The financial crisis will be resolved, at greater or lesser cost, in more or less time, but the financial crisis is not the principal problem facing the United States. American society is riddled with corruption, chronyism, conflict of interest, and unfettered self-interest.
Over the last half-century, the United States has met with defeat in Vietnam; the precipitous decline of the automobile industry; a demographic revolution driven by immigation and one-parent families. Morevoer, two opposing popular cultures deeply rooted in traditional American values rage against each other: the MTV videoclip, reality show trash as class culture is going head on against an emergent Christian evangelical counter-culture that weds feel-good salvation with market-based materialism. These competing social movments are but shallow and vulgar fast food versions of tradtional American social ideals that have vied for the allegiance of Americans for two centuries. (Later on, I give a fuller description of the two traditional American value systems.)
The MTV culture and the equally media-savvy evangelical counter culture are little more than a quarter-century old. They are both by-products of the sociological revolution has turned our demographics and social structure upside down and inside out in ways that few Americans understand. Both the MTV and evangelical cultural movements can best be explained in the context of the competing values systems that have dominated American life for the last two centuries.
The United States has since its inception struggled to find common ground among enlightment progressives and religious conservatives. By the end of the 19th century, American transcendentalism and pragmatism emerged as "native" philosophical movements capable, it seemed, of reconciling the two traditions and providing us with a clear vision of an inclusive civil society founded on the principles of equal opportunity for all. We defeated slavery, instituted universal education and the rule of law, achieved a democracy with true separation of powers and successfully fought two world wars based on moral principles. There were, of course, failures and contradictions, but internally we believed that we were on the right track; we believed we were building a true, inclusive democracy.
However, following the collapse of communism, we have seen the reemergence of the conflict between conservative religious individualism based on Puritan religious thought and liberal social action rooted in American transcendatlism and pragmatism and embodied in the New Deal. An emboldened and triumphalist neoconservative movement forged an alliance between evangelical Christians and libertarians, between millenarians and free marketers, and promoted a political and social philosophy that blamed government and civil society for all of America's ills, and proposed as the solution the withdrawal of government from liberal social action. The "solution", as it were, was actually a non-solution. Either the losers in society would fix themselves or they would go down the tubes.
And many did, and more are about to follow the slide into poverty. We ought not to forget that America 2008 bears little resemblance with the Mom, Dad and Sister and Brother 1950s happy nuclear family story we sold to ourselves following World War II. Divorce, personal choice, mobility, and immigration have made the 1950's nuclear family an endangered species. In itself, this is would not be problem. Societies change. Our problem is that the new neocon story about ourselves turned out to be a fraud: and now, in the absense of a coherent story, as Americans face greater and greater uncertainty, some they "cling" to their religion, their guns, their drugs, their MTV, their idols, etc. Few see civil society as an anchor for their lives, and most end up going it alone. Church, family, job don't provide a fix, but we cling to them like lampposts in a hurricane. Worried Americans recognize that the forces of change are bigger than they are, and that our institutions, our marriages, our churches, our daily activities are all vulnerable to the jaggernaut of uncertainty. It all seems so unfair. And it is.
In the face such unfairnness, Americans do whatever is necessary to pursue wealth and property. Wealth itself becomes the holy grail. Greed is good because other "goods" -- constancy in love, friendship, work, community -- have lost their currency.
And with the collapse of civil society, the purpose of politics shifts from public service to servicing the needs of those who control the political institutions. I am not so naive as to believe that once upon a time politics in America was an exercise in doing good for the people. Rather, I would like to believe that in following the New Deal there was at least some commitment to improve the lives of most Americans. Public service was part of the equation; unfortunately, sadly, the principles of public service simply went out the window in favor of self-interest.
In fact, we now consider it normal for everyone to pursue self-interest. No wonder the lobbying industry has quadrupled in the last decade as the concept of conflict of interest has gave way to the idea that "we, the insiders, can all get rich together. This, the powerful told themselves, was good. It was simply the natural order of things.
It turned out not to be so good. The result has been serious and harmful corruption: billions in non-competitive contracts in Iraq, private security firms killing Iraqi citizens. And then there are the corporate boards that legally award failed CEOs million and justify their actions as "industry practice". And there is more and more, much of it so banal and obviously unethical that it is hard for must of us to understand how it could happen. One of my favorite examples is how it became standard practice for loan officers at universities to receive payment as "advisors" to companies that had been granted "preferred partners" status for student loans. The assumption has always been that financial aid personnel at universities were there to help students figure out how to pay for college, not to shill for companies. Instead we had financial aid advisers steering students to the "preferred company". Even better yet, with the loan guaranteed by the government it was instant, easy, no risk income. Astonishingly, when this cozy arrangement came to light the financial aid officials defended thenselves arguing that the set-up helped students get their loans more easily and faster. They were completely blind to the conflict of interest.
In industry after industry we get the same story. Perhaps the most troubling is drive by the pharmaceutical industry to market prescription drugs like breakfast cereals. The whole system is simply awful. Doctors are paid by pharmaceutical companies to give talks to other doctors promoting about the benefits of specific, highly profitable drugs that received FDA approval often on research funded by the pharmaceutical companies themselves. The industry considers this set up a "service" to society, doctors and patients. As one industry executive explained to me. By setting up the conferences with doctors and paying doctors to speak we get the word out on new and better treatments. By funding the research for the FDA, we save the taxpayers money and ensure that the new products get to market faster. Our advertising on television alerts people to potential health problems and solutions that might have geen ignored otherwise. When I suggested that the whole system was designed to fill patients with expensive new drugs that drive health care costs through the roof, I was told: the medications relieve pain and suffering. Are you against that?
I said that I believed industry practice was detrimental to the health care system. Doctors should receive nothing from pharmaceutical companies; the FDA should not cede its public responsibility to privately held companies; patients, especially mental health patients, may not be in a position to know what medications are appropriate for them. In short, I don't want pharmaceutical companies paying anything to doctors, nor participating in the drug approval process, nor advertising prescription drugs on television. I tried to explain what I thought is the proper role of government, the industry, and physicians in the health care system. I got nowhere. Our views are irreconcilable. I believe I am right, of course, and I believe that my view is grounded in the tradition values of liberal social action. In the section, below I will try to apply the basic principles of liberal social action to the financial crisis. In so doing, I will provide the discussion of both the Puritan and liberal social action value systems I promised earlier.
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Let us return to the financial crisis. As we now know, the crisis was not an accident. Industry practices are to blame. Aside from lending money to people who could not pay it back, industry executives saw nothing wrong, for example, in handing out credit cards willy nilly and when they had consumers hooked changing interest rates and payment schedules on unsuspecting customers; they were happy, as we said, to lend money to people who might not pay it back. All the bankers had to do was repackage the loans in increasingly complex financial instruments that would be sold and resold. Some understood the risks, but they simply did not care because they knew that they themselves would not pay.
Enough said about the crisis and the bad guys. The good news is that there is a fix. I saw as a banking consultant how fixing a financial crisis gets done. In 1991, my consulting firm was charged with saving Christiana Bank in Norway. We couldn't save Norway's second largest bank as the real estate crash in Norway did in the entire sector. The government swiftly nationalized dozens of banks, taking equity positions. Bank shareholders lost nearly everything, and by the end of the 90's the State had recovered it's investment. Sweden managed its banking crisis similarly, with similarly positive results. The lesson is clear: the model for how to manage banking meltdowns is fairly well-known. Countries like Japan that try to fudge the process by protecting failing banks, prolong the agony.
And so, the recipe for getting out of the mess is already known. There was no need for Republicans and Democrats to get into a blather over how to justify spending $700 billion and whether or not we were "violating" free market principles. Mostly we needed a control-copy control-paste job and a commitment to fire top management with no severance pay whatsoever. Instead, we get posturing and blathering and position-taking and pontificating and John McCain running around like a lunatic. In short, we see the playing out of a confused society that with deliberation elected George Bush, a man unqualified to be President, twice over. Even so, we will get through the financial crisis.
But we may not get through the crisis in values. And so I will turn, finally as promised, get to the more serious question of what American values are, where they come from, and how we recuperate the best of those values as we search for a new direction for the United States.
Admittedly, the starting point is not good. We elected and reelected an incompetent George Bush and we have put up with an absurd and devasting war in Iraq with hardly a protest. There are lots of possible explanations for why this happened. The most obvious is 9/11 and the Bush Administrations skillful manipulation of fear.
But fear alone is not sufficient to explain what went wrong. We need to understand how the Bush team could so successfully sell to millions of Americans a hodgepodge of Christian social mores and libertarian free market practices. The Republicans claimed rights to traditional American, Puritan philosophy and contrasted it with the liberal social action tradition which they alleged the Democrats used to destroy individual initiative and turn America into a society of "whiners" and freeloaders.
The most sophistocated among the Republicans knew that these two values systems have been competing in United States for well over two centuries. The Republicans deliberately used just part of the Puritan tradition, and they deliberately misrepresented the liberal social action tradition. They were good at it, and knew how to communicate their ideas.
With this in mind, let us reconsider the two value systems in a more objective light, if we might, before I argue that neither party truly practices the values they are said to represent.
A bit of American intellectual history is in order. Since the founding of the United States, there have two competing visions of America. One we can call the liberal social action tradition. It roots are solidly grounded in Franklin, Jefferson, Emerson, Dewey and Rawls. Dewey's contribution speaks most directly to the issue at hand. In the 20th century, Dewey's lived committed to liberal social action emphasized universal education, social equality, religious ecumenism; he was deeply committed to human progress and helping educators and government workers understand how to implement his ideas. As a philosopher(educator, Dewey practiced his own version of pragmatism, while also borrowing from Emerson the transcendentalist's romantic vision of a free and actualized independent self. Dewey's work is a logical development of the enlightment project in which men and women are seen to be blessed with infinite potential, each capable of self-reliance and independence made possible through full participation in the community. The individual reaches his or her full potential when civil society enables individual development. Civil society's principal responsibility, Dewey insisted, was to provide each child with the means to achieve his or her potential. Each child has an inalienable to personal safety, health, and education.
Our second tradition is Puritan, its principal philosopher Jonathan Edwards. We should not be cavalier nor dismiss the contribution of the Puritans. The Puritan tradition emphasizes prudence and sacrifice, knowledge of self through God and the hope of salvation. Puritan ideology is surprisingly rationalist in its social and political philosophy; the independent self must struggle both with his relationship to God and himself to achieve salvation. The Puritan is, admittedly less optimistic about human nature than the liberal social action tradition. It accepts that there will, perforce, be winners and losers.
The Puritan tradition's emphasis on personal effort and responsibility and its belief that the worldly success might be sign of spiritual success provided a solid ground for the emergence of managerial capitalism. In the 20th century, libertarian philosophers like Robert Nozick and popularizers such as Aynn Rand broke with the restrictions on personal behavior imposed by the Puritans while retaining their conviction that life offers each of us what we merit. Nozick and Rand and others adapted Puritan discipline and commitment to an emerging market economy capable of creating extraordinary wealth and advances in every area of human activity.
As I argued earlier, the Bush Administration and neocon theorists gave a simplistic reading of American social and political life: they said that the Democratic party practiced "socialism", a version of liberal social action that destroys the economy and individual initiative, while they, the Republican Party, took up the Puritan (evangelical) and libertarian banner arguing that by getting government out of their lives and God into them that they would create wealth and make the deserving among us rich, happy, and saved.
Unfortunately, the Republican representation of themselves has turned out to be a fraud. Equally, unfortunate has been the failure of the Democratic Party to truly embrace liberal social action. Sadly, each of the parties offers little more than a pastiche of the powerful value systems they claim as theirs.
Let us begin with the Republicans. As we have seen, in its own muddled way the Republican Party has picked up the banner of the Puritan-Libertarian tradition, imposing Puritan constraints on sexual behavior while waving the banner of libertarian economic and social policy. However, the Republicans have shown little interest in the Puritan traditions of thrift, probity and personal responsibility and the role of the community as a watchdog of appropriate behavior. And so while the Republicans preach the Puritan/liberatarian litany of merit and responsibility, they systematically engaged in corruption.
How did this happen? Do they not believe what they preached? Were they victims of a larger system that institutionalizes corruption? Did they forget that the Puritans taught absolute modesty before the power of God?
If I may be so bold, I will offer my view on each these questions: 1) Many Republicans don't really believe what they preach nor do they even understand very well the Puritan intellectual tradition; they convinced themselves that they piety and material self-indulgence went hand-in-hand; 2) Yes, many have been victims of a system that corrupts; alas, too many neither had the will nor the training to manage temptation; 3) They ignored Puritan strictures against pride and avarice and foolishly believed that by making themselves and their friends rich they were demonstrating the greatness of the United States and the market economy. They accepted the "logic" of the rich getting richer and poor getting poorer; they believed that this was the result of the natural order of things. They privatized the most basic task of government -- defending our nation. As a result, mercenaries tortured and killed in the name of American public. I would hope that serious liberatarian philosophers, like the late Robert Nozick, we be as appalled by the Republican spectacle as I am.
The Republicans have, in fact, long abandoned the proscriptions inherent in the Puritan and Libertarian belief systems. The intense self-examination required by Puritan religious belief and libertarian ideology is too big a burden . It is far easier to assume that what is "good for me" is right and natural and that my success and the failure of others is simply the playing out of the natural order. As a remedy, I would suggest to the evangelicals that they read Jonathan Edwards and discover getting close to God is not a self-help orgy of feeling good about yourself as you suck up bromides in a mega-church. As for the libertarians, I would assign them Ayn Rand's pathetically bad novels if for nothing else than to be reminded that personal integrity means doing the job the right way no matter who it makes mad. Libertarianism does not mean getting rich at the expense of those who are too unskilled or unwise to know that they are buying, nor does it mean using contacts to win government contracts irrespective of merit. Libertarian philosophy was meant to enable free human beings to fulfill their potential; it is a merit-based philosophy, which excludes sucking up to the powerful as well as all other manners of legal corruption. Unlike Bush Republicans, libertarians really do believe in small government.
I am not a libertarian. In principle, I ought to be a Democrat. I wish.
The Democrats commitment to liberal social action would appear, at first glance, to be far more solid than the Republican commitment to Puritanism and Libertarianism. As set out by Dewey and brilliantly explained by John Rawls' Theory of Justice (1971), liberal social action promises a society in which individuals are provided with the education necessary to participate in democracy and achieve their human potential. In short, Dewey and Rawls defend equality of opportunity and argue that this is the responsibility of the State and can not be left to the will of parents, religious groups or any other actor in society. The right to education and the tools necessary to make decisions for oneself are inalienable and belong to the child. The State's responsibility is to deliver on those rights to everyone. Rawls' "veil of ignorance" explained clearly how if each of us were blind at birth to our original position in society, we would all wish to have this same opportunity, and we would all support governmental institutions designed to ensure equal opportunity for all.
Unfortunately, the Democratic Party commitment to liberal social action has been inconsistent at best. When in power, the Democratic Party's patchwork of government programs has largely failed to provide poor children with the means to become a fully-entitled member of society. Inner-city neighborhoods offer neither safety nor education. Children are mostly unprotected from bad parenting. In the worst instances, social services intervenes, though lack of resources and an incompetent judicial system customarily make a mess. In sum, not only do poor children suffer from bad parenting more often than wealthy children, we spend less on educating poor children due to an antiquated, absurd system of local financing for schools. Poor children also receive far inferior health care. In short, the Democratic Party has failed to guarantee children their right to equal opportunity. The social intervention required is beyond what they are willing to consider. We are not even close to a serious discussion of how to combat social injustice.
Even worse, there is no evidence that Democrats in office actually believe in Deweyian pragmatism and Rawlsian social justice. Democrats share with Republicans the same comfortable relationship with the current arrangement of social structure and power. They are equally corrupted by lobbyists, equally likely to kowtow to corporations in matters as important as child obesity, the pernicious effect of advertising on children, and so on.
We have little reason to believe that Democrats either understand what I mean by social justice nor that they are prepared to rearrange the federal budget to make all American neighborhoods safe and educate our children.
Which brings me to what I want. Free year round day care for children, free local community pediatric care including monitoring of children to ensure that they receive vaccines and are in good health. I am ready to go after the manufacturers of children's food and take serious measures against child obesity. I am ready to spend big-time to develop community-based programs for children in sports, arts, etc. I am ready to spend the millions necessary to protect the poor in their neighborhoods and eliminate poverty for all children independently of who their parents are. I am ready to ban all advertising aimed at children. I want a children's bill of rights and programs to break the cycle of poverty and violence that afflict poor children throughout the United States. By the way, I suspect that middle class children will also benefit.
To both Republicans and Democrats what I want sounds like socialism. I am not worried about the label. I am perfectly happy to have adults navigate capitalism, but frankly corporate America is hurting our children and we need to give them the tools to make it to adulthood with a fighting chance to survive as healthy and happy human beings. I am also willing to do whatever is necessary to get government to provide children with what they need to succeed in life. This will be very, very expensive... Then again, it would cost a lot less than Iraq.
Money is not the obstacle. The hard part is rethinking what we hope for our children. There is little evidence that American society is prepared to do so.
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