartest Chinese students at Peking University began reading the book and became completely obsessed with its brilliance. He couldn’t discuss anything else for weeks.
- Because he was a practitioner, and not a theoretician, most people do not know that Hamilton was probably among the world’s dozen greatest economists. He may have coined the phrase “infant industry” and certainly developed the basics of what later became known as the “American System”, which became the basis not just of the astonishing success of the US economy but was later codified by Friedrich List and led directly to German and Japanese economic success, along with that of many other countries. Probably the single most complete explanation of Hamilton’s thinking occurs in his brilliant Report on the Subject of Manufactures presented to Congress in 1791.
- Not content with being the most brilliant economist of his time, he was also perhaps our most brilliant financier. He founded the Bank of New York in 1784, making it the oldest bank in US history, and presented two brilliant reports of Congress known as the First Report on Public Credit (January, 1790) and the Second Report on Public Credit (December, 1790), sometimes known as The Report on a National Bank, which, among other things, created the first US central bank.
- His fiercest battle was to get the Federal government to assume the outstanding debt of those states that had not yet repaid their American Revolutionary War bonds and scrip. By unifying the fragmented debt he simultaneously restored American credit (ironically his great opponent on the assumption, Thomas Jefferson, was able to use this credit to fund the Louisiana Purchase, probably Jefferson’s most important act as president), created a unified capital base, and redirected elite loyalty from local state capitals to the Federal capital, thus almost certainly guaranteeing that the country would not immediately break apart.
- Of all the other Founding Fathers only Benjamin Franklin was not either an aristocrat or at least upper middle or upper class. Hamilton, however, personified the American dream, having been born into the lowest possible stratum of American society. Only slaves had lower social status than Hamilton at birth, and none of this was made any better by questions about paternal legality. It was sheer brilliance that had him sent from Nevis, where he was born, to King’s College in New York (renamed Columbia University) to become aide to George Washington, finally to end as the first US Secretary of the Treasurer under Washington (a position then more akin to the British Prime Minister) and the leading lawyer of his time. The rags-to-riches story is part of US mythology, but no one exemplified it earlier and more astonishingly than Alexander Hamilton.
- Alexander Hamilton, as is well-known, was wholly opposed to slavery, but his opposition was neither theoretical nor patronizing and, unlike many abolitionists, he had no interest in helping slaves return to Africa. He expected them to become full American citizens, demanded that they be armed during the Revolution because he expected them to play their part in fighting for freedom. Perhaps because as a young boy he spent much of his life dealing with freed slaves, Hamilton was famously impatient with the supposed intellectual inferiority of Africans and argued that their “natural faculties are probably as good as ours”. He also claimed that “the contempt we have been taught to entertain for the blacks, makes us fancy many things that are founded neither in reason nor experience.” This is typical Hamilton. As a practical man in principle he was perfectly willing to accept any argument, including the argument that some races are inferior to others, but he needed evidence. Neither his reason nor his experience gave him that evidence.
- After the Revolution many of Hamilton’s most important legal cases involved protecting the legal and property rights of Americans who had opposed the Revolution and supported the British. During the Revolution he stopped a mob from lynching the President of King’s College, a well-known British sympathizer. Hamilton never doubted that the rights Americans proclaimed were universal, and applied not just to friends but also to “enemies”. And if all that weren’t enough, he risked destroying his friendship with Washington because the old general found Hamilton too useful as his aide to allow him actually to lead a group of soldiers into a fight. In the end Hamilton got his wish and performed with amazing bravery.
I can go on and on, but you get the point. There is no greater American than Alexander Hamilton. He is one of the greatest economic and political thinkers of modern times. He was perhaps the only important white American in our first 100 years of history whose attitudes towards African Americans is not today embarrassing. He was completely self-made. And the only important official recognition he has received from the US government is his portrait on the $10 bill.
Although Hamilton tended to support England rather than France in the great battles of the day, Charles Maurice de Talleyrand-Périgord, prince de Bénévent, then prince de Talleyrand, a French bishop, politician and diplomat who became one of the most powerful men in Europe, famously said:
I consider Napoleon, Fox, and Hamilton, the three greatest men of our epoch, and if I were forced to decide between the three, I would give without hesitation the first place to Hamilton. He divined Europe.
Treasury secretary Jack Lew is said to be considering replacing Alexander Hamilton on the $10 bill with a woman. Of course we understate the role of women in our official observances and of course we need to redress this. But to do so at the expense – or “diminishment”, we are now hearing – of Alexander Hamilton? Is it possible that the current Treasury Secretary knows so little about American history, and about his most illustrious predecessor, that he cannot find someone less deserving of honor than Alexander Hamilton?
My goodness, stirring stuff. What delighted me most was highlighting the Federalist Papers which I relished in my youth as one of the most profound on the nature of men, government and politics.
If you take the time to sit and read through them, Donald, you cannot possibly finish without marveling at their intellectual creativity, and it is all the more astonishing that they were able to conceive of a democratic republican state at a time when the few people who recognized the value of this political system were also absolutely convinced that it could only work in a small city-state, in which conditions, culture and society was homogenous and citizens knew their leaders, either directly or with no more than one or possible two degrees pf separation. To implement this form of government on a large, spread-out area with tremendous variations in economic structure, culture, religious institutions, social and geographic conditions was assumed to be self-evidently illogical.
Ignoring the historical conditions under which the essays were written can still leave you gasping at their brilliance, but placed within their historical context, they become almost miraculous. My young Chinese student who found himself besotted buy the essays, and who necessarily had to read them in a completely different context, was nonetheless able to think of how this Federalist context was able to illuminate his own understanding of China, which gives you an idea not just of how lucky I am to have these kinds of students but also of how particular yet universalist these essays are.
Very nice piece. I must go back and read the books about Hamilton.
The hypocrisy of Jefferson reminds of Mao Zedong. Around 1945 Mao publicly praised George Washington. Despicably Mao held the power until his death. Mao advocated chinese medicine to the country while he was surrounded by the doctors trained in western nations exclusively. Mao was fond of violent revolution.
Perhaps, Vince, but I do now think I was wrong to despise Jefferson and I recognize that in my admiration and even love for Hamilton my dismissal of Jefferson was merely factional. In a reluctant, but increasingly less reluctant, corner of my mind I know that Jefferson was brilliant’ elegant, and sometimes even beautiful thinker, who while he was wrong on nearly every important practical question nonetheless was a good president, partly because he turned his back on his own “beliefs”. On the other hand in my heart of hearts I know that Hamilton would have been at best a divisive president and perhaps even a terrible one, in large part because he was so unlike Washington. He knew that he was right and assumed that any disagreement could only come from a stupidity so deep that it should be immediately dismissed.
Andrew Jackson was a genocidal sadist with anger management problems who made himself an absolute dictator (“John Marshall has made his ruling, now let him enforce it”) who was also a crackpot goldbug on economic issues (he hated paper money). His greatest claim to fame is the Trail of Tears.
His second greatest claim to fame is introducing the “spoils system”, aka systematic placement of incompetent people in public office for corrupt reasons of campaign donations. They actually mention this in high school history books which are trying to praise him. (Prior Presidents — Washington, Adams, Jefferson, Madison, Monroe, JQ Adams — had made a point of only appointing competent, diligent people with some experience to public office. Jackson gave incompetent donors the paid official appointments, and if actual work needed to be done, had someone unappointed in his “kitchen cabinet” do the work.)
Andrew Jackson was unmitigated evil in every way and it’s a stain on our country that he’s on the money.
Yea, I’m in complete agreement with this. I remember when I first saw that Hamilton may have to share space on the $10 bill and I erupted in rage. I’m furious how such nonsense could get through. I think they should upgrade Hamilton to the $20 and eliminate Andrew Jackson from the bill.
I always figured you were a Hamiltonian, although I find it funny how you think the banks should be broken up and radically weakened in an almost Jeffersonian sense in the current situation. I’m currently reading this book, which is about Hamilton and Jefferson’s rivalry (see link below) written by John Ferling. It’s not bad, except for the fact that the guy writing this book is an unabashed Jeffersonian who seems to know so much about history that he claims to have the ability to speculate reasons for why someone (usually Hamilton) did some action X.
http://www.amazon.com/Jefferson-Hamilton-Rivalry-Forged-Nation/dp/1608195430/ref=sr_1_1?ie=UTF8&qid=1434900197&sr=8-1&keywords=jefferson+and+hamilton+the+rivalry+that+forged+a+nation
I hate how Napoleon is treated at a higher level than Hamilton. I do find it funny how Hamilton wanted an elected Constitutional Monarchy, although it’s very similar to what we have now. To be honest, the kind of system that Hamilton advocated for (and very similar to what we have now) really isn’t anywhere close to a democracy in many respects. Any time a vote is close to getting passed, a bunch of elites come together to buy votes for the passage of a bill (ex. the Trade Promotion Authority for the TPP that just passed). Again, I have no problem with this and actually view it as a better alternative to “power to the people”, “will of the people”, and other nonsense. Hamilton was about as anti-populist as you can get. In The Federalist Papers, he has an excerpt where he says the rich need to have a permanent place in government and how important it is for them to have the ability to buy power. Again, I have no problem with any of this.
On another note, I always found Washington to be Hamilton’s bitch for most of his Presidency. Washington got all the credit while Hamilton ran the show. I can certainly see why a lot of people don’t like Hamilton especially if they want “equality” or “social democratic equality” or similar nonsense. My favorite part about Hamilton was his hatred and distaste for the masses, or better known as the large group of people that refuse to think for themselves and only do something (or are for/against something) because there’s a large group of people who also have the same position. I found Hamilton’s elitist and monarchic tendencies quite intellectually attractive.
Historians always say it was Jefferson who wanted a loose empire and Hamilton that wanted a nation-state, but this is wrong. Hamilton was the one who wanted the empire, and we got that when the North crushed the South in the Civil War. The South was about as nationalist as it gets, in one of the most disgusting ways possible. So the empire of the Union crushed this pathetic rebellion and ruined the people who rebelled, which is exactly how you handle rebellion, by not tolerating it one bit.
“Historians always say it was Jefferson who wanted a loose empire and Hamilton that wanted a nation-state, but this is wrong. Hamilton was the one who wanted the empire, and we got that when the North crushed the South in the Civil War. The South was about as nationalist as it gets, in one of the most disgusting ways possible. So the empire of the Union crushed this pathetic rebellion and ruined the people who rebelled, which is exactly how you handle rebellion, by not tolerating it one bit.”
That’s funny coming from a country that also rebelled. You seem to be saying that rebellion is only good if the rebels win, which is just another way of saying might makes right. If this is the case then I’m glad Murika is dying. Rot in piss.
I assume “Murika” is a way of saying the USA? Can I suggest, as I often do, that ignorance of history is a wonderful source of foolish observations. Murika has been “dying” in the same way for roughly 239 years.
It depends on how the rebellion starts and ends, doesn’t it? To say that all rebellions are good or bad is just foolish. Some are absolutely horrible, brutal and these end in dictators and tyranny (ex. French Revolution). To look at something where it must be universally good/bad like we have such knowledge and understanding is foolish (like you simply and naively assume it to be).
In the case of the colonies, the UK couldn’t keep sustainable control over them for any extended period of time. Washington knew this and his strategy was to survive. In the case of the Civil War, the North blockaded the entire South and control for the Mississippi basin determined the trajectory of the war. Most think Gettysburg was the key battle, but this is wrong. Gettysburg was a last ditch attempt to flip morale. The war was over at Vicksburg.
“To look at something where it must be universally good/bad like we have such knowledge and understanding is foolish (like you simply and naively assume it to be).”
Your earlier statement was pretty universal: “which is exactly how you handle rebellion, by not tolerating it one bit.”
Or perhaps I misunderstood your earlier statement as pertaining to those rebellions and nations that you don’t like.
As for your thoughts on Collapse Dr. Pettis, let me remind you that people of color, like me, will be the new majority in America by 2040, and we will usher in a new system that is free from the oppression of hypocritical white men, like Hamilton and Jefferson.
Persons of Color built America. Not greedy white bankers, and they will take back what is rightfully theirs through demographics. There are already revolutions on the streets for innocent victims like Trayon Martin and those like them. They will crush the tyranny of the white imperialist, neocolonialist system.
http://opinionator.blogs.nytimes.com/2015/04/03/how-the-slave-trade-built-america/?_r=0
There’s a difference between the center being halfway across the Atlantic vs a real security threat on your Southern border. Wasn’t it a problem for the UK when the Colonies broke off? Similarly, it’d be a problem for the Union if the South broke off.
Just so you know, I’m NOT “white”.
Also note that referring to “white” as a race is retarded. “White”, as it’s usually used, refers to Anglo-Saxon Protestant. For example, considering Spaniards “white” is foolish. I also find it funny how people tend to mistake “white” and Caucasian. Caucasian refers to the region being from the Caucasus mountains, where the peoples in the region are usually Turkic/Slavish, not “white”. Another point of note, Aryan doesn’t actually refer to blond hair, blue-eye people of a certain race. The Aryan races are a set of races supposedly to include Persians, Germans, Indians, and other Indo-European peoples. Actually, the word Aryan itself is Sanskrit for noble. There’s many other misnomers involving skin color or “race”.
Just so you know, color of skin has nothing to do with race. Color of skin has more to do with climate and exposure to sunlight than it does to do with race.
As for the slave trade, I don’t think anyone’s arguing for the ethics of slavery, but every society up to that point had slaves. Actually, in Rome some slaves were actually held in very high regard. If you look at who sold those slaves to the Europeans, it often times came from other peoples of the region. Slaves were usually former prisoners of war or rebels or something of the sort.
BTW, much of the racial tension is overblown BS from the media. The real issue IS NOT RACE! The real ISSUE IS CLASS!!! The problem is that you’ve created a permanent underclass in society unable to get out. In terms of the issues of class, Asians (more Asians immigrate to the US than do Hispanics) are basically in line with “whites”.
Oh yea, as a “person of color” just like you, I’ll make sure people like you don’t get in charge. In terms of the way you view race, your view is just as primitive as the people you so quickly accuse. If we have your attitude, we’ll just run everything into the ground.
Yeah, that’s pretty much accurate about the Civil War but it’s leaving out a few points.
(1) The Confederacy didn’t make a single military advance for the entire first year of the war because they were using their army to suppress local Unionists! This was a major disadvantage: there was essentially no support for the slavers in the North, but there was a lot of support for the Union in the South. The Confederacy completely lost West Virginia very early; they successfully suppressed Jones County Mississippi and dozens of other Unionist counties.
(2) The Anaconda Plan was successfully implemented to blockade the Confederacy, as you say, with the Union taking Florida and New Orleans almost immediately.
(3) The attempts of the Confederates to break out across the Appalachians failed; they had insufficient “mountain competent” loyal troops or commanders, because the mountains were primarily the home of non-slaveowners.
(4) Then Grant figured out how to crack the fortress at Vicksburg.
(5) Sherman proceeded to figure out how to destroy the rest of the Confederate military capacity by application of logistics: destroying their equipment in a way they couldn’t replace (“Sherman’s neckties” to destroy the railroads) while feeding his own troops off the land without supply lines.
(6) Sherman’s army actually got larger as he marched towards the sea due to the enormous number of Unionists in the South. This was the fundamental disadvantage of the Confederacy and the one they could never overcome.
Special Field Order #120 makes it very clear:
” In districts and neighborhoods where the army is unmolested no destruction of such property should be permitted; but should guerrillas or bushwhackers molest our march, or should the inhabitants burn bridges, obstruct roads, or otherwise manifest local hostility, then army commanders should order and enforce a devastation more or less relentless according to the measure of such hostility.”
“As for horses, mules, wagons, &c., belonging to the inhabitants, the cavalry and artillery may appropriate freely and without limit, discriminating, however, between the rich, who are usually hostile, and the poor or industrious, usually neutral or friendly.”
The poor or industrious were usually neutral or friendly to the Union. This is the war disadvantage which the Confederacy’s slaveholding elite could never, ever overcome, and thank goodness they could not overcome it.
“The regular distribution of power into distinct departments; the introduction of legislative balances and checks; the institution of courts composed of judges holding their offices during good behavior; the representation of the people in the legislature by deputies of their own election: these are wholly new discoveries, or have made their principal progress towards perfection in modern times.
They are means, and powerful means, by which the excellencies of republican government may be retained and its imperfections lessened or avoided.”
“Men often oppose a thing merely because they have had no agency in planning it, or because it may have been planned by those whom they dislike.”
Hope this is not reason enough for WW3!
Look I wasnt a founding father of Murika but I have enormous respect for those who were.
I don’t think Hamilton can be described as having hatred and distaste for the masses. On the topic of “the masses” I think he was pretty neutral. Hamilton’s great strength, and his great weakness (which of course are the same thing, as the Greeks always reminded us), was his sheer logic. Once he knew something to be right, it seemed to him incredible that everyone couldn’t see it as obvious, and so he dismissed any disagreement as being sourced either in dishonest self-interest of in stupidity, neither of which had any right. I think I (and perhaps you) suffer from this problem. Logic is absolute, and when something is logically correct, it should be impossible to disagree. It kills me when people disagree with a logical argument on the grounds that it is merely “my opinion”, or reflects my own political prejudices.
In fact logic cannot reflect anything other than necessity, and the only legitimate grounds for disagreeing are either that the logical construction is wrong and the assumptions incorrect (which nearly never happen) or, far more likely, that there are implicit assumptions which have been left out. Whenever someone disagrees with a logical argument on the grounds that “that’s just your opinion”, my frustration immediately rises.
Hamilton died in his forties, and had he lived longer he might have recognized the assumption that, I believe, would have tempered what many people called his vanity but which I think is the inevitable consequence of excessive logic — the frustration of having to deal with illogical thinking and the response, which isn’t indeed to be contemptuous but always comes across just this way.
As I see it, the “logic” of democracy requires institutional strengthening, even if this means, as it often does, illogical behavior. All political systems have factions that present particular interests, and to judge their proposals on the basis of logic is to miss the point. In a well-functioning democracy as I see it every major group must be represented, and there must be compromises that allow redistributions of wealth, power and (too often forgotten) prestige. These compromises are not always optimal from the point of view of value creation, but that is not their point. The goal must be to strengthen institutional credibility. If this sounds Burkean, I think it is. I align myself with what might be called progressive democrats and I think Burke is often misread as the patron saint of conservatives and right wingers when in fact he was neither. He may have been horrified by the French Revolution but it was not because he hated the masses and pandered to the posh but rather because he recognized the power of institutional flexibility. Remember that he strongly supported the American Revolution, in part because it grew out of American institutional coditions and in a sense represented not a radical break but rather a form of adjustment.
Any set of political institutions, no matter how beautifully conceived, are simply unable to keep pace with social and economic change, and so a well-functioning political system is not a system that “gets it right”, but rather is one that is highly credible and embeds mechanisms that as conditions change allow institutional “gapping” in a non-disruptive way. Throughout the past 200 years, regular as clockwork, during periods of stress whenever a non-democratic country seems to achieve enormous advances while democracies flounder, we get the same old nonsense about how democracies have outlived their usefulness and it is time to turn towards a more “meritocratic” political system in which smart people can decide, and can implement their decisions forcefully.
If only we bothered reading history we would understand that fashions in political thinking are as predictable as fashions in the length of women’s dresses or in men’s facial hair. It is certainly true that autocratic systems can implement policies much more forcefully than democratic systems, and only Mussolini or Hitler could ever get the trains to run on time within a year or two of promising to do that, but this misses the point.
First, we have no way of knowing which are the policies that must be implemented. Hitler managed to keep the German economy humming throughout the great global depression of the 1930s, but Germany would have probably been forced into default and industrial chaos by the early 1940s had the war not started — Adam Tooze even argues that the war started in 1939, against the strong warnings by the German high command that Germany would not be war-ready until 1941-42, because German economic policy makers knew that the economy wouldn’t survive that long. While the west floundered in the 1970s the Soviets seemed to go from strength to strength, but by the 1980s the country had collapsed economically. Mao’s Great Leap forward was implemented with all the force, determination and gumption that anyone could have possibly hoped for, but in jus one of those three awful years, if I remember my numbers, China managed to wipe out 25% of the country’s GDP.
Only autocratic systems manage to pull off growth “miracles” (as you probably know Japan during its growth miracle periods seemed often to be more democratic in name than in practice), but every growth miracle has been followed by efficiently implemented chaos, so that economic convergence, which during certain times (the 1920s, the 1950-60s, the 1990-2000s) seems inevitable, doesn’t ever really happen — in the 20th Century only South Vietnam, Taiwan, Hong Kong, Singapore and a few small Arab oil states seemed to have pulled it off, and maybe Chile will join them, but most of these (excluding mainly the Arab oil petro-states, whose source of wealth is obvious) were or became democracies, and there always seemed to be highly plausible and very specific exogenous and non-replicable explanations for their success. They have also been counterbalanced by sharp reversals of fortune in autocratic states — most spectacularly Argentina but also the USSR and several others.
To return to Hamilton, there is no question in my mind that he was the greatest economic statesman of modern times, but I am glad he never became president because his impatience with stupidity undermined the logic of successful political systems. These include, I am guessing, the following:
1. Credibility. Institutions must be felt by citizens to represent their interests credibly, and if at times that means allowing or implementing distributions of wealth, power and prestige that are less than fully efficient, than so be it. In the case of the US, why abolish slavery, or allow women to vote, or to land a man on the moon, or to encourage government spending in poor states, or to impose affirmative action within universities? Not because these are economically efficient (although I suspect that in nearly every case they turned out to be ) but rather because they create institutional loyalty to and pride in the system.
2. Flexibility, This, ultimately, is one of the most important and under-appreciated economic values that determine long-term success. In their different ways Albert Hirschmann, Robert Aliber and Keynes all understood that growth miracles are, relatively speaking, the easy part, especially for autocratic systems, but the necessary subsequent adjustment is far more difficult and far more important to long-term “success”. Because growth miracles are “unnatural” and require substantial institutional rigidities to implement (institututional rigidities create policy traction), in every single case the countries that enjoyed growth miracles have floundered during the adjustment period and ultimately suffered significant retrogression. Perhaps because the inefficiency of democracies prevents the kinds of institutional rigidities that create miracles, or perhaps because the high institutional credibility and wide dispersal of the benefits of adjustment allow the opposition of powerful vested interests more easily to be overcome, democracies seem to do adjustment well. What is more adjustment never seems to be politically disruptive for democracies, but I cannot think of any autocratic country who has had a growth miracle that was not followed during the adjustment period by significant political disruption that often leads to a regime change. In the US and Europe, one of the most important worries for me is that the rise of financial institutions may undermine this flexibility.
3. Resolving the agency problem. I cannot think of a single political regime or system that has consistently created higher quality leadership and suspect it is impossible even in theory. In every case we usually get a random assortment of good and bad leaders, although some unfortunate systems seem to create a disproportionately large number of bad leaders. Before anyone starts pointing out contemporary cases of countries that have developed practices that very obviously and very systematically provide great leaders, let me remind once again that ignorance of history can easily lead to very foolish observations. There is more than enough evidence to suggest that when a country seems to be growing very rapidly for many years, whether because of lucky exogenous shocks or because of significant institutional distortions that generate low economic value and high economic activity, there is an almost universal recognition that the country has developed a system for developing greater leadership. Some of my readers may be too young to remember that in the 1970s we suddenly “realized” that certain forms of hereditary governance — at least as practiced among Arab oil producers, in which the sexual reproduction of the ruling family resulted in hundreds of sons and nephews from which brilliant future leaders could be identified and educated — were far more intelligent than the clumsy, money-obsessed democratic charade of the West. Weirdly enough, once oil prices stopped rising, the sexual practices of the rulers seemed suddenly to deteriorate, and these countries found themselves stuck in the same old process of creating a random selection of good and bad leaders. Other readers might not remember that Westerners were obsessed by the Japanese system of the late 1970s and 1980s, in which all the important government positions went to brilliant, highly educated Japanese who were far too smart to be fooled by the incomprehension of “Western” economics, and so had developed a far superior model. When we learned in the 1990s however that Japan’s astonishing economic growth had come with even more astonishing debt growth, along with outrageous business practices that could be described, at best, as simple-minded gambling dressed up as financial engineering, we turned eagerly to the geniuses who ran the country in the hopes that they would fix the mess with another, even stronger, dose of non-Western economic thinking, and discovered, to our horror, that Japanese leaders were just as incompetent as our own, or perhaps worse, because in twenty years Japan’s share of global GDP dropped from 17% to 7%, a feat unrivalled in times of peace. Why does all of this matter? Because if we cannot design a governance system that consistently comes up with superior leadership, we are stuck with the agency problem. The worst way to solve the agency problem is the way they do it in the West. Whenever things get so bad that they cannot take it anymore, they chuck out the leaders in an insane election process. Unfortunately, as Churchill proposed, this may well be the worst possible way of doing it, but all the alternatives are even worse.
I could go on, and it might seem strange in a post dedicated to the proposition that Hamilton was one of America’s greatest statesmen and possible one of the greatest in modern times, but I do want to show that my love for Hamilton is qualitatively different than the love my admirable nieces have for Justin Beiber. I think because for all his astonishing brilliance and the well-deserved confidence he had in his logical thinking, he might not have understood the logic of democracy, or rather how democratic institutions often require policies that may seem illogical, wasteful and even stupid, because their goals are not to maximize economic decision-making in the short term but rather to achieve economic success in the long-term by maintaining credibility and flexibility and in trying to resolve the agency problem. He would have probably been our economic Napoleon –easily winning every economic battle but in the end fundamentally undermining the US.
And Suvy you are wrong about Washington. I used to think the same way (not the “bitch” part because O always understood that Washington would never allow himself to be anyone’s bitch), but he was not only a truly great leader but was probably the only possible leader that could have allowed the US to become what it became. You should rush out and buy Chernow’s book on Washington and I am happy to bet you that by the time you have finished it your opinions will have completely changed.
Just a note, wouldn’t you say that the American government is pretty close to a Constitutional Monarchy. The reason why I sympathize with a Constitutional Monarchy isn’t because of the monarch, who I often find to be some egghead who thinks he knows more than he actually does, but because of the administration. With that being said, I’ve always felt like Presidents have a tendency to behave like kings regardless of their political ideology or slant with Obama being a typical example. I fail to see much of a difference between a President and an elected monarch. Wouldn’t you liken the American President to a king or monarch in many ways?
I also think that Hamilton would’ve made a terrible President. Hamilton had a tendency to take things WAAAAAY too far, which is understandable given his background, childhood, and attitude. Simply put, Hamilton was kinda crazy. He was smarter than everyone around him–by a long shot–and he knew it.
The idea you bring up about institutional credibility is interesting. I haven’t really read a lot of Edmund Burke, but the way you explained it makes sense.
I guess my main disagreement with you is over how Hamiltonian our political system really is. I always say that if you wanna understand the American political system, read The Federalist Papers. I think the political system works exactly the way Hamilton wanted it to. The constant mud-slinging, the hell raising, the demonization of the other side, the seemingly unquenched thirst for power that every person in the system has, and all the other stuff comes straight from Hamilton in my opinion.
My main issue with monarchy, as you said, is that you get some egghead thinking he can’t possibly be wrong and about how “meritocratic” the system is, which often has a tendency to blow up the system. There’s other reasons I think monarchies fail, but I’d have to be incredibly non-PC (which would mean my comment would probably get deleted) so I won’t make any further comments or notes on the topic.
As for Justin Bieber, I can make no comment. I think he needs to get his ass kicked–it’d be good for him. I don’t listen to his music, although one of my favorite artists did a song that features Justin Bieber. Here’s the song if you’re interested (the song is okay, but the drop is actually pretty sick ~1:00).
Really appreciate your discussion on logic. And for what it’s worth, I suspect a key factor that draws so many of us here is your own respect for and mastering of logic. Using myself as a data point, I have no background in economics or finance, but found myself immediately fascinated by your arguments and the “sheer logic” supporting them. I imagine many of us here share your frustration with unprincipled arguments that either do not use or pretend to use logic. This includes arguments from the international level all the way down to the spouse. In fact, if you are correct that Hamilton may not have been a good president, perhaps this is a lesson for those of us who wish for logic to rule the household.
When I was slightly younger and much more naive, I went to study on the east coast and then to work in DC with the hope of finding “truth” in logical policies supported by the best available evidence. I should have stuck to observing the offspring of fruit flies, or something of the sort. Your comment on the logic of democracy potentially requiring illogical behaviors brings some comfort.
I think it is your practical and principled approach that makes some here interested in your thoughts on topics for which you do not consider yourself an expert. However, I question whether you can apply option theory to explain why Sonic Youth is better than Wong Faye.
I developed a theory of governance which has not yet been tried: you might find it interesting.
SO: we have good leaders, bad leaders, indifferent leaders. Almost at random. But we can often tell after the fact: in particular, the general population can often tell, *eventually*, when their leader is extra-bad.
When we get a really good leader, it would be a good idea to keep him or her in power as long as possible. We don’t really want them to be struggling with constant election campaigns, either.
When we have a really bad leader we really need to get rid of him or her ASAP. The absolute worst problems came from leaders who refused to leave when their time was up, such as the Russian Tsars and King Louis in France. We don’t want to have to remove them with bloodshed.
So the most important part of democracy is *recall elections*.
My theory is that we should pick a leader (somehow — it’s possible random sortation would be good enough) and leave him or her in place until resignation or a recall vote.
Interfering with a recall in order to stay in power would have to be treason punishable by death, and would have to be considered as such by the general population.
^^Suvy WROTE: “Yea, I’m in complete agreement with this. I remember when I first saw that Hamilton may have to share space on the $10 bill and I erupted in rage. I’m furious how such nonsense could get through. I think they should upgrade Hamilton to the $20 and eliminate Andrew Jackson from the bill.”
—————————–
72% of all purchases in the US are now made electronically, with only 22% reporting currency transactions. Clearly, currency is dying and Visa/MC are taking over. Perhaps Visa/MC would like to consider putting a portrait of Alexander Hamilton above its Logo on the card? Alternatively, they could offer customers a range of choices like Hamilton, Washington, Susan Anthony, Sacagawea, Rosa Parks, Caesar Chavez, Malcom X, Louis Farrakhan, Captain America, Mickey Mouse et cetera. If this happens, all individuals can pick the particular National Hero they want on their card and we could track issue-statistics to rank them and see which one is the most revered. Vox populi, Vox Dei.
Some historians have argued that Lincoln would have handled Reconstruction more in light with the terms reconstruction and reconciliation. Perhaps Lincoln would have used his immense political skills to engineer economic incentives for Southern reconstruction possibly even a Marshall Plan of sort. It is likely Reconstruction as it was executed by the Northern Republicans held back industrialization of the South. Reconstruction’s aftermath also left African-Americans in the South in a state of second-class citizenship for another hundred years. While African-Americans in the North were certainly not treated fairly, their circumstances were better and evolving.
Of course, it’s easy with historical reflection to paint a different world that is as wildly optimistic as it is theoretical.
Suvy, can you elaborate what you mean by empire and nation-state as it relates to the Civil War North and South? I’m not sure I understand what you are saying.
My comment above was in reference to Suvy’s comment about the the Union (empire) crushing the rebellion during the U.S. Civil War.
I’d be one of those people right alongside those historians in the way Lincoln did things. There’s a difference between economic productivity and political/geopolitical power. The problem was that the old power structures (aristocracy and land-based rentier economy) were still in place.
“The problem was that the old power structures (aristocracy and land-based rentier economy) were still in place.”
Andrew Johnson made an explicit point of preserving those structures. He aggressively pardoned all the elite traitors who’d started the Confederacy and waged war on the US. And he refused to implement the Enforcement Act which guaranteed voting rights to the emancipated blacks.
Johnson’s crimes deserved impeachment, but James Madison had screwed up the impeachment procedure in the Constitution — he’d made it too hard to convict — so Johnson’s impeachment removal failed by one vote. This is still a major defect in the US Constitution.
As for empire and nation-state, I’m basically using size, ethnicity, and political structure. Nation-states are relatively small, consist of one ethnicity/nationality/culture, and the political structure is largely governed by the ethnicity running the show. Empires tend to be much larger in size, multi-ethnic, and the political structure is primarily designed to keep internal peace.
One key difference is that empires don’t really have borders; they have frontiers or borderlands. When you start getting away from the empires core territory, you slowly start to encounter shifts in the culture, language, ethnic background, etc.. You don’t really have a border because it’s just way too big of a region to have any defensible border. Instead, what you have are frontiers.
The South was a nation-state to the core surrounded by a certain cultural and ethnic views. It’s a nationality imposing a state, or a nation-state. The Union as a whole is an empire, coming in large part because of the brilliance of Alexander Hamilton.
Let me put it this way: for 50 states across this massive landmass with 320 million people to behave as a nation-state isn’t gonna happen. You need an empire to do that. Just look at the structure where each state has authority with the federal government holding supreme authority. It’s as if every state has a king with the emperor being the king of kings.
Who else do you think should be on the short list of prominent US historical bankers and financiers?
As a rule, Lord, I am not always convinced that the interests of financiers and those of their countries always coincide, but of the top of my head I think Robert Morris, Marriner Eccles, Jay Cooke, and of course Nicholas Biddle are all important figures. I might include John Jay and Gouverner Morris (not strictly bankers, but important to the development of US financial history), along with Warren Buffet, Bernard Baruch, JP Morgan and perhaps Michael Millikan and the Rockefellers. Benjamin Strong and the German Paul Warburg were critical in the development of the Federal Reserve System.
What about John Sherman? In addition to being the brother of General William T. Sherman, he was heavily involved in the effort to finance the North during the Civil War, and (as Treasury Secretary under President Hayes) in bringing about “Resumption Day” in 1879.
I will look him up. Quite frankly it would have never occurred to me to include him on the list, but now I am curious.
I recently read Akhil Reed Amar who teaches constitutional law at Yale, but more historian than lawyer. He makes the point that ALL of the early presidents were either slave owning southerners or pro-slavery northerners; one of the reasons Hamilton could never have become president (nor was he native born). Our first anti-slavery president was Lincoln with predictable results. “Slavery” does not appear in the constitution, but pervades that document using various euphemisms and code which everyone at the time understood. So replace Andrew Jackson with Frederick Douglass? And the 1 rmb note?
“This is not the sort of thing I usually write about. . .” I would encourage you to roam even more freely; a blog should be more bar than classroom.
Thnaks, Dan. I have thought about expanding the topics of discussion for this blog. For example I would love to write about the Chinese music scene and the artistic straightjacket of “authenticity” that we so often impose on non-Western artists. Maybe I will vary, but I have always been a little bemused about the ways in which a person who has developed a reputation in one field decides that he actually knows quite a lot about everything…
Michael,
Many of us would love to read about the Chinese music scene. And like your economic thoughts, I know your “authenticity” straightjacket treatise would be preaching to the choir. But I would also like it be a separate blog. But I just have one vote….
Just a point to note, I believe Jefferson was against slavery, not because of its treatment of people of color, but because Jefferson felt like a few wealthy aristocrats were getting very wealthy while everyone else didn’t have anything. This is why Jefferson proposed a Virginia law through that gave every white male 50 acres of land, confiscated all of the slaves, threw the slaves off the land, and ruined the wealthy plantation owners or aristocrats. Basically, Jefferson was a base level populist.
This brings me to my next point, why do so many people always hail “power to the people”, “will of the people”, “equality”, or “democracy” like they’re good? The masses are some of the most oppressive people that can tend towards bigotry and hatred while excusing themselves that “everyone else wanted it” and other such nonsense. Hamilton noticed the same thing when he was protecting former loyalists in court as a lawyer. How many realize that it’s the masses who support the dictators and autocrats? For example, Napoleon (along with others like Hitler, Lenin, Stalin, etc.) derived their entire support bases from the mass populace.
I don’t think many seem to understand that true democracy can be best manifested and executed as a monarchy. Usually, the people at large have divided interests and for them to be united, there must be a head. A people without a leader (monarch) is like a body without a head: completely useless. So if we actually want true democracy, we should want absolute monarchy. Any idea of a Constitution or republican ideas or a system to protect liberty must necessarily be anti-democratic.
Yet again, the brilliant Alexander Hamilton duly noted all of this. Why would you want the masses to have a lot of power? Again, if they’re fighting over themselves and disunited (as they must be in healthy republics), they have virtually no power. What we (by we, I mean me) really want are hierarchical political systems where the power is vested in the capitalist elites ran via republican institutions that emphasize constitutional governance, a rule of law, a basis around sound economic/financial systems, liberty, and focus heavily on class mobility instead of equality.
The inherent idea of social democratic equality, which Jefferson was strongly in favor of, is complete bullshit. It’s dangerous, is usually what leads to despotism, and morally wrong. The masses aren’t capable of ruling themselves, nevertheless a whole country. On top of this, they excuse the worst things because “others were okay with it” or such similar nonsense. Why do people hail this as a goal? Hamilton realized how foolish all of these ideas were.
While “the masses” can become mobs, that most awful of beasts, institutional constraints on the mob should be part of any political system and are the point of things like a bill of rights. Otherwise I suspect that “the masses” are often far more intelligent that the elites. Just think about howe much effort the European elite spent on trying to prevent the masses from having any say in the creation of the euro.
We used to joke among ourselves that when it came to expressing strong views about, say, the Chinese economy, it was wonderful to hear people insist that because they visit China once or twice a tear, they really understand the country. In fact we found that the only difference between China experts who visit the country once or twice a year and China experts who have never been to China at all is that it is occasionally possible to convince the latter when they are wrong, whereas the former are immovable in their cliched thinking. Perhaps this is the great divide between the elite and the masses — when the former are wrong it is impossible to convince them that they are, whereas it is not so hard to convince the latter.
Doesn’t this just mean we need to rotate elites? Basically, having the people hold a gun to the head of the elites whilst the elites run the show and if they screw up, the people put new elites in charge and the cycle continues.
After thinking about this, I think you have some points, particularly about institutional credibility. However, I always find most racism and bigotry to come from “the masses”, for lack of a better word. You know as well as I do that most of the resistance against slavery and equal rights to blacks came from working class whites who would become equals to the lowest class instead of being the second lowest class above blacks.
For example, take any sort of anti-immigrant movement or any sort of “working-class” movements anywhere in the world. Where do you see the worst treatments of minorities and those with less rights. Take a look at Europe today, where you’re having these movements alienate and radicalize Muslim and other minority populations. I’m sorry to say, but capitalist elites that only care about money are far less willing to look at color of skin than the average proletarian.
I’m going to jump in here. I’m not convinced that European Muslims have been alienated, but rather have refused to assimilate. A liberal judge who was a friend of mine told me fifteen years ago he feared the U.S. was allowing many immigrants into the country that did not share our values and never intended to assimilate. The values and assimilation formula for democracies absorbing immigration cannot be dismissed. It has always been a cornerstone of the American experiment. I believe a key tenet of successful immigrant nations such as the U.S., Canada and Australia.
I’d argue it depends more on class than anything else. Bourgeois Christians or Muslims or Hindus or Buddhists are more like one another than poor Christians or Muslims or Hindus or Buddhists.
I don’t know where you want to go with this. Mass doesn’t mean most of the people. Always some group feel like it would be good to oppress others. And that basically why you don’t need republic with FIX institutions but a soft system with DYNAMIC institutions. If you look at Singapore or EU witch follow much of what you like. They are now stuck because their institutions are heavy. You don’t know if 200 years after created a country it will need concentration of power or the reverse. But with rigid institution you are sure to be wrong at some point.
So the problem is not mass in themselves but the fact that some kind of power remain in the hands of the same people for too long. The fact that Rodney King what cases was dropped show that police institution protect itself from disruption. Highly educated black communities protect themselves with affirmative actions.
To me republic is really the worst that you can get from democracy. But Platoon who advocate for Republic was a very BAD democrat. Who really think only a few should run a country.
How can you say republicanism is worse than democracy? That makes no sense. As Prof. Pettis duly notes several times, the most important part is to have the ability to throw away bad leaders. The advantage of a republic (at least in the sense I’m talking about) is that it’s got the same structure as an empire. The decentralized structure makes it more robust to shocks.
The democratic nation-states we see today ARE NOT very robust. In most of these states (ex. France, Germany, most of Europe, and other places), you don’t even really have the basic version of the Bill of Rights. In France and the UK, you can’t attack public officials. In Germany, you can say whatever you want unless you don’t hurt someone else’s “dignity”. What a load of bullshit? How the hell can you have a law to protect “dignity”. Dignity comes from proper philosophy and spiritual guidance in your life, not something that can be granted by states (barring abject suffering).
Not having something like the Bill of Rights or emphasizing the will of the people over a rule of law, a Constitution, a free press, an independent judiciary, and the rest of the old liberal stuff is a way to blow the system up. In a time of crisis, mob rule takes over and dictators get in charge. Remember that republic comes from the Latin word res publica or public thing–the law.
The problem with the people is this: winning elections is about LOOKING like a good ruler, not BEING a good ruler. The problem with the people is they can be fooled. If you do something that shows a gain, but there’s a loss concealed under it, you’ll win an election. If you do something that shows a loss with a larger gain concealed, you lose. This happens all the time. I’d like to see Prof. Pettis’ take on this.
Note: Please don’t mistaken empire and imperialism, which are two different things. The former comes in to protect trade, create investment opportunities, and is often (usually) productive while the latter is built on extracting rent.
The problem of republic is actually what you wish, a good leader. Plato wanted that a Republic lead by a king made wise or a wise man made king. The problem is how can you know before that every situations you are going through will be solve by such type of men. If you look at how a company are ruled. Nobody want you to be smart, just get that money and that’s it. In a democracy people should elect somebody who fix the problem and that’s it. But you have a bunch load of useless institutions protecting their interest like prof unions ECB. Of course Mario Draghi is a wise man. But what he is doing is wrong, but he can’t go out because, stability blah, blah…. It’s because don’t know if you need a a wise man or not that you should be able to choose both.
If you look at affirmative action. In Brazil they recently voted one and it’ s temporary. So you dodge predatory behavior. It’s that kind of Flexibility that you need n your society. And obviously in a Republic rights/institutions are FOREVER and that’s what you don’t need.
I haven’t read The Republic by Plato so I can’t comment, but I don’t think Plato says that republics should be overthrown by philosopher-kings. He just has a dialogue where Socrates says that, if I’m correct. I could be mistaken here.
With that being said, how likely do you think it is to have a king like Marcus Aurelius every single time? It’s just not gonna happen. Most people will get drunk with power and start doing stupid shit.
“In a democracy people should elect somebody who fix the problem and that’s it.”
How wonderful?! If everyone does everything in the exact right way, it’ll all be okay since that’s exactly how it happens.
“And obviously in a Republic rights/institutions are FOREVER and that’s what you don’t need.”
Yea, no government is gonna be forever. In a time of crisis, the people will turn to a king/dictator. Then, him (or one of his successors) will eventually have a son who they’ll name king. The cycle will continue until you get a retard in power who thinks he’s better than everything, a guy who actually buys the idea that he’s born to rule and he’ll run the system into the ground.
Republics are not forever, but they have far more vitality and vigor because they’re able to adapt through the diversity of their citizens. The problem with “democracy” (in the naive sense used by leftists) is that the people are, in many cases, their own worst enemy. If you give all the power to the people, they’ll blow themselves up.
With a king, it takes one guy to run the system into the ground. One bad decision and everything’s literally lost. If you want a robust kingdom ruled by a king, it is possible, but you need laws and rules limiting the king. In other words, you need some form of a Constitutional Monarchy with some form of a Parliament or Congress to check the king.
The idea of trying to build something that’s gonna last forever is foolish and will lead you to ruin far quicker than understanding death is a part of any life as well.
As for the ECB, everyone knows it a retarded design. The problem is that you don’t have a Constitution, a rule of law, or even a free press/elections really. There’s no way to throw out the guys running the show. The problem in Europe is a lack of republican institutions.
If Europe turns to dictators and kings again, it’ll simply end up like it did the last time: war. It’ll exacerbate the weakness of the nation-states and ruin the entire continent, again.
“But you have a bunch load of useless institutions protecting their interest like prof unions ECB.”
To be honest, what do you expect? Why would you expect anything different? We act and talk like politicians have choices, but in reality they’re highly constrained. People in power don’t really have many choices if they want to maintain power.
Republic of Plato is not the most important because searchers found out that Plato was actually the man teach to the king/philosopher (now you understand….). He had two teachings one public and one hidden. So we don’t really know what was in it. Let’s say he was an ancestor of Kissinger. And for sure Kissinger is wise. He also made huge mistakes, did they sent him in prison?
FED is close to ECB in some points, EVERYBODY know that the happy few who get QE money become very rich for NOTHING. But still no sanction.
Because these people/institution are here forever, abnormal behaviors go on.
To me one central bank is an error at least you should have many. And of course allow everybody to create the money.
So of course i want a king/president to have limited power but also want temporary institutions.
Central banks were actually created as machines of war. You don’t need central banks, except for raising funds for wars, imperial expansions, and other things of the sort.
BTW, I think you’re right on central banks. I suspect you’ll see either:
1. the Fed eliminated outright OR
2. the power of the banks drastically reduced
On another note, what do you think the American President is supposed to be. The purpose of the President is like that of an elected monarch, but if you want the power of a monarch to be constrained, you still need a Congress or Parliament.
Remember one thing about great philosophers “teaching” or “tutoring” rulers: Seneca was, at one time, Nero’s tutor or teacher. Sure enough, Nero forced Seneca to kill himself. Having great tutors like Seneca (who I consider one of THE best philosophers ever) didn’t stop Nero from being a tyrant.
As I said, not everyone is Marcus Aurelius. In fact, very few people, regardless of their tutors, are like Marcus Aurelius.
I still find democracy to be the tyranny of the majority.
As for affirmative action, I don’t see how any affirmative action really helps anything. You end up getting some black kid get way overmatched while some guy like me, who consistently took risks to do as well as I could, ended up getting fucked by the system. Some kid with a similar GPA that took less academically challenging stuff, took less risks, did less stuff outside of class, etc deserves to get into a school with financial aid that I can’t even get in to? I’m sorry, but that’s straight up bullshit.
Putting some kid in an environment where he’s totally outmatched just because of the color of his skin (which is not race, but it’s the world is too PC and “sensitive” to actually portray the truth) is complete horseshit. To be honest, I don’t see how much good can come out of that.
I think there are obviously many flaws to Affirmative Action. In line with Prof. Pettis’ views on the flexibility of democracy, Affirmative Action was enacted and engineered to increase buy-in from a very frustrated and suppressed African-American community fifty years ago.
I myself find my views of Affirmative Action more sympathetic with Justice Scalia (who I actually find many times contorting the constitution to defend conservative views to a fault). I believe Justice Scalia has questioned the idea that African-Americans deserve favoritism in admissions, government/corporate contracts and hiring in perpetuity. He asks the question who decides when it’s enough? This is just one point of his among others related to Affirmative Action.
Given the current sensitivities surrounding race relations in the U.S, I wouldn’t expect the Supreme Court to make any major pronouncements in the near term. However, Chief Justice Roberts is a noted opponent of Affirmative Action in it’s current form. I suspect over time voters in several states will be asked directly to tread on this “third rail of American politics” much as they were in Michigan in 2006.
We were so lucky that we had to do at least a few years of liberal arts!
So….Suvy.
Half of all people are below average intelligence. So can we assume that those smarter people, lets say the top 1% know what is best not just for themselves but also for at other99% ?
We cant because power corrupts and absolute power corrupts absolutely.
If by historical accident combined with ruthlessness rather than merit a group of people rule only for the benefit of their families, dolling out benefit to the masses only enough to keep them from revolution, then sooner or later when the economy plateaus or goes backwards the system will collapse. See Nicolae Ceaușescu for example. These leaders are then relegated to compete for the title of greatest despot in history.
Now if you believe in a meritocracy, without inherited wealth or family connections skewing its functioning, that is still not enough. What is needed are insitutions to ensure that those who are clever or ruthless enough to garner most of the resources or control do so not just for their own families benefits but for the common good.
One is an inhibition on propaganda which controls the masses happy with “bread and circuses” or worse perpetual war while basically exploiting them to further the gains of the 1%? You can argue that Rupert Murdoch at Fox specializes in propaganda which excites the least intelligent Americans into voting against their own best interests. Eg Denying Climate Change in support of big Oil for example,
But you can fool some of the people some of the time but you cant fool all of them all of the time…if you have a free press.
Hamilton: “consists in the right to publish, with impunity, truth, with good motives, for justifiable ends, thought reflecting on government, magistry, or individuals.”
from John Stuart Mill
“If all mankind minus one were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person than he, if he had the power, would be justified in silencing mankind. (1978, 16)
“absolute freedom of opinion and sentiment on all subjects, practical or speculative, scientific, moral or theological” (1978, 11). Mill claims that the fullest liberty of expression is required to push our
the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. (1978, 9)
Boy Mr Pettis, you have big job here.
I agree with everything you just said. It’s not about “democracy” or “equality”. It’s about a Constitution, a rule of law, a free press, an independent judiciary, proper incentive structures, free elections whereby the people can throw out idiots, and all the other old liberal stuff.
IT is everything about equality and democracy is the best way of ensuring that, which is why the advanced world practices it. Its the best system. Imperfect but no one has come up with anything better.
The US constitution is there to ensure democracy and equality of opportunity. It is not there to the glory of the individuals who wrote it. The most truly historically amazing thing about America is the constitution. I think it had a lot to do with the then currency of individual “honor.” In Hamiltons case he put his “honor” above his life. Now we have externalized that “honor” into social institutions, and perhaps are in some ways the worse for it. See Rand Paul.
And as for SOCIAL democracy. Read John Rawls on Justice. Those at the bottom end need a bit of help. Its a balance. Where you draw the line is the question.
Equality of opportunity is not equality. I also don’t think the developed world actually practices equality. A meritocracy, or similar society, is not an equal society. Most of the developed world has clear social hierarchies. Quite honestly, I find the US one of the least equal societies, and that’s including some LDCs. The amount of class mobility in the US can be absolutely brutal on people who would, in other places, be living like kings.
As for the beauty of the Constitution, I agree with you. With regards to equality, the Declaration of Independence says “all men are CREATED equal”, it never says all men are equal.
As for social democracy, my main problem is the way it distorts the incentive structure. Social democracy is basically the idea that you give the people what they want and vote for. I’m against the “will of the people”, for lack of a better word. The problem with social democracy is that there’s no real way to hold people accountable (lack of skin in the game).
There’s a fundamental difference between the consent of the governed and the will of the people. I want the former, not the latter. With that being said, the US IS NOT a democracy, but a Constitutional Republic with the structure of an empire.
I think income inequality is the great modern challenge in the U.S. While I think Great Society programs have not been successful in preventing greater income inequality, I think there have been strong historical forces contributing to the problem over the last forty years.
I agree with Suvy. I worry that we will destroy incentive structures. I still think the U.S. government can develop policies that gradually supports higher wages and redress policies that hurt wages without destroying inventives to work, to learn and to achieve. I worry that the populace thinks the quick fix is to raise taxes, increase government benefits and raise the minimum wage.
I always say Democrats don’t show enough respect for Money and Republicans don’t show enough respect for Work. I think here in the U.S. we now need to show more respect to those who work.
Suvy
I dont think the world will survive a democratic revolution in China. And nor will it survive a war between China and the US.
What we need is incrementalism. Moving towards democracy. Deng understood this.
I don’t know if China needs democracy per se. Why not just go to a Constitutional Monarchy? You can establish a Congress or a Parliament, but it doesn’t have to be full-blown democracy.
@ Micheal & Suvy
Thanks for this interesting dialog. I probably do not possess the depth of your wisdom but still would like to add a point or two.
“How many realize that it’s the masses who support the dictators and autocrats?”
Did you consider the possibility that this may be the result of a one dimensional linear development in which a single segment of society appropriated more and more power and wealth and the rest is driven increasingly into a state of slavery (of course not by name)?
“Otherwise I suspect that “the masses” are often far more intelligent that the elites.”
I agree to this being a Swiss citizen and having enjoyed real democracy. However there is a certain degree of truth in the statement that the masses may act irresponsible, especially when enraged by the rule of law that increasingly diverts from intuitively felt justice. The act of assuming political responsibility requires a certain degree of “training” in that one goes far deeper into the issues subjected to a vote.
Institutional loyalty to and pride in the system
These feelings are strongly influenced by the economic well-being generally. Look back how Greenspan was heralded and referred to as maestro and how his reputation has suffered in the past few years. It applies not simply to personalities but to institutions as well. There is an additional danger that well thought of institutions will try to expand their sphere of influence and assume further central planning activities, which are natural tendencies of any large organization; such developments have to be carefully observed and countered by the citizenry which is not always easy.
Generally I would like to state my conviction (which may actually reflect some of Jefferson’s ideas) that any system tends to become corrupted and increasingly inflexible (the opposite to the flexibility that Michael feels to be important) given sufficient time. This happens simply due to the fact that some segment of society will gain relatively higher benefits/power from it and use that power to expand this development by influencing the decision making process (legislation) in a rather linear fashion again to increase their own wellbeing; this may be considered a short sighted approach but is at the same time normal human nature to ensure one’s personal future first and foremost.
Sorry…hit reply by mistake on earlier one….
Well said. Hamilton should stay on the $10 bill. Treasury is responding to a proposal by an NGO for a woman to be on the $20 bill, which would take Andrew Jackson off the US currency. Jackson doesn’t belong there anymore. He advocated for and then enforced the Indian Removal Act. His economic policies are believed to have caused the panic of 1837 and the subsequent five year depression. And he own hundreds of slaves.
the same Jackson that considered fighting bankers his biggest achievement?
indeed..the sheeple are so predictable..
Jackson is looked on as one of the fathers of the Democrat Party, so taking him off is a little bit awkward. I’m sure that many historically literate Democrats are a little embarrassed by him, but the symbol is important.
What symbol? His symbolism against a unified currency, commerce/trade, industry, and mostly a symbolism of rentier based economics of an agrarian economy. If there’s any symbolism with Jackson on the $20 bill, it’s not any sort of positive symbolism in any way whatsoever.
Mr. Pettis,
Have you seen Lin-Manuel Miranda’s “Hamilton” in NYC? I was fortunate enough to see it off Broadway at Public Theater (and no less fortunate to sit next to Daniel Craig and Rachel Weisz. It is scheduled to begin running on Broadway in July for a few months and has/will surely do as much as anything I can remember to create general awareness around Alexander. Shoot me an email, and I would happily treat you to a ticket next time you are in town.
http://www.nytimes.com/2015/02/18/theater/review-in-hamilton-lin-manuel-miranda-forges-democracy-through-rap.html
-James
I am dying to see it. My friends Hans Humes and AJ Medirata have promised to get me tickets.
Thank you for educating us about Hamilton. I had no idea of his accomplishments.
I have barely scratched the surface, Andrew. Read up on him. He was truly remarkable. I tell my Chinese students with political ambitions, as well as friends in Latin Americana Europe, that the more the read of him, the better they will be.
Dr. Pettis,
Hamilton was a strong advocate of a privately owned central bank. Others, notably Jackson, felt that role should be assumed by the Treasury. With the advantage of 200+ subsequent years of history, would you mind sharing your thoughts of Hamilton’s view on this particular subject?
Very tough question. Hamilton’s support was really for a central bank that unified the credit system, created accessible capital, and fostered the development of a productive economy. To him private ownership was not about ownership but about political independence.
And yet it isn’t so clear cut. A national development banking system was one of the three pillars of the so-called American system that derived straight out of Hamiltonian thinking, and the correlation between a system of stable money and credit and rapid economic growth, especially in the development stages, is not nearly as positive as most people think (it is probably even negative).
Like most elite-educated, Wall-Street trained, know-it-alls, for much of my career I had never doubted that an independent central bank that guaranteed the stability of money, that protected savings, and that minimized financial crises, was an unambiguous “good”. But for the past decade I have become much less certain. The role of the banking system should not be to have a good banking system. It should be to promote growth. This is a very complex topic that I have written about in pieces and pieces but which I hope to do more on.
There is a brief, almost jokey piece I did for the Financial Times in which I said:
“The Belgian historian Raymond de Roover once explained that, in the 19th century, “reckless banking, while causing many losses to creditors, speeded up the economic development of the United States, while sound banking may have retarded the economic development of Canada”. Too much financial stability, in other words, may actually reduce growth by limiting the transfer of resources to producers of wealth. This is not to say that all reckless banking is good…”
Needless to say I was lambasted for suggesting that banking stability is not the summa bonus of economic policy making, but you can read the article here: http://www.ft.com/intl/cms/s/0/0796bcce-9558-11e2-a151-00144feabdc0.html#axzz3dnJOAWoC
In you FT piece you argue that it might be better to fragment the financial system i.e. turn banks away from being too big to fail. My question is, is there any merit to the argument that fragmentation leads to less powerful banks less able to serve the needs of large corporations? This is certainly the argument anti-fragmentation proponents are using. Does it hold any weight?
I fear you may not have to argue your case for long.
Free money stock market pop?
Bond market crisis?
Prof. Pettis and others,
Did you see Rand Paul’s choice for his economic adviser? It was none other than hedge fund manager Mark Spitznagel. Spitznagel used to work for Taleb and they’re both still very good friends with Taleb remaining as an adviser to Spitznagel’s firm, Universa Investments (see link below).
http://www.universa.net/
Spitznagel is a straight up Austrian. Here’s an interview he had with Taleb if anyone is interested.
http://www.zerohedge.com/news/2014-06-01/spitznagel-taleb-inequality-free-markets-inevitable-crashes
I tend to view him like I do most libertarians, who understand quite well the importance of war in the development of economic systems, but a person who acts like geopolitical considerations can be completely ignored in financial matters. That’s my biggest worry with guys like Spitznagel.
You may not agree with Rand Paul on everything. I mean Libertarians are basically anarchists. But I agree with him on a number of things.
I think its great Paul exists. Hamiltons. Checks and balances. Freedom of speech.
He fulfills an important role.
Absolutely the best defense for keeping the genius Hamilton and shifting a woman to another bank note – my preference would be Andrew Jackson on the $20 bill. I have never had any regard for Jack Lew, but this act of ignorance leads me to have nothing but disdain for this act of ignorance. He does this particularly at a time of racial tension in the US, and as you rightly state, Hamilton was no slave holder and against such. A good message would be conveyed by removing Jackson for this very reason. But that would be dismissive of the greatness of Hamilton, which is the most important reason as to why Lew is so wrong.
The racial tension isn’t really a racial tension any more. It’s a tension between classes. You’ve effectively created (in large part due to the poor design of The Great Society) a permanent underclass with little class mobility with incentive structures for poor women who benefit monetarily by having more children. When you have a society where this many kids are growing up in households without two parents, you will have problems.
Actually, we’re seeing some positive signs where childlessness among more educated and higher class women is actually dropping while lower class women are having slightly fewer kids, but this shift hasn’t gone far enough. Poor people shouldn’t have having 5 kids where the dad leaves. A huge problem is the drug war, which needs to be sent to the grave. I can’t tell you how much the North American Drug War has added on to these “racial tensions”–which are really class tensions. We’ve thrown kids in jail for nonviolent drug crimes where they’re nickel and diming pot while the guys in the DEA are actively working to destroy entire societies and getting away and being hailed as those doing a service to the country. This is an absolute disgrace.
I’m not saying drug addiction isn’t a problem, but it’s not a criminal problem. If I have serious health issues, I need treatment and help. If I have psychological issues or family issues, I need either help, philosophy, or some form of spiritual guidance. If someone has a disease and you throw them in jail, what do other people with that disease or similar problems do? What do their children or wives or baby mamas do? Resorting to guns, violence, and detainment isn’t the way to solve real health issues. The saddest part is that the rich or relatively well off are able to get treatment while the poorest and least well off get completely ruined.
It seems like very few of those in power (or older people in general, particularly senior citizens) actually understand this or are even willing to understand this. When I talk to people in older generations, it seems like they’re more worried about what’s going on in Iran, which is absolutely no threat, than they are about what’s going on in the other side of the border. Many of these people think that it’s a better idea to go into other countries, destroy random governments, destabilize large regions, try to build infrastructure/nations in other places, and do a whole bunch of other nonsense while our Southern frontier is not even being dealt with.
Sorry for the rant, but this topic drives me insane. The biggest national security threat to the United States is the North American Drug War. The “racial” issues stem, in large part, from the North American Drug War. Once we start to actually understand it, we can then deal with it. This is why I like Rand Paul BTW, he’s the only person who’s actually been speaking about these issues and willing to deal with the real risks.
http://suvysthoughts.blogspot.com/2015/02/the-largest-american-security-threat-is.html
Suvy, I don’t always agree with everything in your rants, but I agree with you here. Unfortunately, we have class issues that are now ingrained in our culture. They will not be easy to fix and I fear the Democratic Party platform has codified much of The Great Society good and bad. I wish we could all agree certain govt. programs aren’t working and try to develop different initiatives to help the underclass, but it’s almost impossible politically to rollback a government program in democracy.
I also agree with you on the Drug War, but that’s my libertarian streak in social matters. It’s hard for conservative Americans to realize the War on Drugs has immorally targeted the underclass. While a wealthy kid involved with drugs will get probation, a poor black kid will be incarcerated for years. It doesn’t make selling drugs right, but we have to take a step back as a society and see what the laws and a biased court system are doing to the underclass.
Well, everyone in my generation gets the issue of the drug war, regardless of the amount of drugs they’ve used. When I talk to people my age that give a damn about the stuff we discuss on here (or otherwise), they all understand it’s a class issue. Hell, there’s not even really any sort of discussion on it, regardless of skin color or race.
I’d also like to add that almost everyone my age doesn’t care about race in any way whatsoever. It’s one thing to say that you don’t care about race or think you don’t care about race, but it’s another thing when your subconscious perceives things in a certain way. For example, 15-20 years ago I don’t think most people were racist, but there was more of a subconscious attraction that girls and women had towards boys and men. Today, you can walk into a bar or club or anywhere really and most girls often find themselves more attracted to the black or brown guy than they do the white guys near them, and this is at a very subconscious level. However, the division among classes seems to become more and more apparent as the days go by. If I take the example of middle class girls (white, black, Asian, or whatever), they’re all attracted to the same guys who may be different colors of skin, but they all belong to a certain class.
I’ve got a white friend who did his undergrad at my graduate school and it’s almost entirely dominated by upper-middle class kids while my friend grew up in a working-class area. He told me that when he got there, he was completely shocked at the way the people in the college were. He couldn’t relate to them at all. Now, in the same college, I walk around campus and can automatically relate to almost everyone there at a very intuitive level. Almost all of the girls (and guys) there have the exact same values and ethos as me and we look at the world in the exact same way, although our political views can be different. With regards to my friend (who has very similar political views to most of the people at the college, particularly the girls who tend to skew very “liberal” in the American sense), he has a different ethos, different values, and looks at the world in a very different way. Again, all of this is at a very subconscious level. Of course now, he’s got a upper-middle class job, living very cushy for a guy his age, and his outlook has completely changed, but that’s not the case for most of his childhood friends.
I’d also like to add that I’m kinda worried about the developments we’re seeing in race, not so much for the black community (which I think will be fixed sooner rather than later simply because of the ideas and thought process of my generation), but for the proletarian white community. I think many of them feel like they’ve been left out.
Some regular white guy grows up in a working class town that he sees get decimated over his entire lifespan and then moves to another town to work because he has to. He’s been told all his life how great “their culture”, “their values”, and “their way of looking at things” is. He keeps being told how “his people” built this country and designed it into what it is. He’s told how “the values” of “his people” made everything great about the world. Then he either gets stuck in the town that gets decimated where everything goes down the tubes or he’s gotta move.
When he moves, he sees bourgeois white girls dating successful, intelligent black/Asian/brown guys and meets successful, intelligent guys who are white who have the exact same ethos, values, and way of looking at the world as the black/brown/Asian guys and other girls in the area. Then, he goes back to his hometown where he sees everything around him completely being destroyed. He sees everything he’s been told or taught since he was a kid (that was basically garbage IMO) completely razed to the ground, what’s he supposed to think? More importantly, what’s he supposed to feel? What’s he supposed to think and feel whenever he goes to his father and his dad tells him “this entire country is going to shit”?
In accordance with many of these race/class issues I’ve discussed here, Republicans seem to be more in line with the way I view these things than white Democrats. For the most part, white Republicans seem to be more eye to eye with than most white Democrats. The people who view my attitudes and views with the most contempt tend to be working class people, former factory workers, former unionized labor, etc.. If I talk to some Republican guy that runs a business, they look at me like they would anyone else.
I think the issues we have among lower class whites are bigger issues than what we have among blacks. The issues among blacks will be resolved, and I suspect they’ll be resolved in a much quicker and more effective manner than we expect simply because the ideas are there.
Maybe I’m wrong, but the more I read history, the more and more it seems to me that this quote rings true. That’s why I’m more worried about lower class whites, in the longer term, than I am about poor blacks.
“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.”–John Maynard Keynes
Suvy, everything you say is somewhat true with a healthy dash of over extension. However, I don’t think we will see a resolution to black poverty in our lifetime.
I concur the black underclass is now the result of class issues and not primarily racism. Blacks in the U.S. don’t see it that way. They see the results of historical racism regardless if it is the root cause of continuing poverty. On the other hand, this concept of the white working class guy will likely just die out in the former factory towns. It has almost died out entirely in the cities which used to have large, union, blue collar populations.
I think what you will be left with for most of this century is an undereducated underclass with the black underclass continuing to hold significant resentment. I don’t see quick fixes because I don’t think there are easy political answers. I don’t think spending more money on urban education will solve the problem. Conversely, firing and incentivizing public school teachers won’t solve the problem. I don’t think middle class communities will let the government build extensive public housing within their boundaries. There will not be political support for creating more government jobs for the unskilled and undereducated. Affirmative Action has probably already reached its peak application. Expanding access to higher education has produced limited results when kids are not prepared in primary and secondary schools.
Now I will sound like a conservative, but the only solution for the underclass, as always, will come from within the family. And that is the family unit advocating and pushing education to the children. With the disintegration of the family unit in the U.S. underclass, this will be a great challenge.
Incidentally this is in great contrast to China, where the one child policy has reinforced the concept of the Chinese family as an economic unit. Chinese families devote much money and energy in advancing the education and opportunity of the next generation.
Suvy, why do you think there will be a solution to black poverty? Do you see the government becoming creative and incentivizing the underclass to get educated and achieve in school? I am pessimistic because I still view the American Left as beating the victimization drum and unintentionally or not, continuing to reward the poor choices of the underclass.
Why do I think the black underclass problem will be fixed? You’re absolutely right: the problem is the family structure. Everyone within my generation realizes that. We talk about it all the time and very openly.
When I mention it to people of older generations (probably people closer to your age), I get looked at like a nutcase. When I talk to my friends about it, there’s not a doubt in our minds. Once you have the ideas and leaders in place, vested interests will be beat.
http://www.pragcap.com/opinion-what-being-white-privileged-has-taught-me-about-black-america
A couple more things to add, I’m really not exaggerating. These are all things I’ve heard or seen (mostly seen).
It’s like I said to Prof. Pettis above, the people who gain the most in keeping blacks as an underclass are working class whites who can use this underclass as a way to stay a social level above blacks in the social hierarchy. This is why I’m against the “will of the people”–it gets you in situations like this where you have a permanent underclass with no class mobility.
In order to bring black people out of poverty, they just need an opportunity. If they have the basic ability to add and subtract and can open up a shop outside of their neighborhood safely without jackass cops trying to fuck them over, they’ll be fine.
The people who really prevent class mobility for blacks are many of these “anti-drug” people. Usually, they consist of older people who think that the best way to outlaw “morally wrong” behavior is by holding a gun to the head of the poor and proclaiming their superior morality to everyone else. Again, these are people who usually grew up (and still are) working class.
Suvy, I respect your thoughts on this matter. However if the facts don’t fit your thesis exactly, you can’t force them to fit.
I don’t agree with you on the white working class’ perception of blacks. I think what you said would have been definitely true fifty years maybe even thirty years ago. Outside some isolated rural areas, I don’t think the working class is now concerned with keeping down blacks in the “social” hierarchy. This is kind of an archaic view my Marxist Sociology professor would have taught in the 80s. The fact is the white working class has enough to worry about today in their own economic lives.
Thirty plus years into the War on Drugs, everyone at every level of society has seen enough of the damage or has been impacted directly. I don’t think you can make a sweeping comment that working class whites are a major reason for the War on Drugs comparing their attitudes to a gun to the head of blacks. The War on Drugs still draws support from many areas and all levels of society.
Your weakest argument is the providing blacks opportunity/ability to add-subtract/opening stores is not realistic. For whatever reason, we have evidence that the black underclass has been disincentivized to be entrepreneurial and become small business owners. At the risk of stereotyping, it has been documented that most store owners in American ghettos are Asian very often Korean. This has caused significant tension in black urban communities. This despite the fact that government programs have promoted minority entrepreneurship and small business for decades. (I have to chuckle because government-sponsored entrepreneurship is somewhat of an oxymoron.)
Again, I’m not suggesting we don’t try to uplift the black underclass. I’m also not saying it is impossible. I’m just saying it will be very difficult and take much longer than your optimism suggests.
“For whatever reason, we have evidence that the black underclass has been disincentivized to be entrepreneurial and become small business owners. At the risk of stereotyping, it has been documented that most store owners in American ghettos are Asian very often Korean.”
This is correct. One of my cousins does business in Ferguson none of the corporate stores got burned down. All of the places that got burned down or were broken into were all bourgeois owned shops by Koreans, Indians, Asians, and some whites.
Just a note, Ferguson isn’t the hood either. I could walk around in Ferguson and I’d be safe. It’s a working class neighborhood (both white and black).
“Thirty plus years into the War on Drugs, everyone at every level of society has seen enough of the damage or has been impacted directly.”
Looking back, some of my comments were out of line. I don’t think working class people are even racist anymore for the most part, unless in particular small towns.
However, I really do see a lot of resentment in many young “white” men that aren’t bourgeois. There really are a lot of ways of blowups. The destruction of the factories and unions has pushed the vestiges of old manufacturing into small towns getting corporate/government money for a few areas. When change happens, there’s no ability for these places to regenerate. In healthy cities or city regions, they’re built like ecosystems. In these regions, it’s a few companies/factories that bring in most of the “wealth”. The demographic of people that’ve gotten smashed from such a poor structure are a very specific group and there will be consequences.
On your criticisms of my comments, you’re mostly correct. I was out of line.
Suvy
I find your notions, of “those who keep” x in y are z as absolute non-sensical hollywood rubbish.
In many ways you are filled with a lot that makes one hopeful, for the younger people, then you have this Hollywood non-sense, what a shame.
You really think that one poor racial group has the ability to keep another poor racial group in some form of (hyped) bondage, and then there are vested interests that progress this, and further, were we to change leaders, do you see yourself climbing up and down ladders to put pegs where they are convenient to complete the story that hollywood lays at your feet, or have you concocted this rubbish yourself.
Am a bit disappointed.
Then you notions as to how things are for the educated this or that, again, really unfortunate and ridiculous again. As to alterations in dating patterns, the one big rise that is on the horizon is white men and african american women, this is the big change, not dark men and white women, that is so 1970.
Anyway, you should clear of the racial social economic class based considerations it is much more burdensome to your analysis than fat tail risks are to the modern bankers.
Csteven,
I don’t think you understood the point I was making. I’m saying people identify by class more than by race. With a certain class of people trying to keep another class down, that’s happened all throughout history. Working class whites did that to blacks in US history. If the other people get charge, they’ll oppress the working class whites. This is just human nature.
This is also why I’m against “the masses”, for lack of a better word. Most people aren’t virtuous. Most people care more about what others they interact with think while esteeming themselves higher. Any time their tribe can exact an advantage over another tribe, they’ll do so.
I’m not saying x did this to y and will always do so. I’m saying that regardless of whether it’s x, y, or z that can exact an advantage over someone else, they’ll do so. Whether they be working class whites, the bourgeoisie, elites, bankers, military guys, or whoever it be.
BTW Csteven,
Most of the stuff I’m saying about certain groups of people are coming from things I’ve seen or heard from people in those particular groups. I’m really not making this stuff up. These are things I’m really worried about; there are real risks on these things. There’s a lot of resentment from these groups.
Just go to a small town or an old industrial town in South Carolina, Georgia, I suspect in country parts of Florida, Alabama, other parts of the South including even North Carolina.
I think you may find this of some interest.
http://suvysthoughts.blogspot.com/2015/07/class-issues-in-america-masquerading-as.html
There is a terrible problem with synthetic drugs globally. US, Mexico, China Europe. Its an equal opportunity catastrophe.
Japan practices the similar economic and political policies. However, there is no class or drug issue there. What can we learn from Japan? Singapore has strict laws against drug use/traffic and the laws work pretty well.
Singapore is a city-state. The same drug policies that work for Singapore can’t work for the US as a whole simply due to scale. Policies don’t scale linearly.
Suvy, you may be right about Singapore. But, what is your opinion on Japan?
It’s a very tightly knit country with a very homogenized population where almost all of the population resides in very densely populated areas. My opinion on Japan is the same as Singapore on this issue, but I don’t know too much on Japan, so if I got different information to shift my assumptions, I’d change my view.
Create new $200, $500, even $1000 bills to give deserved representation to women, and as a side-effect mitigate decades of inflation…
I propose that Professor Pettis and Secretary Lew fight a duel to decide this. My money is on the professor. Ten paces with heavy textbooks.
Ok … it’s been awhile, but given how Hamilton died isn’t this in poor taste? Of course, this is the internet …
yeah and Prof PEttis would probably fire in the air!
This is a good thing. Alexander Hamilton would be ashamed to be part of the current shenanigans. They should dress up Alfred E. Neuman in different dresses and use those pictures on bills of all denominations.
Looks as if Michael isn’t the only one who’s upset; http://www.brookings.edu/blogs/ben-bernanke/posts/2015/06/22-jack-lew-ten-dollar-bill?rssid=LatestFromBrookings
@Dan Berg
Yes, I had noticed it too. Only, Bernanke being Bernanke, he had left many things unsaid.
Thankfully, Prof. Pettis has connected all the dots…
Fred List’s “Das Nationale System der Politischen Ekonomie” was largely influenced by Alexander Hamilton’s original “American Way”.
https://en.wikipedia.org/wiki/Friedrich_List
https://en.wikipedia.org/wiki/American_School_(economics)
https://en.wikipedia.org/wiki/American_System_(economic_plan)
Except I’m pretty sure List threw out the high wages, brutal internal competition, and other central tenants of Hamilton’s economic system. List basically took Hamilton’s system, watered it down, and claimed it was better.
Examples of Catch-up Industrialization:
American Model -> German Model -> Japanese Model -> Korean Model ==> Current Chinese Model (Mixed) <== Soviet Model
Capitalism: UK, US, German, Japanese, Korea, Russia, China
Bourgeois revolution: UK, French (one step forwards two back) , US.
Successful rebalancing, UK, US.
The Soviet catch-up was *easily* the fastest. Done by pure command-and-control, it replaced a medieval system of *serfdom* with a fairly modern industrial economy in less than a generation. While emancipating women, letting them into the workplace, giving them reproductive rights, and establishing formal racial equality.
Changing things this fast… isn’t really a good idea. But faced with war with Germany (twice!!) I can see why it was considered necessary, and they did it.
Significantly altering any of the US bills would be a symbolic measure at the worst time in US history . . . reflecting the constitutional republic’s stance for capitalism in the free marketplace having transitioned to become a third world banana republic powerhouse of a fiat currency leading the western banking system to the abyss.
Fox? “Napoleon, Fox…” Who is Fox?
Charles James Fox. Not bad but not a patch on Hamilton in my opinion.
Speech in the House of Commons (2 March 1790).
Persecution always says, ‘I know the consequences of your opinion better than you know them yourselves.’ But the language of toleration was always amicable, liberal, and just: it confessed its doubts, and acknowledged its ignorance … Persecution had always reasoned from cause to effect, from opinion to action, [that such an opinion would invariably lead to but one action], which proved generally erroneous; while toleration led us invariably to form just conclusions, by judging from actions and not from opinions.
My opinion on his comment on opinions.
Professor Pettis, thank you for this brilliant post on Alexander Hamilton – possibly the very greatest of America’s founding fathers. You have written so elegantly and ably about why Hamilton is so great. I, too, simply cannot fathom why Secretary Lew would want to diminish Hamilton. I’m curious whether you have any opinions on Tench Coxe, Hamilton’s Assistant Secretary of the Treasury, who helped co-author the Report on Manufacturers. Coxe strikes me as an underrated figure in America’s history.
Instead, replace Andrew (Trail of Tears) Jackson on the $20 bill. Keep Hamilton!!
It must be nice to live in a fantasy world, where USA presidents step aside because they recognize someone else genius.
When Santa Clause visits you and talks to you personally, as I am sure he does every year, please send him my regards.
With all this discussion on historical statesmen and their impact on economic development globally and in their respective countries, I am curious what Professor Pettis’ thinks of the recently departed Lee Kuan Yew.
Looks like The Economist has admitted defeat in its bet with Michael….
http://www.economist.com/blogs/freeexchange/2012/03/china-will-overtake-america-within-decade-want-bet
The Economist Intelligence Unit is now predicting that China will overtake the US only in 2026…
http://www.huffingtonpost.com/judah-freed/eiu-releases-2050-economi_b_7655030.html
Congratulations to Michael; remember to collect your winnings from the Economist.
There’s a lot of stress in the markets right now. Chinese equities are very volatile and it’s becoming more obvious by the day that the GDP growth numbers are overstated.
People need to can these GDP growth forecasts. What the hell does GDP growth mean? Is it really good if you’re wiping out mountain ranges and forests to put up a few skyscrapers just because it produces GDP growth?! The funny thing is that I think the current Chinese leadership recognizes all this.
On a different topic, it’s interesting to see this Greek drama unfold this week. The U.S. media is reporting the current Greek protests are mostly in support for staying in the Euro. A few weeks ago, the Greeks were protesting austerity and economic reforms. I’m not sure the Greek people on the street are being realistic. If you ask most Greeks today whether they want to leave the Euro independent of submitting to the IMF and ECB austerity and reform program, of course they will say no. They know staying in the Euro preserves their purchasing power. An introduction of the Drachma will cut into their purchasing power initially even if the intermediate term is more economic stagnation. So what are the Greeks choosing and will it change next week?
Dear Prof. Pettis,
We hunger for your wisdom!
How would Pettis know that, John?
Do you think he has any understanding or knowledge of what is going on behind the closed doors where big guns negotiating with each other? Or you think what is going on the streets of Greece matters at all?
What missing from Michael analysis, which is otherwise pretty good, is HOW most of the people and governments in today world are saving their money.
There is something inherently wrong if wealth producing countries like China are forced to save the product of their hard labor in irredeemable currencies.
Makes me Wonder if Michael does not WANT to talk about it, for whatever reason, or he thinks there is nothing wrong with this picture and it is a business as usual and there is not much to discuss there.
Actually Johny, Michael has discussed this in loads of detail and has been doing so for years. China is not forced to do anything.
What else China is going to save in other than US dollars, TonyS?
The real extinguisher of debt used throughout history except for the last 80 years or so, which is gold, is taken out by government decree.
The problem is that neither Michael nor anyone else on this website realize it.
You should thank me for showing you the light at the end of tunnel, TonyS, instead of posting your meaningless comments.
China can save in whatever it wants. Nobody forces China to do anything. Gold, instant noodles, RMB or pubic hair. It’s up to China. The rest of the world would need to be convinced that whatever China chose was worth exchanging.
Given that China has chosen to have a closed capital account and non-convertible fixed currency with no rule of law and a state-owned and controlled banking system, nobody would want RMB even if they could get it.
The questions you should be asking Johny boy are:
1) why does China have no rule of law.
2) why does China have no national army
3) why is the Chinese government called the Communist party
4) why is the entire financial system owned by the government
5) why has china destroyed its environment
6) why is the media and internet controlled by the state
7) why is the state so scared for its people to learn the truth.
Once you understand the answers to those questions, you will understand why the world is happy to accumulate USD and use them in place of gold.
Why the US would want that is a separate question and as Michael has discussed many times, the day where that changes may be fast approaching.
I never said people should save in RMB, did I?
And how exactly China would go about obtaining gold with its trillions of US dollars, TonyS?
Do you even read what you are writing? How would you convert even its small amount for China, say 1 trillion US dollars, to physical gold?
Or you think they can just go to London financial district and buy it there? Who has this amount of gold for sale? And what it would do to its price?
It is very sad state of affairs that people like you have ABSOLUTELY NO IDEA how savings actually function and that saving in someone else debt is unfortunately the only choice right now for really big producers like China and Saudi Arabia. And shame on Michael for playing along and not setting a record straight. But like I said before, he might not see the big picture behind the balance of payment discussions.
Johny, you speak to people as if they owe you an explanation, they don’t. Your education is your responsibility. If you engage people courteously, I (and others) may take the time to respond. My hunch is that you are young and think you have it worked out, but have failed to realise that little knowledge is often more dangerous than none at all.
Just the same way you can not blame Americans for spending too much, you can not blame Chinese for saving too much. that is where Michael does get something right, I have to give him the credit for that. Considering it does not happen very often.
What he seems to be absolutely clueless about is that saving in someone else debt is a complete economical nonsense. It is also a contradiction in terms. Of course nobody puts a knife to China neck for them to save in IS dollars, but they do not really have any choice in this respect. What else they are going to do with it?
My point is, Pettis should admit that the current situation is in fact an economic anomaly which can not last very long. But for that he needs to understand things beyond money trading basics.
It is just sad to me, most of the people who read his article left with impression, just like TonyS that “China is not forced to do anything”. And yet he goes on an don how it is other economists are clueless on a matter of country debts and savings. All he has to do is to look in the mirror.
You actually can blame the Chinese for saving too much. It’s an explicit policy that’s a part of their economic system. It’s a similar way that you can blame the US for excess savings after World War I all the way to the Great Depression. The massive accumulation of foreign assets and financial repression leads to excess savings and this was done explicitly by China and also in US history. It’s common practice throughout history.
The point is China is producing. And the USA is consuming. I am not saying it might not change n the future, but that is what it is now. Blaming producer for satisfying the needs of customers is stupid.
Johny, China joined the party late. You write as though this is all some huge conspiracy. From the ashes of WWI came the Great Depression and then WWII. All the US wanted was peace. Woodrow Wilson 14 Points,mthe League of Nations, then UN, the WTO, etc.
The US is a nation that believes in mutually benefecial free trade. China and its east Asian cousins believe in Mercantilism and win lose trade. The US in its history as a young country has made many mistakes but has also made plenty of good decisions. At the very least, it owns up to its mistakes and analyses them relentlessly. It doesn’t burn its books from dynasty to dynasty like the Chinese. The state library is testiment to that as is the whole democratic system, with its checks and balances.
The questions you didnt answer in my last post are why hasnt China faced up to its past? No other country trusts the Chinese to shape or lead a new system because China makes it clear time and time again that it has no altrustic tendencies but is driven purely by self interest. The US has shown that while it makes mistakes, it genuinely wants to solve problems, defend peace and stability and it has a culture worth admiring and celebrating. China has no such culture because it has burned its books and its people have an identity crisis – no religion, no philosophy, just money.
Of course i dont mean all its people, but those who do care about bigger issues are shut down, not given a microphone.
You are speaking of the USD as though you have diagnosed a problem, but it’s you (and your people) who needs to look in the mirror, not me
I don’t think Professor Pettis places any moral judgement on producers like China. (Germany that might be another story.) He just points out that all periods of rapid economic growth (so called economic miracles) have come to an end in a similar manner.
Pettis is most definitely not preaching that the U.S. is good and China is bad. He is just pointing out the historical examples that can be supported by economic realities. He is quite detailed in his approach. He is not waxing poetically about the Chinese and global economies, but rather he goes into considerable detail.
Several people with, let’s say, pro-China biases have come to his blog and have taken it as some kind of pro-American (or pro-Western) commentary. Pettis’ blog does not have a Western agenda. He is merely pointing out economic realities that affect all economies regardless of how they are organized. As others have pointed out here, the U.S. hit their wall of rapid mercantilist expansion after the 1920s. Japan hit that wall around 1990.
Even the Chinese government recognizes the economy has entered a new phase where domestic demand must become a bigger part of the economy. That is easier said than done. I know there are many who think Chinese trade surpluses are the fault of the U.S. consumer. However, the U.S. government could easily enact policies that eliminated the U.S. trade deficit including eliminating the fiscal deficit. These policies would only put downward pressure on an already weak global economy.
One needs to look at the global economy as a holistic mechanism and not through a U.S. prism or Chinese prism.
TonyS,
what in in the world are you talking about? Do you even read what I write?
I am not bashing the US and I am not praising China and I am not blaming anyone in particular at all.
All I am saying that with the current global financial system set up, a big producer, does not matter what its political or economical structure is, has no real choice but to save its hard earned savings in irredeemable paper. There is no way you can use, say 1 trillion dollars to buy gold, for example, at this point of time.
And saving in someone else debt is economical nuisance. If Michael Pettis had some intellectual honesty, he would spend time discussing it in details, instead of papering it over with being childishly excited about how great Google search is. Even though he is very much right in this respect.
“All I am saying that with the current global financial system set up, a big producer, does not matter what its political or economical structure is, has no real choice but to save its hard earned savings in irredeemable paper.”
It’s the other way around. These countries have to accumulate foreign assets to drive up production. If autocratic countries like that saw a dramatic fall in production, I think there’s a real risk of China collapsing into warlordism (again). China has been explicitly accumulating massive amounts of US paper to drive up production. Now, if it’s some sort of commodity backed reserve currency, China wouldn’t be able to do this.
wrong video this is the one
http://www.nytimes.com/video/multimedia/100000003781464/clinton-accuses-china-of-hacking.html?playlistId=1194811622186
So disappointing.
I went into Prof. Pettis’ bar last night, took my shirt off, climbed on a table and shouted “Alexander Hamilton万岁！”But still didn’t get a free beer.
Had I been around, you would have been invited to a shot of the special stock of single malt kept hidden away.
I know John. It is amazing to me how Pettis writes about US presidents as some kind of noble persons who are motivated by some idealistic ” greater good” of humanity. I am sure if Lincoln and Washington could read this article, they would have a great laugh over it.
Do you think he does it on purpose though? I mean the man was managing money funds, for Christ sake. How could he be really so naïve? Hard for me to believe.
Actually, Johnny, I have never managed money funds, and I am not even sure what a “money fund” is, unless you just mean “fund” (or maybe forgot to insert “market”?), and I haven’t done that either, luckily for potential investors I suppose. I have been a trader for many years, and perhaps that’s where you got confused — I guess you can say traders “manage” money if you use the word “manage” vaguely enough — but among people who don’t know much about finance, traders are always seen as too brutally cynical to be naively idealistic.
But to get to the main point, you say that “Pettis writes about US presidents as some kind of noble persons who are motivated by some idealistic ‘greater good’ of humanity” and imagined Lincoln and Washington having a great laugh over it. Again, unless you are so widely read in my writings, and perhaps got hold of one my sixth grade history papers without realizing it, you must be defining the second half of your sentence so vaguely that it is a truism.
Sorry for using a big word like that, and please know that I am not going to try to convince you that I am every bit as realistic and hard-headed as you are, but as part of my newfound admiration for him I am eager to show off by pointing out how unlikely it is that Washington would have had a great laugh over anything I might say about him. Lincoln, maybe, and certainly either of the two Roosevelts, and possibly Jackson after a few bourbons, but I’m probably already referring to people you haven’t heard of (and yes, there were two of them).
It’s probably silly to ask — people who understand the motivation are never smart enough to understand the question — but when people write comments mainly in order to posture in public, why do they do it anonymously? It seems self-defeating to me.
Michael, you think it is not a well known fact just about to anyone that there were two Roosevelts, Franklin and Theodore. Really Michael? It is stooping too low even for “money trader”.
Well let me rephrase. I am sure Washington would call you “naïve” ( to put it politely) if you told him that he stepped aside as a president because he recognized someone else genius. Politicians simply do not do that. Both in the past and today, They have to promote and defend the interests of people who put them in power. Otherwise, get shot like Lincoln.
By the way, Lincoln COULD avoid the biggest disaster in the USA history – its Civil War and save thousands of lives. He choose to go to war in order for north political and economical elite to have access to southern recourses, mostly land. Are you going to argue that too? He is the man who encouraged to “pursue this policy of colonization” so do not get me started on “freedom for slaves” issue. http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8319858/Abraham-Lincoln-wanted-to-deport-slaves-to-new-colonies.html
Calling Lincoln a “great president” that shows your stupidity, nothing else.
As far as anonymous comments, I am not sure what your point is here. Do you want me to write my own name and phone number on your website? Or you think you are so intellectually above me ( which I know you do) that I would be afraid to debate you face to face? Because I am not. Bring it on any time. After one hour of debating me on a subject of history, you would be running looking for a place to hide your ignorance and embarrassment, I promise you that.
Maybe you could beat Pettis in a history debate, Johnny, but so far it doesn’t look like it — for one thing Washington didn’t step aside because “he recognized someone else genius”. I would leave bad enough alone.
Johnny: I don’t think he wants your name. He wants to know why you would posture (think about it as blabbing loudly in public without any intention or ability to learn or share information) anonymously. You can answer him with the truth: this is what they do in the internet forums you normally frequent. Tell him about the Freemasons and the ET people who really run the world. And if he doesn’t believe you, then the whole world will know he’s been brainwashed too. Or something like that.
When someone calls you stupid, don’t respond by acting even stoopider.
Washington didn’t want to be President. To call Washington a regular politician is flat-out wrong.
As for the Civil War, you’re asking Lincoln to tolerate rebellion. That’s just foolish. When you tolerate one rebel, it creates incentives for others to rebel. How do you deal with rebellion? You crush the rebels and completely ruin them. This is what Lincoln did.
With regards to the Civil War, the South never really had a shot. People always talk about Gettysburg as being the key battle, but that’s mistaken. The war was over in Vicksburg when the 47 day siege was ended the day after Gettysburg. Gettysburg was a just a last ditch attempt to flip morale and by the time Gettysburg took place, everyone knew Vicksburg was gonna fall.
As for the North having access to Southern land, you’re absolutely right. That’s why the Union should’ve ruined the South in the Civil War (as they did). There’s critical national security interests at stake like control of the Gulf of Mexico, control of the Mississippi Basin, and a whole host of other stuff. That’s exactly why the South deserved to be ruined and that’s what they got.
DerekF
read Pettis article, “…he recognized someone else genius”. That was his words, not mine. Who is looking bad now?
With regards to the Civil War being about the role of finance, merchants, trade, and entrepreneurialism, you’re absolutely correct. The Civil War was a battle between the American Empire that was designed and built upon networking large, diverse regions against a Southern nation-state built on a common “culture”. Isn’t it absolutely wonderful how the “culture” and the nation-state got absolutely annihilated by a superior governance system built on empire? It’s situations like this that make me proud to be an American.
Note: I’ve got nothing against Southern culture, tradition, or heritage. I just think it’s retarded to build states/governments around a common “culture”, “heritage”, or some other nonsense.
Most people think Jefferson favored empire and the Federalists/Hamilton favored a nation-state, but this is wrong. The Civil War basically proves my point. A large part of the Civil War was that the South really wanted a homogenized polity, which is a nation-state by definition. The American Empire, on the other hand, was designed to adapt itself to its polity. In a way, this was the real battle of the Civil War where the American Empire decided the result pretty handily.
With that being said, I find it funny how so many people in the South today hoist the Confederate Flag with pride and put it right next to an American flag. The Confederate flag isn’t a racist symbol at all; it’s a sign of rebellion. So placing the Confederate flag next to an American one and saying you’re “proud of your heritage” or something similar is completely contradictory. I just assume that anyone who has a Confederate flag next to an American one is a dumbass.
I’d also like to point out that comments like this from Johny is exactly why I’m against “the masses”, for lack of a better word. Prof. Pettis is far more in favor of the masses than me and more in favor of the people getting what they want than me, so I don’t think he’d make this comment, but I will. The masses are idiots and comments like yours in favor of the South show exactly why the masses can’t rule. With that being said, the only things worse than the masses are retarded dictators and aristocratic, land-holding elites that were given wealth, titles, and can’t be stripped of anything. This was basically what you had in the South AND these land-holding rentier aristocratic elites were also exploiting the sentiment of working-class whites wherein the working-class whites were using slavery so that they could be a class above them.
In the American Empire, however, the show was being run by the capitalist classes that consist primarily of merchants, traders, entrepreneurs, and finance guys (not limited to financiers). Of course, entrepreneurs, finance guys, merchants, traders, etc. don’t and can’t get wealthy by not doing shit (like the elites in the Confederate South), so they’re much more fit to rule. The system of the American Empire allows for class mobility whereby the guys at the top can come back down. In reality, Lincoln and Congress were simply the puppets of the capitalist elites. Thank God this was the case.
To sum up: Hamilton was right.
By the way, that article really doesn’t say a whole lot. He advocates former slaves to go to places to primarily do work, like construct the Panama Canal. The amount of people in question were really negligible and there’s a serious bias in the “experts” they ask. I’m not taking one side or another, but I don’t think there’s enough evidence to make a claim one way or another.
Suvy, I don’t know how long you have been reading Michel’s blog, but every year or so someone extremely limited knowledge decides that the reason no one reads his own blog or his writings cannot be because he lacks knowledge or intelligence and so must be for some other reason, maybe because no one can deal with his brilliance or maybe even a plot. He decides the way to satisfy the enormous demand for his opinions is to hijack the comments section of a blog of someone who people actually take very seriously.
Because he keeps getting kicked out and has to constantly find a forum, at some point this person takes roost here. Michel usually ignores him until he resorts to name-calling and totally ruins the comments section as a place for intelligent discussion. Like most people who don’t win argument soften, his idea of a debate is insist on how stupid his opponent is. He inserts himself into a debate that brilliant people have been waging for centuries, and will tell everyone the solution, along with making the point that the solutions is so obvious that anyone who cant see it is stupid. He doesn’t seem to understand that this can only be the case either if he is an unqualified genius or if he just doesn’t understand the issue very well.
He has some quirks. For some strange reason he tends to be a goldbug, but he doesn’t understand very well the reasons in favor of gold, let alone the reasons against it. He also tends to be very confused and easily angered by the concept of “savings”, and indignant by the idea of an accounting identity. He never understand why someone who “believes” in an accounting identity cannot be “clueless”. Also for some strange reason, maybe because that’s what the smart girls used to call him in high school, he overuses the world “clueless”.
Pettis has debated some of the smartest people in the world and seems to enjoy the fight, maybe because he wins a lot, and yet this guy really believes that Pettis is afraid to take on his outstanding ability, even though he tries to disguise his brilliance with misspellings, bad grammar, and basic mistakes in history and economics. The idea that Pettis might not be interested in debating him because he is simply too stupid to bother with is so far out of his reach that sometimes all of us marvel.
Every year or so another such moron inundates this blog with dozens of comments, and they get longer and longer until he disappears, usually because in the end the comments consist of nothing but insulting everyone for making fun of him or for failing to recognize his intelligence. Sometimes he is too stupid even to realize that I am talking about him. Don’t encourage him.
He didn’t step aside, Johny, but never mind…
JeremyChan,
I actually think Johny has a view that’s actually being largely ignored and I think there’s a lot of resentment that’s been built up among a certain demographic of people that have such sentiment.
I have a lot of friends that have a sympathy to towards that kind of view and I do understand it. I also think his position has no logical basis because it involves those that support rebellion and treason, but I do think it’s important to understand where they’re coming from. In today’s world, it’s very difficult to go around and take Johny’s view and get taken seriously, but I do think he does make some sensible (and correct) points.
Do you really and truly think anything really and truly matters anymore? Are you really that gullible to think whatever we say or do now, makes the slightest bit of difference?
Apparently writing comments on my blog seems to matter.
Good point Moonunit. I am sure Michael will consider your words.
I did not know “stupider” is a word. Thank you for teaching me a lesson.
No problem, Johnny. It’s a good word too. Now, I will have to teach you about lining up your comments. It’s harder than learning a new word, but if you knew about Washington’s missing teeth (it would have been better if you had been able to make a clever allusion to his wooden teeth), you are perfectly trainable.
@Jack Post
you are a very confused man, as I can tell. I do not “frequent” forums and do not believe in free masons or ET.
What I believe, politicians in the past and today act in interests of financial and political elite. You think it is farfetched?
When a grown man writes about USA presidents “stepping aside because they recognize another man genius” I have to take this man to school and that is exactly what I did. You do not like it? Too bad for you.
He did not write about “USA presidents ‘stepping aside because they recognize another man genius'”. He said that Washington recognized Hamilton’s genius. You added the part about stepping aside, which is something no one who knows early US history could have possibly said, and so its a little funny that this was the part that incensed you.
OMG Suvy
you are something. You do realize the Southerns were Americans too. They had a constitutional right to form a Confederation, which is all they wanted to do. Just to be left alone.
Lincoln flat out broke the USA Constitution when declaring war on the states which wanted a peaceful solution to their economical needs. You writing that thousands of American citizens deserved to die just so Northern elite get access to South resources is heartless, to say the least. If not outright disgusting.
“Lincoln flat out broke the USA Constitution when declaring war on the states which wanted a peaceful solution to their economical needs.”
You do realize that the attack on Fort Sumter was not seen by many Southerners as part of their peaceful solution, don’t you? The vast majority of the Southern press hailed the attack, and understood that it would very probably lead to war. which many of them welcomed.
Johhny, can I suggest that when you make statements that are at best arguable as if they were undisputed truths, and imply that anyone who does not see them as undisputed truths is an idiot, you undermine your own case?
Unlike Suvy I think there is nothing wrong with people like you having your own opinion. I disagree with the idea that you should be intelligent and educated before you can express your views, either publicly or even politically through your vote. Ironically, Professor Pettis himself has argued before that the nativist, uneducated, and often easily confused faction that reoccurs throughout American history, today in the form of the Tea-Partiers, has played a positive role in American history by undermining aristocratic tendencies within the US democracy. But still, there are stronger and weaker ways to make your argument, and you always manage to make them sound foolish even when they are not necessarily so.
No need to thank me. I am not a snob.
Southerners WERE Americans before they rebelled. Rebellion is an act of treason. Lincoln didn’t break the Constitution at all. It’s a rebellion dude. You can’t tolerate rebellion and there were critical national security interests at stake. You’re basically saying we should encourage treason.
When you call the way the North treating the South heartless, that’s war. That’s what should happen when you rebel against the Empire. War is inherently amoral.
There was not “Constitutional right” to be “left alone”. The Constitution never says that and the Constitution explicitly treats treason as one of the worst offences. You had an entire population in the South that was engaging in active treason.
There were Northern merchants who were using the Mississippi to trade who were now being blocked off. New Orleans is a key port for national security. This is money, wealth, and lives at stake.
Here’s the Constitution on this issue. I always love it when those who’re from the South with sympathies to the Confederacy argue by using the Constitution. It’s literally retarded and makes me think they haven’t ever read the Constitution.
Article III, Section 3:
“Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort.”
“The Congress shall have Power to declare the Punishment of Treason, but no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted.”
Article IV, Section 2:
“A Person charged in any State with Treason, Felony, or other Crime, who shall flee from Justice, and be found in another State, shall on Demand of the executive Authority of the State from which he fled, be delivered up, to be removed to the State having Jurisdiction of the Crime.”
The Southerners were actively committing crimes/violence against the citizens of the American Empire, including its soldiers, merchants, traders, financiers, etc.. They were explicitly, actively, and deliberately committing treason in its most obvious forms.
In reality, the Constitution actually provides the government of the American Empire the right to basically do whatever they feel to these people. In respect to what could’ve been done (not what was just or right) and what the law commands, the South could’ve been treated much worse than it was.
Suvy
you are completely clueless on a history of the USA Civil War. South could win the war within first months, as North apparently had no idea how to fight at the beginning of the war and South had experienced fighters and commanders. In fact, South just stopped short of taking North government as prisoners at the beginning of the war.
You know what is really funny, you think there are “masses” who uneducated and there is you, who is so much smarter and intellectually superior. But just about anything you say, weather it is about Karl Marx or US Civil War shows you are completely clueless even when it comes to basic facts. Just keep dreaming buddy.
Suvy
here is some reading for you about the Civil War. So stop talking about “masses”, hide your stupid arrogance and educate yourself a little before you make a laughing stock of yourself
http://bevinalexander.com/books/how-the-south-could-have-won-intro.htm
After my last note I thought I’d check your source, Johnny, because I was sure you’d want to back it up with real scholarly work.
And who is Bevin Alexander? He is the self described “acclaimed military historian & author” (his ampersand, not mine), and the author not just of “How the South Could Have Won the War” but also of “How Hitler Could Have Won the War” and nearly 300 hundred other history books on every nearly war ever fought, including dozens of books on how to win wars, or on how wars are won, or on what it takes to win a war.
Only a great scholar could have read so many books, let alone written them, although it isn’t clear that he has actually read more books than he has written.
Suvy, there is no way you can write as many books as Bevin, so stop talking out of your ass. He has written so many books.
Books like this are retarded. How can you sustain a war effort without finance or industry? You can’t.
The South never came close to having any sort of naval superiority and all the North had to do was take the Mississippi.
I consider most historians idiots, especially “military historians”. The best tool of war is finance and you need finance to build a navy as navies are expensive. The Union blockade created lots of problems and once the Mississippi was controlled, the South literally starved.
The South had no finance or industry and their naval power was nil, which means they had no way of sustaining any sort of war effort over the long term. Naval superiority>>>Land superiority regardless of how good your generals or troops are and anyone that doesn’t understand the importance of finance and industry in war shouldn’t be taken seriously.
Also, saying someone is intelligent because they “write books” makes no sense. Most people that write books aren’t intelligent and I think they’re stupid.
With regards to me writing books, I’m actually working on a couple. I’m actually compiling a list of various blog posts and essays I’ve written into a book. The only thing is that my work in geopolitical finance is far ahead of my work in mathematics, so I’ve been spending lots of time recently on math work where I also wanna write a book.
Think about how an island off the coast of Europe defeated Napoleonic France and ruled most of the world. How does that happen even when all of Europe is allied against you?
The post above was directed at Johny’s comment, not JohnWarberg.
I’ve actually read quite a bit of Marx (needless to say that I hate the senseless bigot). I never said I hate the masses because they’re uneducated. I said I hate them because they’re mob-like. It’s disgusting.
The North did fine in the Civil War. The Anaconda Plan was perfect. Once you seize the Mississippi with your better naval superiority and split the South in two, you will win. All you have to do is survive until that happens. This is a very old tactic.
BTW, do you know where all of the best Southern generals like Robert E. Lee studied? Robert E. Lee himself was a West Point grad which was supported with Northern funds and he wasn’t the only one. These guys are literally engaging in rebellion (and thus treason).
*some of the best, not all of the best
By the end of the war, the superiority of Southern troops/generals really deteriorated too. The South was great off the get go, but couldn’t sustain the war. Actually, Lincoln wanted Lee to command the Union army.
There is a petition on We the People to keep Mr Hamilton on the $10 bill.
https://petitions.whitehouse.gov/petition/keep-alexander-hamilton-face-10-bill
IMO Andrew Jackson should be replaced. Many Native Americans will not carry a $20 bill to this day.
Thanks Leah.
The situation in Greece is getting out of control. Prof wrote about EU and Greece before. And i disagree with you. Greece is NO Spain. They really have few working institutions and they have massive corruption. Did you know that 70% of past Spain governments are in jailed ? They are really doing a great job to tackle crooked people. In Greece a very few people are now in jail. Greece is really about to exit euro. But sadly they don’t have any kind of exporting industries. So i don’t really see what would be the pro’s about devaluation. Despite austerity, price did not declined. Some happy few pockets everything that’s sad.
I think dismissing a devaluation (leaving the Euro) is too easy and supported by many (including naive news commentators) who see the Euro and hard currencies in general as sacred. There is also the selfish interest on the part of the hardliners in the North. What if the Greeks succeed in growing their economy by leaving the Euro? What will that show the Italians, the Spanish, the French? Better to set an example by beating up on the Greeks. Northern Europeans also know the Euro will appreciate if you throw out Greece putting pressure on their exporters.
I don’t buy the Greeks have nothing to sell, no exports argument. It’s too simple. For one, foreign tourism is like an export. Foreigners bring their money and buy experiences that they take home with them. One news commentator said that Greek tourism was in a very competitive environment with Turkey and Croatia who have significantly devalued currencies over the past few years. A small economy like Greece could get a lot of stimulus from a foreign tourism boom. In regards to the powerful Greek shipping industry, I tend to think of it as a border-less industry, but it should remit some cash flow into the economy via wages and profits that find their way back to Greece. Perhaps real wages would drop enough for shipbuilders to return. Last but not least, you are forgetting the import part of the equation. Greeks will undoubtedly buy less foreign imports. Their imports will focus on necessities such as pharmaceuticals and medical products. Better that you and your neighbor have the opportunity to find work rather than a situation where one of you can afford the Louis Vuitton handbag and the other is unemployed.
I think most everyone realizes the status quo is untenable. The European Union has completely emasculated the Greek government and Greek voter. Greece today doesn’t look like a democracy at least one I recognize. Years ago, Professor Pettis astutely predicted the rise of fringe parties on the left and right in Europe’s troubled economies. This runs the risk of getting worse. Remember Hitler came to power on the back of a German debt crisis.
The debt haircuts are inevitable and it will be some crazy dance that goes on for more years all the while shaking confidence and increasing uncertainty in the Greek economy. The shock treatment of exiting the Euro and issuing a devalued currency is preferable. Growth will most surely will return and the debt haircuts can be determined by the real potential of the Greek economy and not this arbitrary, prolonged process on the back of a downward, austerity cycle.
Cedric,
are you really saying that 70% of past Spain governments are jailed ? Where did you get with this statistics? Moon?
http://www.elplural.com/2015/04/17/el-gabinete-de-la-verguenza-11-de-los-14-ministros-de-aznar-estan-imputados-cobraron-sobresueldos-o-duermen-en-prision/
Hey! They don’t speak Spanish on the moon. It’s a trick!
I guess you have nothing to say about actual matter at hand, Moonunit, do you?
Did not think so either. At least I speak SOME Spanish. Do you?
Cedric, my Spanish is really bad, may be you can correct my understanding, but in the article seem it says “Eleven of the 14 ministers who took part in the penultimate government of José María Aznar (July 2002) are involved in legal issues to varying degrees.”
That hardly means ” jailed” as you wrote.
That’s true but trial/investigation are not ended yet but, in Mariano Rajoy office they already have people under investigation+ their is also a member of the royal family (Christina) which is also under investigation. We will what’s going on with trials( it might take time because this is EU and not US). But for sure nothing like that happened in Greece.
Washington had “handsome face”? May be, but only in the eyes of Adams, who apparently did not have have very high standards in this respect, did he?
Especially when Washington smiled so people could see his missing teeth and crooked dentures. What a turn on it must have been.
OMG!!!! You no about the missing teeth!!!! U no sooooo much about history!!!!!
Its so awesome when u try to talk so educated. OMG!
It was wonderful seeing you speak, Michael at the Institute for Advanced Studies. I hope you got to see the Lin Manuel Miranda play while you were here! I’ve been three times already: it’s going to run for 50 years, introduce Hamilton to an entire new generation, and I am betting, tip the balance on the $10 bill debate!
Thanks again for the great talk in Princeton.
Thanks, Brandon. In fact one of my best friends was able to get me Hamilton tickets, either for Wednesday or Thursday night, and thinking I was free for both, asked for Thursday. On Thursday he handed over tickets for two of the best seats in the house. It wasn’t until around 6:30, when I was back in the hotel, that I realized, thanks to some very frantic phone calls from the host, that I had a very large investor dinner scheduled at 6 pm that night which, in the confusion of a very busy trip with many meetings tacked on at the last minute, I had forgotten to put on my calendar. I missed the show of course and felt really awful, especially as I didn’t even have enough time to rush out to the theater area and find a couple of young people who could never afford the tickets. Not only did I miss what might have been a great night, but for a show that is sold out every night and has a long waiting list, there were two empty seats in the middle of the theater just a few rows from the stage. What a waste!
Do you have a list of what universities/places you are giving a talk at? If you give a talk near to a place where I am (mid-Atlantic), I’d take a roadie to see the talk if I was able to. I might have been able to go to Princeton, but if you’re even an hour or two south of Princeton (say Baltimore) I’d definitely take a roadie. I’ve taken road trips for concerts from where I currently live to Richmond and Norfolk two-way over night, which amounts to ~2-4 hour drives there and back. I went to music festivals in Baltimore (5 hour drive with no stops) and Atlanta (6 hour drive with no stops) in the night after the festivals were over (they ended around 10-11 PM or so).
So yea, if you ever give a talk at a place even semi-near where I live/stay, I’d happily come and take a roadie to see the talk. Princeton is right on the edge of my range for a talk (probably, unless I’m somewhere else that’s closer to Princeton with a car/some transport where I’d definitely see the talk).
High Tragedy! I hope you will get a second chance. Every economist’s heart will thrill to see Hamilton vs. Jefferson debating central banking policy as a rap-off!
It appears that Hamilton’s place on the $10 note has been saved: http://money.cnn.com/2016/04/16/news/economy/jack-lew-hamilton-10-bill/index.html. Good job, ladies and gentlemen.
By the way, do you really think Hamilton was more brilliant than the current occupant of the English £20 note, Adam Smith? He was an economist of Hamilton’s time.
“By the way, do you really think Hamilton was more brilliant than the current occupant of the English £20 note, Adam Smith? He was an economist of Hamilton’s time.”
I’d say so. Hamilton was the brilliant and most intelligent financial/economic thinker of all-time IMO.