Sunday, October 21, 2012

Is Barack Obama An Intellectual?

Barack Obama was the first black President of Harvard Law Review, the 5th black senator, the first black president of US in 275 years. He also has the dubious honor of becoming US president with the least governing experience in modern history and had mostly voted 'present' (not even 'abstaining') as state senator in Illinois legislature.

Is it even fair to ask, an Ivy league graduate and a man so many historical firsts, whether Obama is an intellectual? A legendary political strategist confided in a private conversation that "whoever becomes the US President, irrespective of the party, deserves to be there". Obama's candidacy for US presidency is a tale of ambition and strategy unparalleled even by Reagan and Clinton, both of whom were very experienced Governors who sought national office and had to fight their way to it within the party and nationwide.

Taking advantage of opportunities is a talent by itself. In the aftermath of the drubbing that GOP recieved in 2006 mid-term elections Bill Clinton is supposed to have told Hillary "unless the Democratic party nominates a felon we can win the presidency". Obama, in many ways, was like what Carlyle said, "the moment produces the man". Let us not forget that Obama started as an outlier candidate. Until his Iowa victory even within Afro-American community he was seen as sure to lose possibly gain experience now and run a better campaign at a later date. It is easy to talk of how he coasted to the Presidency from gaining popularity since his much lauded address at the 2004 Democratic convention.

It would be gross injustice to Obama's campaign to harp only on how the press treated him with kid gloves and was lost in blind adulation. Bill Clinton was the first Democrat to be re-elected since FDR. Democrats and Republicans thought Hillary was a shoo-in given that she would be supported by the political genius of Bill Clinton. Those were lonely dog days for Obama. When he romped home in Iowa (37% vote) and Hillary finished a poor third Obama became an overnight national sensation. But how he won Iowa is the question on which I intend to discuss what kind of an intellectual Obama is.

Beyond 'hope' and 'change' the only tangible thing Obama did in Iowa was pandering. He pandered to Iowa's notorious farm lobby for tarriffs against Brazil's sugarcane based ethanol. John McCain, later to become Obama's opponent, bluntly opposed the Iowa corn lobby on the tarriff against Brazil. Sugarcane based ethanol is more fuel efficient than Iowa's corn based ethanol. Economists continue to warn against using corn for ethanol in an artifical attempt to lower fuel imports. Corn diverted to brew ethanol to fuel American cars robs the world of corn based food driving up food scarcity. Pandering to sections of voters will be a recurrent pattern of the next four years.

Obama has never challenged conventional wisdom or populism. In midst of a world seething with fury against Wall street it does not take any courage to scold bankers or to call them 'fat cats'. What would have taken courage is to call for better and more capitalism. Wall Street's undoing was not capitalism but insufficient capitalism. It was Bush who, risking unpopularity and the wrath of his own party, bailed out Wall Street under terms that eventually benefiited the tax payer. It was also Bush who bailed out Detroit. Obama turned it to a reckless bailout to reward the unions and resulted in continued tax payer losses.

Withdrawing from Iraq was no brainer. The American taxpayer was exhausted, the war was controversial from the word go. What would have been intellectual was to withdraw from Afghanistan in 2009. The VP and many others counseled Obama to withdraw from Afghanistan too citing weak economy and the intractable mess the war was. Afraid of GOP backlash and with his eye on 2012 Obama tried to replicate Bush's Iraq 'surge' strategy. It is a grand failure today. If Obama had leveled with American people and refused a 'surge' for Afghanistan and vowed that pursuit of Bin Laden is still afoot that would have been a moment of leadership.

Unlike Bill Clinton's crusade in 1992 to reform health care in 2008 it was commonly agreed by all candidates and the American tax payer that the health care cost Leviathan needs to be hooked. The only contention was how to do it. Battle scarred Hillary Clinton presented a plan that included mandates. Obama cried foul and pontificated that his plan does not levy a 'tax', as he referred to mandate. Hillary and other experts disagreed that health care reform without mandate was not possible or cost effective. During Ohio primary Hillary exploded 'shame on you Barack Obama' for mischaracterizing her mandate as tax. As president Obama instituted mandate in his Affordable care act and the US Supreme Court later ruled that that was consitutional but called it a 'tax'

As President has Obama ever delivered bad news to a constituency that he depends on for re-election? Never. Not once. Standing before a gathering of hundreds of doctors Obama lobbied for his health care reform but started off with a stern message "I cannnot give you what you want" referring to doctors demand to reform malpractice lawsuits and institute caps on awards. Tort lawyers are a very influential democratic base and prodigious fund raisers too. It is easy to offend doctors than to risk offending his own fund raising base.This is not about opportunism. An intellectual articulates a difficult to swallow position and shepherds his constituency with logic and reason about a required change of course given new paradigms. Failing to do that is a signal failure of an intellectual.

America has a debt burden of $16 Trillion which is almost 100% of UD GDP. Entitlement programs are expanding exponentially beyond any fiscal sustenance. Obama's simplistic prescription is to raise taxes on millionaires and billionaires under the pretext of asking them to pay 'their fair share'. Without going into the debate of whether millionaires and billionaires are paying their fair share lets look at the 'what-if' scenario of Obama getting his wish. The revenue thus raised will pay for only 72 hours of US Government expenses. This, to be polite, is intellectually dishonest shorn of any shred of intellectual integrity. A serious problem needs a serious answer not dishonesty.

That Obama, an Afro-American, became a President is justifiably characterized as a watershed moment, even a redemption. Many black commentators wrote that seeing a black first family inspires many afro-american kids. True. But within the Afro-American community there is widespread resentment against Obama administration, despite the immense pride that is there on the surface. Seeking to be seen as "president of all America" Obama, even where he could or should, has actively distanced himself from being seen as doing something targeted for Afro-Americans.

Jodi Kantor writes in New York Times, "At the first meeting of his top campaign donors last year, some black donors were dismayed when officials handed out cards with talking points on the administration’s achievements for various groups — women, Jews, gays and lesbians — and there was no card for African-Americans". Referring to Obama's quote that he is not only "President of Black America" Afro-American activist and scholar Cornel West said that statement “makes me want to vomit. Did you say that to the business round table?” he asked rhetorically. “Do you say that to Aipac?” (referring to a pro-Israel lobbying group).

Unemployment rages at 15%, twice the national average, for Afro-Americans. Appearing before the Congressional Black Caucus that was anxious to hear what President Obama can do. Obama borrowed a much revered Civil Rights era slogan and lectured "put on your marching shoes". That implied, for astute observers, that Afro-American community was sitting idle and not doing enough to lift itself. That was not Obama's intention. It was a speech delivered without much thought or sensitivity. Black Congresswoman Maxine Waters erupted "who was he talking to, we are hurting already". 

Even more shameful was the Shirley Sherrod episode. Shirley Sherrod, an Afro-American State Director of Rural Agriculture in Georgia, was falsely accused of being racist in refusing to help a white farmer. The whole incident was based on dishonest editing of a portion of her speech at a NAACP function. Conservative blogger Andrew Breitbart broke that story. White House went into panic mode and was instrumental in making Shirley Sherrod resign. Sherrod is blistering in her recently released memoirs of how betrayed she felt that this happened in an Afro-American Presidency. Sherrod, as the full speech showed, had actually went out of her way to help the white farmer retain his land. When the full truth emerged the administration still did not offer her old job back, they only offered an 'equivalent'  position. Obama later called her and spoke telling her that he understands her and has written about her kind of experiences in his book. Sherrod simply told him that he could not have had her experiences. Sherrod grew up in racially charged in Georgia unlike Obama. Obama promised her to visit Georgia. Sherrod notes Obama is yet to keep his promise. If Bush had treated Shirley Sherrod like that the GOP would be called 'racist'.

In the aftermath of a rash of shootings that included hurting a congresswoman much was written about America's fetish for guns and the second amendment. The GOP, beholden as it is to the gun lobby, was shamefully, but understandably, silent on talking about gun controls. The acute disappointment was Obama's silence. The last President to sign a ban on assault weapons, A.K. 47's, was Bill Clinton. That ban lapsed in Bush's period and was not renewed. Obama, keen to be re-elected, completely ignored the gun control issue. This was a moment for a supposedly intellectual president to seize the issue and shape public opinion. Instead we only got more soaring rhetoric.

Obama is undoubtedly a very intelligent and very talented politician. But the more and more one looks at his record we only realise that this President is interested in only one thing, his political ambitions and success.

Eisenhower defined an intellectual as "one who takes more words than necessary to say more than what he knows". On that score Barack Obama is the most intellectual to ever occupy the Oval Office.

Tuesday, October 9, 2012

Bush, The Intellectual President

I never thought a day would come when I would argue that George W Bush was an intellectual.I came to USA in 1998 when the economy was booming and Clinton was widely praised for it. The GOP and Bush were repulsive to me especially with their accent on religion. During a republican presidential debate all candidates were asked to name a political philosopher who influenced them most. Bush said "Jesus Christ" and just looked away into the distant sky (or roof). I was angry at such an answer. Today I do not think so and with that a lot of my perceptions changed about Bush thanks in large measure due to Barack Obama.I used to be virulently anti-Bush and today I am not so. I still have criticisms of Bush's Iraq war and the deficits. I've not changed my views of Bush only because I have a visceral hatred of Obama's policies. I am not doing a volte face either. My views have changed simply because I've become far better informed than I used to be as a new immigrant in the early years of Bush. Second, my animosity towards religion is mellowed down as I see religion as a more constructive force, especially as it is used in USA compared to how Advani used it in India. Third, my understanding of economics has deepened considerably since I came to USA and of course it took some time to really shake off some decades old truisms that were beaten into an Indian's conscience (some of which apply to Americans too).

To define who is an 'intellectual' is a very difficult task. It surely should not be restricted to academic achievements or books that a person digests. It is not even just the ability to formulate ideas. Its more. One should be able to stand up for one's ideas and convince a skeptical audience of those ideas. One should be able to transcend the stereotypical image of the collective group of which one is a member of. And, yes, it includes willingness to change one's ideas in the face of new evidence. Bush has a stellar record on some of those benchmarks and a mixed record on some. How does he measure as an intellectual on balance? Let's see.

Bush campaigned on a humble foreign policy. He declared America will not be a "911 to the world" (referring to the number Americans dial for emergencies). A Republican candidate was arguing for a less muscular foreign policy harking back to the original isolationist tendencies of the GOP. Yet 9/11 prompted an immediate change and Bush realized that, for good or bad, America has to plunge headlong into tackling a global menace. It's like how an aging Godfather feels "just when I want to get out they pull me back right in".

Bush was lauded from the left and right for the moral clarity he brought to combating Al Qaeda. Lance Morrow writing for Time said this is a moment for 'purple rage' and told Americans not to allow themselves to be counseled. Only the far left naysayers like Noam Chomsky writhed in agony. It took a Romney candidacy for New York Times to find something redeeming in the Bush actions immediately after 9/11. NYT columnist wrote of a little spoken about visit by George Bush to a mosque after 9/11 to clearly signal that America is at war only with Al Qaeda and not with Islam. When a Muslim Secret service member was asked to get off a plane Bush, visibly angry, took to the bully pulpit with that agent standing next to him and declared that it was 'un-American' to treat his agent like that. Bush also recognized the need to revamp America's laws and re-organize America's security agencies. To Bush's credit his successor has not changed much of those laws and has only taken them further. Imitation is the best form of flattery.

It is GOP orthodoxy that Federal government should stay away from education which rightly belongs to states to legislate and manage. America's school system, unlike its Universities, suffers from deep malaise. Students not being tested and just moved from one class to another is a common sickness of American education. The man whom liberals love to deride as least intellectual and practically a dumb guy was the one who put education on the table to reform. Bush worked with arch ideological nemesis Ted Kennedy to create 'No Child Left Behind' law. Suddenly all of America was abuzz with talk of 'standardised testing' and 'teacher performance'. Bush stood up to his own party's orthodoxy and crafted a bi-partisan legislation working with Ted Kennedy of all people. Sure, the bill has its flaws and it can be improved. That applies to all legislation. The credit should go to the fact that Bush took an important issue head on and shaped public opinion and in the process led his party against its deeply held beliefs.

Bush's faith based initiatives were widely criticized when he formulated them. Given my experience of seeing politicians use religion to get votes in India I was appalled. I've mellowed since then after realizing how religion has a central and enriching role in the American society. Bush was seeking to use religious institutions, not just churches, as vital organs of society. Mac Arthur genius awardee and Afro-American scientist John Dabiri's interview in NPR was a catalyst in making me understand how churches play an integral role in many blighted neighborhoods in America. To characterise Bush's faith based initiative as theocracy does gross injustice to the program and only betrays the leaden thinking of liberals who wield their atheism as a badge of honor. The answer about Christ as political philosopher is very credible and not laughable I'd concede now. Christ's teachings have influenced many world leaders and it is not an answer to ridicule if one understands the role of religious texts in influencing many a world leader across history. If MLK Jr and Gandhi can draw succor from religion so can George Bush.

Bush's handling of stem cell funding came in for lot of criticism from many, including Nobel Laureate and former member of President's Council on Science, under Clinton, Harold Varmus. Bush, in his first nationally televised address, said he would not allow federal funding to stem cell studies that used embryonic stem cell EXCEPT the then current 2 lines that were being researched. Academics and liberals were in an uproar that the President sacrificed scientific progress at the altar of religious belief and party orthodoxy. I too thought so until I read Bush's detailed analysis in his book 'Decision Points'.

Embryonic stem cells are a tricky issue in the frontier of science where very disturbing questions do get thrown up. To be succinct, those stem cells were harvested from embryos that are often discarded after fertility treatments as either surplus or as useless. Bush, as pro-life GOP President, saw that as disturbing. Some of those embryos did hold a promise of life, babies born from such embryos are called 'snow flakes'. Bush was surrounded by 'snow flake babies' when he signed that order banning 'further' federal funds to such stem cells. Note, he only banned federal funds not private funds. Bush had consulted widely with scientists, bio-ethicists and religious people. He arrived at a careful thought out decision. Many cried that this was the end of stem cell research. It was not. Today such embryonic stem cells have been deemed unnecessary. I'd identify this as a key intellectual moment for which the liberal academics have been loath to recognize the president for. Let us also bear in mind that scientists have often egged on Presidents to recklessly pursue courses, like the arms race, in the name of science.

The nuclear deal signed with India was another intellectual moment. Bush nurtured India as a strategic partner and with the weight of the US Presidency he brought India onto the exclusive nuclear club while snubbing Pakistan. Today that deal is in the doldrums thanks to lack of leadership in both countries.

The day after his re-election Bush declared "I've earned political capital and I intend to spend it". He wanted to reform Social Security and Health care. Both proposals had merit to at least be considered. But the downward spiral of Iraq war stopped that.

Iraq is where Bush deserves much scolding. To be brief, no nation at that time could say with certainty that Saddam had no WMD's. All agreed Saddam was gaming the UN inspectors. Where the rest of the world disagreed was on what to do about it. Bush saw Iraq as unfinished job. He squandered US taxpayer money and lives in both countries. It was not a war for oil as Iraq later showed by NOT giving US many oil contracts. Lost in this din is also the fact that Iraq remains the only Islamic middle eastern country where women voted in elections and free elections were held. Bush ignored the Iraq study group recommendation to cut and run. Instead he fashioned the surge that his predecessor later copied for Afghanistan albeit without the political will. Iraq is still far from a liberal democracy but the Iraq that is today is entirely due to Bush. It is up to Iraqis to live up to their historic opportunities.

Bush would ask invitees as to why he is hated overseas, 'is it me or is the US Presidency'. Bush haters reveled that it was Bush who gave US a bad name. Nay. Irrespective of who occupies the White House  they will be hated by a large swath of people simply because its America. This was amply borne out when Obama was no more loved than Bush in the middle east. Bush was very respected in Eastern European nations though for standing up to Russia. Interestingly a Pew global survey indicated Bush was popular in India. Hindu majority population disgusted with the squeamishness of their own leaders in standing up to radical Islamism saw a ray of hope in Bush.

Obama has pulled of a propaganda victory in tying the 2008 financial crises to the Bush era. Bush cried hoarse about the need to rein in the reckless lending by Fannie and Freddie. As I pointed out earlier it was during the Clinton years that Wall Street was deregulated and given a free ride. Bush sacrificed populism to do the unthinkable for a GOP President. He bailed out both Wall Street and Detroit.

The dot-com bust of 2001 started under the Clinton watch and was entirely due to the 'irrational exuberance' of Clinton era yet I did not hear, by hindsight, Bush blame his predecessor as much as Obama whines and groans about his predecessor's 'failed economic policies'. Clinton often brags about the surplus he left behind which supposedly Bush squandered. Clinton's surplus evaporated in the dot-com bust and was totally gone immediately after 9/11.

One of the inflection points in how I viewed Bush was his conduct during the 2008 election season. As the country rapidly slid into a financial morass Bush refused to play favorites. He instructed all departments to keep both Obama and McCain equally informed of what is being done. Aware of how unprepared his new administration was on national security, taking over from Clinton, Bush worked to avoid it. He instructed his homeland security team to work with Obama's transition team on dry runs. Obama team, allegedly, balked thinking "hey what if something happens in the early days of our administration we cannot blame Bush then".

I've never understood how Kennedy, Clinton, LBJ, FDR are all revered as 'intellectuals' but not Reagan or Bush. All those that the liberals love have committed serious acts of omission or racism or plain recklessness and yet we are told to look at them as intellectuals. LBJ would personally pick bombing areas in Vietnam. Kennedy administration dropped orange gas in Vietnam. FDR interned Japanese Americans and embarked on a failed New Deal. Clinton threw away his second term simply because his pants had no zipper.

Bush had his share of omissions. Most notably Iraq but he found his stride on that. Towards the last days of Bush administration many in his circle thought that history will be kinder to Bush as it is towards Harry Truman. I think history will be kinder to Bush and harsher on Obama.

Monday, October 8, 2012

Clinton's Economy: Myths and Realities.

During the 2000 Presidential campaign Al Gore, trying to define himself as his 'own man', distanced from Bill Clinton and rarely invited Clinton to the campaign trail. Time columnist Lance Morrow wrote, "while Salieri campaigns, the Mozart sits in the Oval office". Obama after sparring with both Clintons in 2008 vowing a new era and basking in his own new found rock star status had no need of the fabled campaigner. What a difference 4 years makes. 

In 2012 the Mozart was called out by this year's Salieri to campaign. Clinton, the party soldier, appeared on prime time at the Democratic National Convention and showed the world why he still is the only Mozart in town. A day after accepting the nomination Obama gushed, at a campaign stop, "I got an email suggesting that I appoint Bill Clinton as the Secretary of 'explaining stuff'". The crowd roared in approval seeing the supposedly silver tongued orator realize that giving a speech littered with pabulums and rhetoric is no match for the master-explainer.

Bill Clinton laid out the case for Obama often reminding America about the sunny years of the Clinton era. Like any politician Clinton took credit for the years that are still referred to as the longest economic expansion in US history. If somebody can make the word 'arithmetic' become a punch-line only Clinton could. Clinton detailed his years of balancing the budget, working across the aisle, delivering prosperity, surplus budgets and more. 

Amidst campaign rhetoric as always truth is the first casualty. Clinton roared into office on a landslide coasting on the mantra "its the economy, stupid". Unemployment was at 7.5% in 1992 (today it is 7.8% and Clinton wants a second term to the guy at the helm unlike what he said in 1992!!!). When Clinton left office unemployment was at 4.7%, up 0.7% during the same year, 2000, as the nation was sliding into recession. Clinton often boasts about the 20 million jobs created in his tenure and the budget surplus that he left. Both are true, but only on the surface.

Economist Raghuram Rajan taught me, in his book 'Fault Lines' on the 2008 financial crises, an important principle about any analysis of an event. He said it is important to look at not just the event but its associated events. He said look for 'in ceteris paribus", i.e. 'all things remaining same'. Clinton made it a virtue that he raised taxes on the so called wealthy that helped address deficit and the rest followed. Can Obama do the same 'in ceteris paribus'?

Clinton's 1992 budget deal, recounted in detail by Bob Woodward in 'Agenda', is remarkable for how much the debate remains the same. Clinton's address of Feb 17th 1992 is classic Obama. But the similarity is only on the rhetoric. By the time the address was turned into a bill and voted Clinton had moved to the center. Clinton abandoned the middle class tax cut he campaigned on. The price he extracted for that was taxing the rich. The movement to the center abandoned spending the revenue raised by that tax on pet liberal causes. This is where Obama fails. Obama can never be Bill Clinton. Woodward acknowledges that Clinton's tax helped address the deficit.

But is that all? No. Look at the world in 1992. USSR had imploded. Eastern Europe was redrawn. Germany, Europe's powerhouse of production, was spending billions of dollars in the unification and was also dealing with the political turmoil arising out of that. India and China were not yet BRIC. India, in 1991, had been compelled to reform its pathetic economy due to a balance of payment crises. It took Deng Xio Ping well into 90's to reform China's economy. Add to the above the 1997 Asian crises that America managed to dodge making Alan Greenspan, Robert Rubin, Lawrence Summers as 'Person's of the year" by Time. 

Into that picture try to fit in the internet revolution. Today there is a hue and cry over raising taxes on dividend income. Time, in it's cover story of 1982 titled 'America's risk takers' with Steve Jobs on the cover.
The TIME cover story is telling in details:

                 In 1969 Congress increased from 25% to 49% :he maximum tax on long-term capital gains—the profit made by an investor on the sale of stocks, real estate and other property.
The effect was devastating. The amount of money that Americans were willing to gamble on a long-shot business dropped sharply. In 1969, $171 million was amassed in venture capital. By 1975 the amount had fallen to just $10 million.
                In 1978, however, Congress rolled back the capital gains tax rate to 28%. With the potential payoff increased, investors were again willing to take a risk. Last year $1.3 billion in venture funds was accumulated, more than 100 times the amount of only six years earlier.
Add on the Y2K economy. America was importing talent by allowing H1B's by the thousands and unemployment was still going down. At its lowest, unemployment would be 4%. A full 1% below what is considered full employment. Talk about an over heated economy.

The Dow was soaring with everyone asking 'how high is high'. The one really great achievement by Clinton in this period was signing NAFTA. Much of the work for NAFTA was done by the previous Bush administration. Clinton enlisted Bush to campaign for NAFTA with Congress. Obama rattled Canada by vowing to re-negotiate NAFTA and scolded both Clintons on the campaign trail for NAFTA. Again, Obama is no Bill Clinton. Yes, Obama has signed a free trade pact with Mexico and South Korea but the work for that was done by George W Bush administration.

Into this heady cocktail lets add the surging housing market. Alan Greenspan battling unemployment early on kept interest rates too low for too long. The housing market just exploded beyond belief. Clinton and subsequently Bush campaigned for the 'American dream'. Clinton ignored calls to rein in Fannie and Freddie. Bush Jr's attempt to rein them in was rebuffed by a Democratic congress. Many economists later would point to the low interest regime during Greenspan era as sowing the seeds for a crises that brought American economy to its knees. 

Clinton took credit for an economy that was starting to get better even during the days of George H.W.Bush. Of course Clinton did make some hard choices like the tax bill he passed. However Clinton's signature achievement, 'ending welfare as we know it' was largely the result of a republican congress.

Bush Jr inherited a recession that was entirely due to Clinton era policies. The dot com bust was due to what Alan Greenspan memorably labeled 'irrational exuberance'. Bush, unlike Obama, did not blame his predecessor at every speech. 

Liberals love to talk about de-regulation as the sinister evil that created the 2008 financial crises. Most point to the repeal of Glass-Steagall act that separated investment banks from commercial banks. It was Bill Clinton who signed that repeal. (Never mind that Bear Sterns and Lehman bankruptcies had nothing to do with that repeal). It was Clinton's economic tag team of Larry Summers and Robert Rubin that warned off Brooksley Born who wanted to regulate the burgeoning derivatives market. The implosion of the derivatives market would be at the center of the financial crises a decade later. 

Oh, about that working across the aisle. Clinton's economic plan in 1992 recieved zero republican votes. The GOP's intransigence was only part of the story. Woodward recounts that Democratic legislators were warned 'not to work' with GOP to craft any compromise. And who would forget the infamous Newt Gingrich led government shutdown. Clinton made it habit to co-opt GOP ideas and do what came to be called 'Clinton's triangulation'. Obama derided that triangulation in 2008 proving that he can never be Bill Clinton. 

Clinton, to sum, takes too much credit for unique circumstances where US was the unassailed economic super power by a mile. At the same time Clinton and his admirers turn a complete blind eye to the fact that it was Clinton's administration that has much to answer for the financial crises. 

America and the world in 2012 are only faintly similar to 1992. The Euro area is collapsing, China and India are having challenges. It may not be 1992, but if only Obama was Clinton, at least the good sides, America would roar ahead, again. Alas, that will not be the case.