A review of David Stockman’s book and a chief complaint that I should consider, I think

A Samsonite

A Samsonite

I have only started into Stockman’s “The Great Deformation” – it’s 750 pages long, for crissake – so I was pleased to find this  critique to suggest a perspective from which to view his argument as I trudge the path to happy destiny.

The new book is as full a statement as you could wish of where that strong theory now stands. It turns out to be Ron Paul libertarianism, give or take. Stockman is both impressive and infuriating in just the same way as Paul. He makes valid criticisms of many policies, but his ideas form a sealed intellectual system. Everything depends on everything else. Things can’t be improved here and there. Suggesting palliatives is missing the point — the entire body politic is sick and has to go.

The fundamental problem, says Stockman, is easy money. Alan Greenspan’s low interest rates caused the bubble, hence the crash. Ben Bernanke’s low rates and quantitative easing are reinflating the bubble, hence the next crash (which will be worse). Cheap money obliterates the signals on which capitalism depends. Everything that’s bad in public affairs, from political corruption to explosive growth in public and private debt and the depredations of private-equity firms (like the one Stockman ran), follows from the Federal Reserve’s monetary indiscipline.

It’s a grave indictment of modern central banking and no laughing matter — even when you’re asked to read sentences like this: “During 2009-2012 the vultures feasted gluttonously in the Fed’s killing fields.”

The book describes an 80-year arc of fiscal and monetary recklessness. Dwight Eisenhower wins praise for fiscal solidity, but every other president was a knave. Stockman is nominally a Republican, but his party disgusts him as much as the Democratic Party. There’s no partisan rancor in the book: It’s sustained and intense, but entirely nonpartisan.

The author concludes,

The scope of the critique, while crazy, is undeniably impressive. It has a kind of logical integrity. Everything is worked out and all the connections explained. Stockman has been reading his economic history and his Austrian economics. Crucially, a lot of what he says really does make sense. In understanding the crash, for instance, the Austrian school’s emphasis on the role of the credit cycle looks right. Most of Stockman’s observations aboutWashington’s self-replicating morbidity are accurate.

Frustration arises mainly from the way this mode of analysis resists reform at the margin — the only kind of reform that can actually happen. This relieves Stockman, just as it relieves Paul, of the need to engage in government as we know it. Instead, they can contentedly contemplate our destruction from a great height.

It brings to mind the current flare up on these pages between the Scott Frantz approach – engaging in government, and that of my favorite bomb throwing, flaming haired Solomon Samson some angry dude intent on bringing down the temple out of frustration and despair of achieving anything positive, ever. I absolutely don’t share Scott’s optimism, but I’d welcome the chance to be proved wrong: pessimistic nihilism is a lousy place to spend one’s life.

37 Comments

Filed under Uncategorized

37 responses to “A review of David Stockman’s book and a chief complaint that I should consider, I think

  1. Er…wisdom of Solomon, strength of Samson. One built the temple, the other brought it down. Actually, they were different temples, but let’s not pick too many nits. Am on the waiting list at the libe for Stockman’s book; meanwhile, keep posting about it, please, so I can know what to expect. Thanks!

  2. Hu Nhu?

    Clive Crook is being his usual disingenuous self when he effectively dismisses the views of Stockman and Paul with this: “Frustration arises mainly from the way this mode of analysis resists reform at the margin — the only kind of reform that can actually happen. This relieves Stockman, just as it relieves Paul, of the need to engage in government as we know it. Instead, they can contentedly contemplate our destruction from a great height.”

    Neither Paul nor Stockman is contentedly viewing the carnage to come.
    Both are alarmed. Crook’s “reform at the margin” assertion is equally disingenuous. “Government as we know it” is now so rotten with corruption and overreach that only a root and branch pattern of reform will reverse our decline. That is unlikely to happen until a collapse leaves no alternative.

    What in the world is “Ron Paul Libertarianism, give or take”? Give or take what? Principle?

  3. Yos

    Pessimistic nihilism… by that you mean “sanity.”
    : ]

    Cheers anyway…
    Yos

  4. Inagua

    The blunt fact is that America has prospered mightily during the last 80 years despite imperfect federal government fiscal and monetary policy. Consider any measure of human progress from birth survival to longevity to standard of living, and everything is much better than is was 80 years ago. Human progress comes from human ingenuity, not government policies, and Americans are still hugely ingenious people. The private sector still dominates the economy and the profit motive still brings us the things that make life so abundant — from antibiotics to fast food to good cars to larger houses and apartments to cheap clothes to flat screen TVs to year-round fresh fruits and vegetables to smart phones and Google and Amazon.

    The private sector is doing fine. It is only the government at all levels that is wasteful and inefficient. Unfortunately, a majority of us now favor a larger and larger role for government. We have reached a tipping point where the government has grown so large that the opportunity for future robust economic growth has been sharply curtailed. America will continue to have low growth, high unemployment and a stagnant standard of living unless and until public policy changes.

    But the economy is not going to to implode, go off a cliff, contract by 20%, or any suffer any other predicted calamity. We will sputter along and do fine, just not as fine as we could do with better government policies. And, as always, many of us will get rich and many of us will remain poor. The difference is that now many of the new 1% will be unproductive bureaucrats and very senior public sector employees.

    • Old Coot

      Not all private sector is doing fine. The self-employed, the mom and pops, are really suffering.

      • Inagua

        There are always individuals and businesses who suffer regardless of the macro-economic condition. Great blacksmiths suffered as a result of the automobile; good telephone operators suffered as a result direct dialing; etc.

    • Anonymous

      Well said. I was going to try to write something similar but you did a better job.

    • TheWizard

      I disagree on the economy part, as the price of energy is going to continue to swell under this administration’s hostile policy.
      No matter how much people refuse to accept it, petroleum and coal are the energy of our present and foreseeable future.
      Rapidly growing energy costs + stagnant economy = I don’t know, but it ain’t gonna be good.

      • Indeed. And worse, Obama’s promulgating EPA regulations that will give the Luddites fodder for decades of law suits. His policy of no energy will continue long past his administration’s rule.

      • Inagua

        Energy is an excellent example of how terrible government policy can only marginally retard a vibrant industry marked by great technological advances. Shale has greatly increased the supply of oil, and fracking has greatly increased the supply of gas while lowering costs.

  5. Anonymous

    Sweet post inagua:

    Please explain how fast food and ‘good’ cars make life so awesome or ‘abundant’ in 2013 ??

    Some smart people will even bitch about the overuse of antibiotics in our food supply

    And don’t forget, america prospered while Europe fought an incredibly costly and bloody civil war from approx 1915-1945

    • Inagua

      Despite what Stockman says about government policy over the last 80 years, look at the difference in both price and quality between a 1933 and 2013 Ford. Essentially no more breakdowns, no more overheating, no more flat tires, reliable heat and a/c, power windows, power brakes, etc.

      And in 1933 how many times a year did the average family eat out? Fast food has made dining out so cheap that even poor people can now avoid cooking at home on a regular basis.

      Never in all of human history has life been better for ordinary people than it is in America right now.

      • Old Coot

        I would agree that in some aspects we are better off. Technology has made life simpler, faster, and easier. But at what cost? The family unit barely exists anymore. There’s little deferred gratification. People are trained to want everyone now. There’s little patience in the workforce to wait for a promotion so rather than improving skills or working longer and harder than the next guy, many quit, putting more drain on the federal de system.
        I’m not sure i call that progress.

        PS: Chris, re your photo caption, did you know that the luggage company founder named his initial cases Samson, after the Biblical strongman, and began using the trademark Samsonite in 1941. The company changed its name to Samsonite in 1966.

        • Ha! I did not know that.

        • Inagua

          Old Coot – Fair point about technology-driven prosperity contributing to family breakdown. But so what? Would you rather haver a poorer society with better family values enforced in part by economic necessity?

          Deferred gratification is basically a mark of maturity, self-discipline and planning, and I am not sure that there is less of it than in the past, as human nature is pretty much a constant through history and across most societies. What is different now is that some of the conspicuous products of deferred gratification like college education and home ownership are heavily subsidized by government in a doomed attempt to artificially create the benefits of deferred gratification without the character sacrifice.

    • AJ

      You’ve got it backwards: it’s good food and fast cars that make life so awesome.

  6. AJ

    Solomon was the baby on the half shell guy; Samson was the Temple demolition guy. Samson and Delilah: note the very young Angela Lansbury at 11:55 into the movie is quite the spear chucker. Just as with Obi-Wan Kenobi (Help me Obi-Wan, you’re my only hope), Ron Paul libertarianism is our only hope. You guys who vote old-school Republican are just Democrat enablers; if that’s the best you can do, why vote at all and add a stamp of legitimacy?

  7. Front Row Phil

    Chris — While you may have second thoughts about the perspective you take and the incendiary nature of your actions, I for one seriously appreciate the role you play and manner in which you keep us enlightened and entertained. Keep throwing the bombs, Chris. Please.

  8. Joe $$

    Honestly, dont rely on Clive Crooks ad hominem character assasination of Dave Stockman as an honest book critique.

  9. Libertarian Advocate

    Ron Paul’s “Libertarianism” was gaining massive traction on the campuses as Obama had trouble filling half an auditorium. The Mittens/Ryan team colluded with the Dems to screw Ron Paul by shutting him and and his delegates out of the process. It sure looks like the statists are in a panic, in light of their now readily apparent compulsion to crush liberty before they are crushed by it. Ron Kuby once commented that he loved to watch the left and right wings of the American Capitalist Party beat each others heads in. In part he’s right, but its really the two wings of the crony capitalist utopian statist party.

    • Anonymous

      I am an immigrant. I became a US citizen in 2006. It was a proud day for me. My wife is American and my sons were born here in NYC. One thing I never understand and can not explain to my fellow Europeans is why a third political party can not get off the ground here. I am sure I don’t understand the history well enough but it seems to be that a third party embracing some common sense issues and rejecting the extremism of the Dems and Repubs should prosper. It seems that the only thing the Dems and GOP can agree on is not to allow somebody like Ron Paul a foothold.

      • Inagua

        The impossibility of a national third party is inherent in our Constitution which effectively sets up a winner takes all system. Only parliamentary systems allow for a viable multi-party polity. The two successful third parties, the Whigs and the Republicans, supplanted and effectively succeeded failing predecessor parties.

        Voting third party is effectively throwing away your vote, which I do regularly for the Libertarian Party. I was pleased and proud to be among the 1% who voted for Gary Johnson for President. It feels like being in the 99% percentile of a standardized test. I relish the privilege enormously.

  10. Anonymous

    @inagua: I agree we are living durring a truly great time. Mostly because of the information that is available so easily. Not because of nice cars or tvs.

    Yet , when the (cheap)food we eat makes us sick and when the younger generation will not be able to accumulate the wealth of the baby boomers, all is not well.

    • Inagua

      Right. Freely available information is the greatest boon to free people ever. I was remiss in not recognizing it.

      I agree all is not well. Our problems, however, do not rise to the level of a serious macro-level threat, and are entirely self-inflicted because we elect politicians with bad ideas and worse policies. Bush and Obama have been the most damaging one-two punch since Pearce/Buchanan or Nixon/Carter.

      • TheWizard

        Bush at least had the balls to put forth a plan to make social security a sustainable program, which it won’t be in 20 years or so.
        He received support from……nobody.
        In his book he points out a democrat congressperson told him “some of us would like to work with you on this, but our leadership has made clear that we are not to cooperate”.
        The longer that can is kicked down the road, the more painful any solution is going to be.

        • Inagua

          Social security was designed as an involuntary insurance program to prevent old-age destitution. It was not designed as a retirement scheme, and Bush’s attempt to make it one were misguided.

          The solution to the social security (and Medicare) problem is simple and obvious — the government should get a first lien on the estate, if any, of any enrollee who took out more than he put in. Another obvious fix is to increase enrollment age. And all Disability cases should be reviewed. That program has become an even bigger scandal under Obama.

  11. Walt

    Dude –
    The Lizard Boy makes some excellent points. We are still doing OK in spite of our Government. And how sad a fact is that?

    A truly free nation needs its government to protect its people from foreign attack, maintain law and order, and provide an infrastructure for all to succeed. It should be noninvasive on the free will of the people who elect it. And realize we should rule them, and not them ruling us.

    Who gave them the right to determine how much soda someone drinks? Who gave them the right to not allow us to protect ourselves? Who gave them the right to determine minorities should get preferential treatment? Who gave them the right to determine what words are OK?

    Political correctness is dangerous. Sacred cows are dangerous. The ability not to speak your mind, and protect yourself is dangerous. A biased MSM is dangerous. Encouraging diversity, at the lack of ignoring ability and talent, is dangerous. Pretending we are all the same, rather than accepting and tolerating differences, is dangerous.

    Did Roy Rogers declare the “British Are Coming”, on his horse Silver, for us to wind up here? Did Stonewall Jackson knock down the Berlin Wall for us to sink to mediocrity? Did Howdy Doody have a wooden dick? YES HE DID!!

    Anyhows, the fact that Howdy Doody is the only one who got it right should bother us, and wake us all up that we are doing something wrong.

    Let’s interview the GAR Evil Princess. I have some great questions for her.
    Your Pal,
    Walt

    • AJ

      Kowa gooba (that’s good), the opposite of Kowa bunga (that’s bad). Source: Howdy Doody and Buffalo Bob.

  12. Anonymous

    From this weekends Noonan in WSJ…the man who built Singapore – Lee Kwan Yew on what makes America great—and what threatens its greatness.

    [Edited severely in the interest of keeping the comments section manageable, but click on the link] Tiny excerpt:

    And America goes the way of modern Europe at its peril: “If you follow the ideological direction of Europe, you are done for.” There are always people who require help, but “addressing their needs must be done in a way that does not kill incentive.”

    “Americans and European governments believed that they could always afford to support the poor and the needy: widows, orphans, the old and homeless, disadvantaged minorities, unwed mothers. Their sociologists expounded the theory that hardship and failure were due . . . to flaws in the economic system. So charity became ‘entitlement,’ and the stigma of living on charity disappeared.” Welfare costs grew faster than the government’s willingness to raise taxes. They “took the easy way out by borrowing to give higher benefits to the current generation of voters.” The result: deficits and dangerously high public debt.

  13. Anonymous

    There are some that are still principled and don’t play the popularity contest: read about Mike Molgano

    http://www.stamfordadvocate.com/news/article/Stamford-state-rep-breaks-with-delegation-over-4413742.php

  14. Old Coot

    Inagua @6pm: for a generation or so, Yes i would like to see the family unit bond more, find itself again, even if it means financial times are weaker. We’ve come so far from family as a core value to raising children.

    • Inagua

      Well, Old Coot, Bush/Obama economic policies are indeed contributing to our weaker financial times, so maybe more families will stay intact longer. But I fear the larger contributing factor is out of wedlock births, which are up from 4% in 1940 to 40% today.