Storms Never Last

I must stipulate from the outset that I am largely ignorant of the rococo mechanics of the current financial turmoil. But then, so too is much of commentariat, and if nescience hasn't inspired silence in those quarters, I don't see why it should do so in mine. This lack of information, however, is precisely what makes me nervous as the United States government again inches toward that fatal conceit against which Hayek warned. That said, amidst the noise and static, there has been a smattering of astute writing on this subject. What follows is a mere sampling.


David Brooks:

We're going to need regulators who can anticipate what the next Wall Street business model is going to look like, and how the next crisis will be different than the current one. We're going to need squads of low-paid regulators who can stay ahead of the highly paid bankers, auditors and analysts who pace this industry (and who themselves failed to anticipate this turmoil).

Tony Blankley, speaking Friday on KCRW's Left, Right & Center, is similarly concerned:

Here we are, eighty years after the beginning of the Great Depression and still debating the causes and effects. And to think that you've discerned in a week and a half that it was certain regulations that caused [the current situation] shows a tremendous confidence in your analytical skills.

And Megan McCardle of The Atlantic, who has been excellent as usual of late, writes:

What can I say that Bush, or Clinton, or anyone else, should have done, knowing what they did at the time? I can demand that they be omniscient, but since I'm not willing to hold myself to that standard, that hardly seems fair.

If, in retrospect, if we don't know what caused a particular financial crisis, why should we expect governments to implement regulation that will effectively diffuse future calamities? And if, as Alvin Toffler posited, American business moves at 100 mph while the law moves at 1 mph, how do we build an effective regulatory apparatus that does not, through its unintended consequences, pull the reins too tight or in the wrong direction? This is not a call for anarchy on Wall Street, but rather an honest attempt to answer those questions.

It bears saying, too, that financial bubbles happen only in healthy economies and serve a valuable function therein (see Wright/Gross video above). North Korea has never had a housing bubble; Cuba has yet to experience a dot-com collapse. The degree to which these booms and busts happen may be to some extent mitigated, but their role is undeniable.

Further worrisome is the human tendency toward panic in the wake of perceived catastrophe: the internment of Japanese-Americans after the attacks on Pearl Harbor; widespread and uncritical public support for an invasion of Iraq after the 9/11 attacks; and the current push for more governmental involvement in the US financial system, are but three examples of this. As such, David Cay Johnston, in this open letter to journalists, reasonably suggests that we would all do well to take a deep breath and ask ourselves if what we're seeing right now should be properly called a crisis:

As of now we are, as a group, behaving just as we did the last two times the administration sought to rush through a hastily thought-out, ill-conceived plan. Why in the world are we being so gullible and naive? Whatever happened to the core value of journalism - check it out?

Perhaps, behind all of the panic and pandemonium, there is good reason to be sanguine about the antaean resilience of the American economy. Or maybe not, but, at a minimum, we would do well to put aside our panic and recognize the enormous implications of the current debate.

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Trias Politica

In response to my recent piece on the US presidential election, my good friend Dave left this comment:

"I don't really buy the whole "I prefer the executive and legislative branches be controlled by different parties" idea, is that really the biggest check against Obama for you?"

Dave's question is a good one: Do I believe that the preservation (or restoration) of a healthy separation of powers in the federal government is more important than seeing Barack Obama as (the first African-American to be) president?" 

And as Walter Hirsch would say in response, "'Deed I do." 

Is this my biggest concern in potentially voting for Obama? Superlatives can be dangerous, but certainly my worries about unchecked executive power ride high on any list of concerns I may have.

Government power has become increasingly concentrated in the executive branch over the past generation, particularly with the rise of men like David Addington and John Yoo, who, in their expansive interpretations of the unitary executive, have strengthened the office of the President to an alarming degree. 

Moreover, where Congress - even when controlled by the same party as the executive branch - once acted as a counterbalance to the President, it has increasingly become a legislative rubber stamp for Presidential whims and fancies. We need only look to the first six years of the current Bush administration for evidence of how a President, buttressed by his party's majority in Congress, is able to enact any number of cockamamie ideas. By contrast, when forced to work with an opposition majority in Congress, Bill Clinton (to take a recent, non-Bush example) found himself steered toward relative moderation. 

American liberals have been quick to lambaste the Bush administration for its perceived abuses of Presidential power over the past eight years. And while there has been much to bemoan during that time, I can't help but wonder if those same liberals would be in similarly high dudgeon if, say, Al Gore or John Kerry had been up to the same antics. I suspect not.  Americans have seemingly forgotten that the Constitutional system of checks-and-balances exists not only to prevent the other side from going to excess, but also to reign in one's own favored party when it sets out to do the same.

John McCain and Barack Obama may not hold the same views of executive power as Dick Cheney, but there's little reason to believe that they will be inclined to unhinge and dismantle the newfound levers of power created over the past eight years. Presidents don't give up power willingly. Rather, the relevent question is how will McCain or Obama wield those levers to their own ends? And given that these executive powers are unlikely to be rolled back or relinquished, our best hope may be that voters will step forth and offset the power of the legislative and executive branches.

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The Joy of Discovery

Whenever I discover as fine a writer as Jonathan Rauch, I inevitably wonder how I never managed to hear of him before. This guy has been writing for major publications for more than 25 years and, until last month, I'd never even heard of him. How is that possible?

Rauch first came to my attention via this excellent article about the Chevy Volt in the July/August edition of the Atlantic Monthly. The piece is an absolute must-read - the sooner the better.

Rauch, god bless him, then followed up this article with an interview with Russ Roberts on my favorite weekly podcast, Econtalk. Where the article is a must-read, the interview is a must-listen.

Digging into the Atlantic's archives, I came across this article, entitled "Caring for Your Introvert," in which Rauch cemented his merits in my mind. I'll leave you with a sample:

Are introverts arrogant? Hardly. I suppose this common misconception has to do with our being more intelligent, more reflective, more independent, more level-headed, more refined, and more sensitive than extroverts. Also, it is probably due to our lack of small talk, a lack that extroverts often mistake for disdain. We tend to think before talking, whereas extroverts tend to think by talking, which is why their meetings never last less than six hours.

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