Although there still seems to be widespread confusion about the issues at hand, it seems like the general public has learned a good deal in the runup to the Aug. 2nd deadline (if not as much as one would hope).  We’ve learned, for example, that sovereign debt ratings, not just our ability to borrow, are important — and at stake.  We’ve learned a good deal about the sources of our deficits and debt — even if we still disagree about how to handle them.

I find, in talking to liberals and conservatives on this issue, that certain simple — but effective — ideas can appeal to both sides, without being caught up in the “grand narratives” that characterize each side in our Congressional stalemate. One of them, the idea of tying job creation to overseas tax repatriation holidays, I discussed in a previous post (and will simply list here).  But there are others, and I would like to suggest that implementing even one or two would radically change the game, by changing the confidence level of citizens, companies, and the world in our ability to address our issues.

I would further suggest that our largest problem today is not a crisis of confidence about U.S. indebtedness.  Americans and the world at large lack confidence in the ability of Americans to govern their way out of the problem.  The global markets, and the bond market in particular, want U.S. sovereign debt to remain the risk-free benchmark, and despite occasional posturing, nobody is eager to displace the U.S. dollar as reserve currency, given the uncertainty and dislocation that would inevitably create, during a time of sluggish economic growth.

What we need to demonstrate is not, I would suggest, a complete solution to our deficit and debt problems, but a credible start and follow-through.  President Obama has been talking about “significant downpayments” on deficit reduction for precisely this reason.  It’s not a new idea.  It’s also the strategy of every consumer with significant debt — you can’t simply tell the credit card company you’re trying to make payments, you have to establish a track record of actually doing it.

There are reasons, of course, that the party “out of power” would try to block even simple, common-sensical ideas.  Winning the next election means not giving up points to the other side, if possible.  But I hope we’re close to the point where Americans start demanding progress and solutions — not the ultimatum-style “solutions” we’ve seen daily in the debt ceiling “negotiations,” but concrete steps.

Here are a few that seem to have bipartisan appeal, in my discussions with folks lately.

1.  Ban “off budget” expenditures

A large part of our current deficit (and thus, part of the massive expansion in our national debt), is the result of conducting two full-scale wars and innumerable global “operations,” completely outside the normal budgeting process.  I’m sure there are other off-budget expenditures as well.  These should simply be banned.  Putting everything on the budget will force us to have more honest discussions about spending, taxes, and debt.  In particular, it will force us to consider carefully the cost of going to war, and how to pay for it.   We can include some common-sense exceptions:  direct attacks, such as Pearl Harbor, demand immediate responses which may not be budgeted, but Congress could be required to pass an amended budget within 30 days.

2.  Resurrect the “war bond,” and “war tax” when needed

We forget that we used to ask Americans to step up, patriotically, when we went to war.  We issued “war bonds,” borrowing money from ourselves.  We may not be able to finance a contemporary war, where we can easily spend hundreds of billions to trillions of dollars, purely through war bonds, but the mere issuance of war bonds would give Americans a stake in the decisions made — to go to war, to continue at war, and how much we spend on war-making.

We also tend to forget that we used to tax ourselves specifically to pay for war expenses.  After the Vietnam war, we instituted a supplementary tax whose proceeds went to retiring war debt.  We can, by some estimates, do the same thing in six short years for the current debts incurred in Afghanistan and Iraq.  It would be the patriotic thing to do, and would increase American and global confidence in our solvency and fiscal sobriety.

3.  Tax holidays must be met with job creation

I discussed this in more detail in my last posting.  But the basic idea is that when we give significant tax holidays or breaks to American companies, these benefits should be tied to job creation.  Not by empty promises or economic rhetoric, but mechanistically, by tying the tax abatement in question to demonstrated creation and retention of new jobs.  Job creation is essential to the health of American communities, and it’s essential to the economic growth that will allow us to reduce long-term debt.

Beyond these ideas, which seem to have bipartisan appeal, we must come to an agreement about balancing tax levels and spending cuts.  In similar situations around the world, long-term debt reduction and deficit control has been accomplished by a mix of both, ranging from 1/3 vs 2/3rds, to 80/20.  The Gang of Six, or Simpson/Bowles plans were consistent with this ratio, and need to be seriously revisited by both sides.  I offer no “magic bullet” for getting this to occur, and that — not debt reduction — represents the true challenge of our lifetimes as Americans.

In the last few days, I’ve had conversations with conservatives, and I think there’s a compromise position that appeals to both sides, appeals to patriotism, but “gets something in exchange” for the tax holiday.  Which would be a good thing, because despite the rhetoric, we all know that American companies are not going to automatically turn around and use the profits to hire Americans.

The reason we know this is that they have plenty of profits onshore, and they haven’t used those profits to hire many people, either.  For a simple reason — the economy lacks sufficient demand to require new hiring.  This has been exhaustively covered elsewhere, so I won’t bore you by repeating the evidence.

So, if we want jobs in exchange for a tax repatriation holiday, here’s how we do it.

Under a program which automatically sunsets (say, 5 years, but that’s negotiable), American companies are allowed to repatriate profits tax-free, for each new job created in the United States.  In order to create incentives for full-time jobs, capable of supporting a wage earner and their family:

1. For each new job created, a company would be allowed to repatriate a multiple (M) of the fully burdened cost of the employee.  ”Fully burdened” means wages and benefits — the total cost of having someone on staff.
2. Each job would be eligible for the repatriation credit in each year the program existed, perhaps at a declining modifier.  This creates incentives to keep the jobs created, and not lay them off on Day 366.
3. Attaching the credit to the fully burdened cost, rather than the salary alone, creates incentives for companies to create full-time jobs that carry benefits, which are essential to ensuring that jobs can support families.  Indeed, the better the benefits a company provides, the more profits it can repatriate.
4. Also, using the fully burdened cost allows the plan to work easily in those industries with union contracts, since it does not specify anything about the structure of compensation.

There are obviously details that need to be worked out.  What is the multiplier?  How long does the program or credit last?  Should we simply keep a program like this in perpetuity as a means of allowing global trade to be “open” but still incentivize domestic job creation?  Should the repatriation by completely tax-free in year one, and at a steep discount off normal tax rates in future years?

The main outlines sound fair, and even patriotic.  And it’s a mix of liberal and conservative ideas.  From my initial discussions with folks, the idea seems to appeal to both sides, and sounds “fair” both to companies and to the country.

Kick it around a bit, share it with friends, and tell your Congressperson about it.

Nope.  Douglas Adams does it every time.  It’s the Golgafrinchans, at the end of Restaurant At the End of the Universe.

Because, of course, they’re us.  They’re our bumbling, over-specialized, incapable of making a living for themselves, useless skills aplenty, useful skills thin on the ground, selves.

And, as an archaeologist and social scientist, the Golgafrinchans always remind me of how fragile our civilization is.  I am a social scientist, and I read a good bit of contemporary social science, of course, but in my work I analyze phenomena at a much longer time scale.  I study societies and social groups as they come and go, are born by fission from some other group of people, flourish, perhaps give rise to social “offspring,” and eventually go extinct.  And what is more emblematic of social extinction than Adams’s portrayal of the Golgafrinchan Ark “B”, carrying the non-essential members of society off to form a new world….

The Golgafrinchans occupy a place in my personal “wax museum of humanity” right next to Danny Hillis’s Long Now Foundation, and their 10,000 year clock.  Although the 24 hour news cycle and the buzz of tweets and instant information would have you believe otherwise, it is over much longer time scales that we can evaluate the success, and equitability, and sustainability of the various ways we humans have, of being human.  Our battles might be fought in days or years or lifetimes, but it is only our descendants that can truly “keep score” and decide how well we did.

The Long Now clock is designed to transcend us as a civilization, and as one of the ways we can communicate some of what we’ve learned with our far-future descendants.  It is designed not to require folks to be close enough to us in time and culture that they can read our writings, or comprehend our ideas, but to draw upon principles that are presumably deeper — not necessarily built into the laws of physics, mind you — but comprehensible to beings who are descended from our kind of minds, our kind of bodies.

Combine the perspective of an anthropologist studying the slow coming and going of societies, and the perspective of a software and systems engineer, and I think you get a sub-genre of futurism and speculation:  what it takes to “recover” the good bits of a civilization, after a collapse or other disaster.  Or simply the slow erosion of deep time.

I think of this problem in algorithmic terms.  If you wanted to maximize the chances of being able to recreate us, down the road after we’ve lost our knowledge, lost this particular set of scientific/democratic values, what is the “minimal instruction set”?

In short, what is the “boot loader” for an open, democratic society  combining expressive freedom and respect for scientific discovery?

This is the closest I can come up with, and I do not claim that it’s a deterministic algorithm.  In other words, starting here, you are not guaranteed to replicate the aspects of our civilization we value.  It’s clearly stochastic, and there’s clearly a lot of noise.  Which means only that I’m giving an “initial condition” and transition probabilities for processes which are in the “basin of attraction” of the product we’re looking for, and that if you follow such rules, “more often than not,” you’d end up with something we’d recognize as an open society.  Assuming you either replicate the experiment a lot (i.e., send LOTS of Golgafrinchans to LOTS of uninhabited worlds), or wait for the experiment to repeat itself over and over (i.e., deep time).

But here’s the algorithm (and I don’t claim full originality here):

1. Pay attention and observe patterns in the world around you, keeping an open mind.
2. Bang the rocks together, so to speak, and make things.  Especially new things.
3. Understand how competition and cooperation work, and why each is necessary.
4. Study those who are different, with an open mind.
5. Pass on what you learn, without too much prejudice.

Put this algorithm on an endless loop, and you have something approximating the progressive parts of the last several thousand years of Western Civilization.   Ignore a couple of key clauses, and you have a much wider array of outcomes.  Not all good, and some downright scary.   Do it just like this, and you might, if you’re lucky, end up with an open, tolerant, prosperous, enlightened democracy.

That’s it.  That’s what it takes.  The Golgafrinchans managed it, apparently…and so did we.  But it was a narrow victory, and the question is whether we can manage to keep it up…..

Happy Towel Day!

It’s a fairly compelling story, and it certainly has managed to scare the living s**t out of many Americans, leading to the rise of the Tea Party movement, attempts to destroy public sector unions, and radical budget cutting fever in Congress.

It’s also a carefully constructed story, which happens to succeed only by comparing apples to oranges.  In other words, while we do have lots of debt and unfunded liabilities, the picture is nowhere near as grim as is being suggested.  I intend to go through some simple numbers below which demonstrate that we can handle both our current deficits, and the larger issue of the social safety net, “within the system,” and that collapse is not inevitable.

Typically, someone reminds us that our 14 trillion dollar debt is comparable in size to our “14 trillion dollar economy,” and then compares the total unfunded liabilities of Social Security and Medicare to this.  And of course, the approximately 100 trillion dollar potential liability sounds like it dwarfs our entire national economy.

The problem, of course, is that this comparison is between ONE YEAR of the United States’s economic output (GDP), versus SEVENTY FIVE years of accumulated underfunding of the social safety net.  Let’s put these into comparable units.

We could either (a) figure out how much the unfunded liabilities amount to, compared to the full 75 years of economic output, or (b) we can determine what the per-year amount of unfunded liability is compared to ONE year of economic output.   Both give one the same answer, of course.

If we assume that today’s GDP represents an average, without systematic long-term growth or decline, and since the unfunded liability is being discussed in “today’s dollars,” then 75 years worth of today’s GDP is 1,050 trillion dollars.  A little over 1 quadrillion dollars.  The entire unfunded liability for the social safety net is thus 9.5% of our economic productivity over the next 75 years.   Breaking that down on a per-year unfunded liability basis gives one about 1.33 trillion in unfunded liabilities per year.  Again, about 9.5% of our economic productivity.

That’s a big drain on our economy, since we also spend a good chunk of our productivity on federal, state, and local spending.

But it’s not unthinkably large, nor catastrophic.  On these scales, the discretionary federal budget doesn’t even show up in our calculations.  So the heroic efforts of the GOP to destroy education funding, regulatory agencies, and assistance for the truly needy isn’t about our long-term fiscal health.  At all.

Despite the fact that our long-term liabilities aren’t truly catastrophic when you look at the true scale of the U.S. economy over the 75 year time horizon, these are big numbers and respond non-linearly to demographic changes in society.

Social Security is the much smaller of the two problems.    The unfunded shortfall is fundamentally caused by the intergenerational transfer of funds — each generation is funded partially by the one that comes after it, and the current generation of workers is smaller than the “Baby Boomer” generation, and the next generation is looking like it’ll be smaller yet.  Birth rates have declined.  This causes a systematic long-term shortfall unless we make changes to retirement age, benefit level, or current FICA tax rates.  Or a little of each, which is what the Trustees of the Social Security System have long advocated.  The 13 trillion dollar unfunded liability (over a 75 year horizon) is eminently fixable by following their recommendations, or some combination of adjustments.  This liability represents only 1.2% of our nation’s projected economic output over 75 years.  That doesn’t sound like an insurmountable problem to me.

Medicare is a much thornier problem.  It’s thornier because the size of unfunded liabilities is only weakly predictable from demographics (as is the case with Social Security).  We can predict how many people of each age bracket we’ll have using Medicare at various points in the future, but we can’t predict what the average health care cost expenditure per-person will be, 10 years from now, let along 40 or 75 years.  So the estimates for unfunded liabilities here are all over the map.  And they relate to the overall problem of “rationing” care and reducing overall health care cost increases in the U.S.

What does this mean for politics in America today?

1. We’re bullshitting ourselves about the problems, basically, and which ones need to be solved.  We’re focusing on discretionary federal spending instead of entitlement program finances.
2. Nothing we do on the scale of the current discretionary federal budget will break the bank in the long term.  Education spending and regulation of food safety are not leading the U.S. to the brink of disaster, and we need to call out the folks that claim it is.
3. We can fix the deficit and whittle down the U.S. federal debt within the framework of existing fiscal policy, without “inflating away” the debt.  Our country has a robust enough economy that we have the resources.
4. Our efforts need to be focused FIRST on Medicare and health care costs in general, and figuring out a sustainable solution.  SECOND, we should readjust Social Security funding and benefits policy to close the 75 year gap.  The sooner we do it, the less painful the adjustments will need to be.

Americans aren’t accustomed to having the political dialogue in terms of “trillions” of dollars.  So everything about this is scary, and easily borrowed by demagogues to push their own agendas.

It’s time we all got comfortable with these numbers, and realize that over the next two generations, our economy will produce over 1 QUADRILLION dollars in revenue — goods and services — and that we absolutely can handle the liabilities and issues we face.

If we want to.

After reading today’s article in the San Juan Islander entitled “SW budget based on OI Facility Only,” I am compelled to comment.  I will attempt to keep my comments respectful and civil, but the ludicrousness of the options being presented here makes that somewhat difficult.

While I understand that we face difficult budget choices, and apparently are going to pay dearly for our past choices in this policy area, the idea that an island county should live with zero or just one point for solid waste removal is alarming.

Curbside pickup can and should be more widely used.  Currently, San Juan Sanitation is not able to provide *weekly* pickup to many of the outlying island areas because many streets lack enough subscribers to warrant it.  Obviously, if curbside pickup were mandated, the density of customers would rise and hopefully San Juan Sanitation would respond by instituting county-wide weekly pickup of domestic garbage (and recycling!).  Any policy change here should involve discussions with SJS prior to enactment to ensure that they are ready and willing to move to a much more regular schedule of pickup for all subscribers.

Without this level of service, you as Council members are essentially telling the majority of the County’s population that we should accept that it might take half a day, or a full day, to dispose of a single load of refuse.  Under the “One Station” option, the minimum investment of time for disposing of household waste to Orcas from Friday Harbor would be three-plus hours, and often considerably longer, with a 20-plus dollar ferry fee in addition to whatever fees are assessed at the transfer station.

Under a “Zero Station” plan, that minimum investment of time is more like half a day to a full day.  As you all know, being County residents.  With a monetary cost of 50-plus dollars in addition to transfer station fees.

The fact that such an option is considered possible by the Council causes me to seriously question your judgment.

Mr. Shannon can hide behind his statement that he is merely presenting a plan which meets the requests he’s been given.

You, as Council members, cannot duck this responsibility.

I would ask that you stop presenting options that are clearly injurious to the vast bulk of your constituents, and do the politically hard but necessary thing, and give the voters of the county a plan to vote on, with options for taxes necessary to support it, that provides us with a reasonable minimum of solid waste infrastructure on each island where it is deemed necessary by that island’s inhabitants. This plan may include mandatory curbside pickup (on a frequent basis!) to minimize usage and costs at transfer stations, but the option of no transfer stations in the county is unrealistic.  If you proceed in this direction, I will make common cause with other county residents and fight this ludicrous and injurious plan.

I'm an ordinary citizen, perhaps a bit more politically involved than average, and a supporter of yours since the moment you gave that fateful speech in 2004.  You brought the possibility of idealism back to politics after its long slumber during my adulthood.  After a long and grueling primary campaign, during which skeptics daily doubted your ability to secure the nomination, and supporters like me mostly held their breath, you showed yourself to be a serious candidate for this job. 

And on the campaign trail, you confounded the pundits who said you couldn't talk about substance, and could only talk in platitudes and airy phrases.  But your mixture of idealism and pragmatism won the day, as did your competence in fundraising and running a campaign.

And now, you have the job. 

Early indications are that you fully understand the gravity of the situation.  Your speech at George Mason on the economy resonated with seriousness of purpose, and more than a few direct echoes of Frankin Delano Roosevelt's First Inaugural Address, given during the depths of the fiscal crisis as the Depression deepened. 

As an American and long-time supporter of your fitness for this job, I ask only a few things of you.

1.  Clearly and honestly explain the situation to your country.  Demand more of us, as we demand the world of you. 

2.  Be honest about your mistakes.  Don't fear the polls, and keep your eyes on how Americans traditionally behaved:  we admire people more when they can admit their mistakes and then go fix them, than we do any amount of skill in hiding the truth.

3.  Don't lose your principles.  You've got the toughest job on the planet as of noon tomorrow, and the temptation to use your power in ways you yourself deplore and have decried on the floor of the Senate and campaign trail will be overwhelming.  Don't give in.  I can't think of anybody I'd entrust more with this responsibility than perhaps Lincoln or FDR, and they're not available anymore. 

4.  Maintain your idealism, and keep creating it in all of us.  What will get us through the next four years successfully is to not let the idealism fade, especially in the face of all that will happen to us in the next year or two, economically.  We need to believe, and the economy needs us to believe, and we need each other to believe.  And we need you to keep helping us believe.

Do these things, Mr. President-elect, and you'll keep the hearts and minds of Americans.  And as we now know to our pain and chagrin, that bond of trust is critical, and has been missing for far too long between the People and their chosen representatives. 

For too long we've had government of the people, without as much government by the people as we should have, and nowhere near enough government for the people. 

Please, Mr. President-elect, restore the balance.  Thank you.

And regardless of what you believe finally ended the Great Depression—whether you believe it was FDR’s New Deal and the buildup to WWII, or the natural regrowth of the economy creating demand which finally exceeded supply, or a bit of both—it is clear that Hoover’s response to economic crisis was tepid and grudging, and FDR promised firm, activist leadership in the face of crisis.

And that activism and energy played a major role in creating momentum and preventing loss of confidence among the banks and investors that require an intricate web of confidence. Confidence in each other’s ability to make good on loans or contracts. Confidence in the ability of business debtors that they will be able to maintain and grow their customer base. Confidence in the ability of those customers to keep their jobs and pay their bills and mortgages.

To the extent that confidence-building worked in the early 1930’s, it was largely FDR himself who managed to bolster the confidence and optimism of the people, while a new cabinet and executive branch filled with America’s best and brightest tried experiment after experiment, argument after argument, to give business and financial leaders the confidence that their investments in growth would be matched by each other’s consumption and slowly increasing spending by consumers.

The situation we face, as everyone seems to grasp somewhere deep within ourselves, is very similar, and requires the same careful husbandry of confidence and optimism in order to kickstart our economy. In preparing some fundraising remarks earlier this fall, I read the early speeches and fireside addresses by FDR. His First Inaugural speech is amazing, and every American who watched President-Elect Obama’s speech at George Mason last week on the economy was watching a modernization and an invocation of that fateful speech.

And my reading of FDR’s great speeches, which did so much to motivate and lead us out of panic and despair in the early days of 1933, led me to wonder what Obama should say to us in his First Inaugural next
week.

The following is my list of things Obama should tell the American people later today.

1. President-elect Obama should explain to us the intricate web of confidence that ties together our economy, and explain in terms that non-economists can understand how it works so that the people will be able to lend their informed support to the plans now being made in Washington. We do not understand the various bailouts and stimulus packages and how they actually lead to the desired result. Please clarify it, because it sounds like we only get one shot at this and we need to get it right.

2. Obama should make it clear that we are not abandoning the principles of commerce and trade, nor are we becoming “socialists” simply because we believe that some problems are bigger than private resources can solve. We’re all believers in free enterprise now, but sometimes the free enterprise system needs collective action and a concerted effort from everyone.

3. And he should make it clear that this ”help from everyone” to kickstart our economy really means that every American plays a crucial role. President-elect Obama should make a patriotic call to stimulate local and regional economic activity, and not just wait for the big multi-national corporations to recover. This will create jobs and get money and local loans flowing again, even if global trade and large, global companies take longer to stabilize.

4. The president-elect should make it clear that investment in America is the patriotic thing to do, and that rebuilding our economy not only helps us, and our children, but the world. Our humanitarian and democratic outreach to the world, our environmental concerns, and our ability to address problems elsewhere in addition to those at home, depends crucially on a healthy economy. America’s place in the world, and our ability to be a force for change and for good, depends on getting back to sound financial and business shape.

5. And he should outline the nature of his plan and promise a series of regular discussions with the American people, in the spirit of FDR’s fireside chats but with the full force of modern media and communications, to ensure that all of us understand the situation, how each measure is designed to work and how we intend to use our scarce resources wisely and avoid waste. And that we understand how we’re progressing, and where we still need work. Treat the people like partners in this enterprise, not “interest groups,” or “demographics” to be polled. Mobilize us for action, as FDR did, and we’ll respond in kind.

6. And finally, President-elect Obama should call upon us all to temporarily put aside the issues that divide us in other ways; social issues, differences in economic approach, and issues of ideology. Not because these aren’t central to our political life and deserve democratic debate and discussion, but because right now, as in the 1930’s and 1940’s, we have serious issues that we need to come together and solve, with one voice, as one people.

And that is what I think President-elect Obama should say to the American people

Such rhetoric is misguided at best, and downright duplicitous at worst.  But it arises because we’re a month away from Election Day, and Congress is listening to constituents who oppose "bailing out Wall Street."  I leave it to others, far better equipped than I, to defend the bailout bill itself.  I simply note that I support the bill and additional measures needed to ensure that we do not doom ourselves to repeat history simply because we don’t remember the lessons of 1932-1933 clearly enough. 

Instead, my goal here is to examine the basics of the "free markets" argument used by Senator Bunning and others.  Far from creeping socialism, today’s bailout plan is action in the best traditions of a commercial republic and market liberalism, as brought into the 20th century by Franklin Roosevelt’s New Deal.

Among the most persistent narratives in modern politics is the idea that liberalism lost its way in the early 20th century, betrayed its roots and principles, and was supplanted by the welfare state philosophy that now bears its name. "True liberals," as the narrative runs, decry the socialism of the New Deal, and keep the flame of limited government, free markets, and individual liberty alive as libertarians and small-government conservatives. Variants of this story drove the tax revolts of the late 1970′s and the "Reagan Revolution," as well as contemporary efforts such as Grover Norquist’s anti-tax crusade. Democrats and Republicans alike seem to accept this narrative, which has come to structure much of the current attack on New Deal-era social programs and progressive politics in general.  Senator Bunning, and others in the House, make use of this argument in opposing the current plan. 

The "lost liberalism" narrative derives, in part, from twentieth century commentators like Joseph Schumpeter and Milton Friedman. In particular, Friedman set up the "dilemma" of modern liberalism by placing liberty and equality at odds:

The [classical] liberal will therefore distinguish sharply between equality of rights and equality of opportunity, on the one hand, and material equality or equality of outcome on the other…At this point, equality comes sharply into conflict with freedom; one must choose. One cannot be both an egalitarian, in this sense, and a [classical] liberal.

But is this true? Progressive liberals should consider the possibility that the "lost liberalism" narrative is an oversimplified history, verging on myth. If the dominant narrative is a myth, or fails at the very least to capture the whole truth about "classical" and "modern" liberalism, then the attack on New Deal liberalism by small-government conservatives loses much of its moral force and intellectual basis.  As does opposition to the current bailout plan, if the plan is properly structured.

We might start disassembling the "lost liberalism" narrative by noting a significant difference between the richness of classical liberal writers versus the narrowness and relative aridity of "modern classicals" such as Friedman and Friedrich Hayek. Hayek, in his Constitution of Liberty, defines liberalism as an anti-statist philosophy incorporating limited government and exclusively protecting so-called "negative" rights — protections afforded citizens against government action. Yet we find classical theorists far more balanced in their view towards state power. Montesquieu, in The Spirit of the Laws, imagined that sovereign state power was crucial to guaranteeing freedom from traditional forms of oppression, including private injustice among citizens. No less a capitalist icon than Adam Smith agreed, as did James Madison when he wrote in Federalist No. 51:

It is of great importance in a republic not only to guard the society against the oppression of its rulers, but to guard one part of society against the injustice of the other part.

Classical liberals were concerned about more than individual liberty from government power; at the core of liberalism is a concern about concentrated power — any power — and its effects on human freedom. This concern naturally causes liberals to favor limited government and the rule of law, but it should also keep liberals from treating private economic power as "natural" and beyond concern. The latter concern, however, is explicitly off limits in the narrow version of liberalism on offer by modern libertarians and would-be inheritors of the liberal tradition.

In defending the narrowing of liberalism to protection of private property and free markets, "modern classical" liberals draw upon the deep defense of property and the market offered by Madison and others. Yet the defense of private property offered by Hume, Locke, and others is far from absolute, despite the modern libertarian rhetoric to the contrary. Locke, for example, wrote that "In Governments the Laws regulate the right of property, and the possession of land is determined by positive constitutions." (Two Treatises on Government, vol. II, 50). Madison’s defense of private property also displayed large doses of pragmatism; if property owners are not protected from fellow citizens as well as the government, they will not willingly cooperate in self-rule (Federalist No. 10). Nor does the "market" fare any better in comparisons between classical and modern writers. Neither Locke nor even Adam Smith fetishized the market to the degree seen in Friedman’s Capitalism and Freedom. If anything, the emergence of commercial markets and free trade were seen as a means of redistributing wealth away from landed aristocracies and systems of primogeniture which virtually guaranteed noble monopolies on land and wealth.

And in the latter example we see liberalism in its original historical context. The Founders were using the power of republican government and commercial trade to assault ancient tyrannies. Markets were good because they opened the economy to all citizens, regardless of station or inheritance. Limited government was good because it prevented the abuses of public power seen in aristocratic societies and absolute monarchies. Redistribution, in those days, was considered a fine goal if it meant redistributing wealth from those who had wielded it as power for centuries.

As the influence of the ancient tyrannies on political thinkers waned, new threats became uppermost in the mind of many liberals. The development of social democracy and outright socialism in Europe caused a hardening of laissez-faire commitments among late nineteenth century liberal theorists. It is possible to trace much of the "modern classical" view of liberalism, and the liberalism characteristic of European political parties, to this era. Yet liberals in America continued to respond in innovative ways to new threats. In particular, the American experience of capitalist monopolies in the Gilded Age caused a resurgence of the ancient concern over the tyranny of unchecked private power. Rapid industrialization and rapid immigration-led population growth resulted in massive shifts in income disparities, of a type never before seen in America. The former reality of small business, family ownership, and individual effort were replaced within several generations by massive corporations, concentrations of private wealth and power, and the typical abuses seen in their pursuit. And liberalism did not stand still. One sees reactions to abuses of private power beginning with the Populist movements after the Civil War, continuing in the Progressive Era and achieving real power during the New Deal. The result, as we see today, is twofold.

Regulatory capitalism is designed to provide protection against the enormous distortions that concentrated economic power can create in the market. And welfare liberalism aims to provide a decent minimum to those who are the losers in what has become the only economic game in town. Both were designed to preserve a liberal, market-based society, from a new kind of aristocracy on the one hand, and from popular revolt on the other.  Both are also designed, as we see today, to prevent collapse of basic institutions and infrastructure — such as banks — from abuses or mistakes of the private individuals who run them.  Such protection isn’t designed to protect the individuals who run our financial institutions, but to protect the customers, investors, and other businesses who rely upon "Wall Street" in order to maintain the rest of our commerce, markets, and economy.  We are in the current mess, as most folks now agree, precisely because regulatory capitalism has been systematically gutted by Senator Bunning and "free market fundamentalists" over the last 40 years. 

I began this essay by pointing out that the New Deal is often portrayed as the moment where classical, or "true" liberalism was lost in America. My aim has been to show that if the New Deal is a departure from anything, it is a departure only from modern free-market fundamentalism, or of the extreme laissez-faire version of liberalism popular among elites in the Gilded Age. Progressives own a proud, and yes, liberal narrative stretching from John Locke through James Madison to Franklin Roosevelt. And I suggest that if we hope to seize control of the modern political narrative, we start by reclaiming our past, and stamping out the notion that liberalism took a detour in 1932.

For the essence of liberalism, and especially progressive liberalism, is not private property, representative government, markets, or any specific scheme of rights. Each is merely a method for reaching a goal, and each method has been crucial at various points in our history. None should be considered uppermost, but neither should any be considered obsolete. The essence of liberalism is the search for a politics in which liberty and equality are sufficently balanced so as to avoid the danger of the many absolutisms which threaten us, whether public or private. For only by avoiding absolutism in all its forms can we achieve, preserve, and defend the liberty and security to which we aspire.

We can start this conceptual revolution by helping support the current efforts of Democrats and the Administration to stabilize and support our financial institutions.  And by doing so using the rhetoric and arguments provided by one of our greatest presidents, Franklin Delano Roosevelt.  I recommend sharing the texts of FDR’s First Inaugural Address and his nomination acceptance speech, given as the Depression and banking crisis deepened and the nation slid towards chaos and revolt.  Roosevelt’s words, promising action and a "New Deal for the American  people," are more relevant today than at any other time since the dark days of 1932-1933.  Share them with friends.  Read more about the plan to stabilize the financial sector, and consider the parallels to 1932-1933 carefully.  And then contact your Senators and Representatives and let them know you stand ready to defend our country in the best traditions of both capitalism and liberalism.

(several portions of this essay are derived from a previous post on the now-unavailable Progressive Commons website; given the current crisis I felt it was time to revise that argument and highlight its relevance to the current crisis)

I’m increasingly disturbed by reports (or perhaps merely polls) that some Democrats will “boycott” the general election, or even vote for John McCain, if their preferred candidate doesn’t win the Democratic nomination.

After nearly 8 long years of the Bush White House, scandals and wars and torture, after the twisting of the meaning of “executive power” and constitutional rights, after the trashing of America’s image to its allies and the world….after all of that, are you seriously ready to vote for “a third Bush term with a different face” simply because your favored candidate ends up not getting the nomination?

If you can really look at the last 8 years, and still decide to throw your vote away or vote for McCain in order to protest not getting your favorite nominee, then shame on you.

As I’ve said previously, both here and to many friends, I’m supporting Barack Obama. Perhaps not surprising, given my demographics. But as I’ve also said, I will happily vote for either Hillary or Barack in the general election. We’re in the middle of a particularly protracted and hard-fought primary battle. And the reason why it’s hard-fought and protracted is that — surprisingly — the Democrats actually fielded two viable candidates this time!

We need to recall that the number of viable candidates for President we typically field is somewhere between ZERO and one. If we’re damned lucky it’s been one per election. In my whole lifetime, it’s often it’s been closer to zero.

So two strong candidates is an embarrassment of riches, and we ought to stop the incendiary language and threats of boycotts. First of all, there’s another six long months for all of us Democrats, regardless of who we support now, to really get to know John McCain and our chosen nominee, whomever it turns out to be. And are you really going to say, right now, that you’re willing to irretrievably throw your vote to McCain, before you know what we’re all going to find out once the general election campaign begins in earnest?

Frankly I don’t buy it. I think you’ll reconsider once the difficulty of this primary season fades into the “swift-boating” and right-wing media blitz to come. I think you’ll come home to the party and support our chosen candidate, whomever it turns out to be. And yes, I know it’s difficult to read my references to “whomever” it turns out to be and not think that I’m simply gloating over Obama’s perceived chances of victory. But I really mean it — whomever our nominee is, has my support, and my vote.

And if some of you choose to make good on your threat and abandon our nominee — then I ask of you one simple thing. Look back at the last 8 years, in detail. Look at the run-up to Iraq, at Abu Ghraib, at Guantanamo Bay, at the torture memos, the attitude to constitutional rights, the Supreme Court nominees, at Valerie Plame and the politicization of intelligence, at the secret energy committee we still don’t know much about….look at the last 8 years as a whole, and know for certain that if you make good on your threat then you’re voting for more of the same, and that when it gets even worse because of all the precedents set by the Bush Administration, that you have only yourself to blame.

But I don’t think you’ll throw your vote away. I think that no matter what happens in the primaries, Democrats on both sides of the nomination fight cannot, and will not, look at the last 8 years and decide to — in effect — vote for more of the same.

That’s why I think it’s going to work out, why the party will remain unified, and why we’ll all rally around whichever candidate soon emerges as the nominee. I hope I’m right.

And it truly would, and should, be a "feat" to derail a popular political campaign with this particular attack.  Because "plagiarism" requires a higher bar than has been demonstrated here.  Sure, Obama did a riff, nearly word for word, from a speech of Deval Patrick’s.  As Deval Patrick has done, with speech language, from Obama even earlier.  As Biden did to Neil Kinnock.  As politicians have done from time immemorial.  As Patrick himself did, to the Founding Fathers and Martin Luther King.  For in none of these cases, did the politician in question start by claiming that any of these words were actually their own.  "Plagiarism" implies that such a claim has been made, and that the claimant is lying.  It implies that the speaking or writing is occurring in a context within one will be judged, and possibly rewarded, for being the actual author of a speech or some writing.

No such claim is occurring in most (if not all) political speech.  And the criteria we use for electing leaders doesn’t specify that their words must be their own.  This isn’t a final exam, and our country isn’t high school.  We don’t have a "plagiarism policy" in the Constitution, and candidates aren’t disqualified from office if they can’t "show their work" and demonstrate that they — and only they — wrote the words they deliver to us in stump speeches and debates. 

Clearly, on the other side of this coin, we voters often do want to assure ourselves that our chosen candidate can "pull their own weight" and isn’t an intellectually empty shell.  As, for example, some recent political leaders we could mention, but won’t.  Barack Obama has cleared this hurdle quite well enough in my mind, and apparently in the minds of an increasing fraction of primary voters. 

So I sincerely hope that Democratic voters in Ohio and Texas view the current flap over Deval Patrick’s speech for what it is:  a last-ditch effort by Senator Clinton to revive a campaign on the decline.  No further confirmation of her unsuitability as our nominee is needed than the sight of her striving to emulate Michael Dukakis in campaign victories — his "plagiarism" fueled defeat of Joe Biden.   Do we really want a Democratic nominee who takes Dukakis as their  example?