Dana Blankenhorn

Old Hippies of the GOP

2012-05-25T02:33:00-04:00

Think of this as Volume 16, Number 21 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

The hippies of the early 1970s were, by and large, good people. Good-hearted and idealistic.

But they were completely out of touch with the political zeitgeist of their time, as we now know. Anyone even remotely associated with their idealism was pushed out of the political mainstream starting with Nixon. Watergate and the Carter election fooled some into thinking this wasn't the case, but normal service was resumed by 1980. After that, the ideological knees jerked whenever the strings were pulled for a generation.

This is the main result of a crisis election, a change in the political zeitgeist, so that the rising generation's assumptions about life and politics become dominant. Opposition to them must then be couched as “yes, but,” accepting the premises but leaning into them. That's what Bill Clinton did, and what Dwight Eisenhower, Woodrow Wilson, and Grover Cleveland did before him.

Before “yeah but” can be a viable strategy, of course, the old playbook must be re-run one more time. The McClellan Democrats, the Bryan Democrats, the Landon Republicans, the McGovern Democrats. They need to be led by avatars of the old order, but what the rising tide will focus on will be its bleeding edge, those “hippies” whom no one should listen to, now or ever again.

Who are the “hippies” of 2012?

Foster Friess. Sheldon Adelson (below). Joe Ricketts. Frank VanderSloot (right). The billionaires brigade that is using its own money to try and hijack this election are the hippies of 2012.

There is enormous fear of these men, and their fellow hippies, in Washington right now. Just as Nixon feared the McGovern Democrats. But there is precedent for not fearing them, for seeing them as a positive indicator.

The American Liberty League . They sued to stop the National Labor Relations Act. They called Social Security “the end of democracy.” Big business, needless to say, hated the New Deal. FDR “welcomed their hatred” and thereby assured his political legacy.

In the billionaire hippies we have the same ingredients we had then. We have great wealth opposing reform. We have domination of the media through the money of these people. We have bogus claims of non-partisanship that are easy to refute.

And it's a gift that the President has yet to fully embrace. The President's base has yet to be energized by this election, which is why it now seems closer than in fact it is. Republicans are unified, mainly in opposition to the Administration but unified. Democrats are also unified, but not as enthusiastically as they need to be.

But the President has this political gift, his ace in the hole. The real contempt most people have, even many rich people have, for people like Friess and Adelson and VanderSloot, who lack even the media infrastructure “Citizen Rupert” Murdoch has to make black appear white and white, black. They are a huge target, they are low-hanging fruit, they're the Republicans' soft underbelly.

And when push comes to shove, as it always does in political campaigns, this President will use them to obliterate his opposition, and solidify his governing coalition. As Lincoln did after the Battle of Atlanta, as McKinley did after the Spanish-American War, as FDR did with his speech welcoming their hatred, even as Nixon did with Agnew.

Fact is, every crisis in America's political history has carried echoes of those crises that went before. The partisan divide of our time is much like that of the Nixon era, which is why so many “analysts” think the President is in trouble – they can't conceive of history before 1972.

The economic crisis of our time was echoed by the New Deal, when demand needed to be ginned up in order to get people to work. The underlying issues – the rights of workers – are reminders of the Progressive era. And the blind hatred of the opposition, its utter resistance to facts, is very much like the Civil War era.

When the wheel of history turns, it turns completely. The wheel of our history turned decisively in 2008, after New Orleans, after Iraq, after Terry Schiavo, after the Big Shitpile and the Great Meltdown of that year. We're not going back there. Not now, not ever. Republicans may think it unfair, but we're going to wave the bloody shirt of that time from now until I'm in my grave.

That's what history will say of our time. And it starts with destroying the billionaire hippies, in welcoming their hatred, in defying their will, and in handing them a nice big cup of STFU.

The Eternal Struggle of Creditor and Debtor

2012-05-18T05:26:00-04:00

Think of this as Volume 16, Number 20 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

The eternal struggle in any capitalist system is between creditors and debtors.

For creditors it seems sisyphean. You make loans, you make money, but then debtors can take you out for a pittance through bankruptcy. That's the risk. You loan too aggressively and, just when you think you're about to take the pot, it's snatched away from you. Game over, start again.

What we need to understand is that countries and, in fact, the whole world, plays this game, and that not only does it not end but that it never should. Which means there has to be a way to re-start the game when the debtor cries uncle.

There has to be a method for national bankruptcy that re-starts growth.

Two crises ago, all this got tested by what Americans call the Great Depression. The stock market crash caused massive bankruptcy and Republicans like Andrew Mellon said take it all down. Liquidate. Sell everyone out, give the banks the proceeds, and they will re-start the game when it's in their interest to do so.

Doesn't work. Didn't then, doesn't now. That's because bankers are rightly, rightfully timid. When they get burned by bankruptcy – and bankers are always burned by bankruptcy – the last thing they want to do is head down the road again. They don't want the country playing the debtors' game, either, and resist it with every fiber of their political being.

But it's the only way things can work. When there's no one buying someone has to step up. That's government's role. FDR did it, even Hitler did it, and while guns have a natural attraction over butter it worked in both cases. The U.S. achieved double-digit growth rates in FDR's first term, by creating new money, by loaning it out, by tolerating inflation.

Fast forward two generations and we had the same thing. The essential crisis of 2008 was bankruptcy. The solution of the Federal Reserve and the Treasury Secretary was to create trillions of dollars in new money and give it out to banks, expecting they would use it to make new loans. But the banks didn't use it to make new loans. They used it to cover their own balance sheets, and then to engage in trading, which they found far more interesting (and which had caused the crisis to spiral out of control in the first place).

What was wrong with the Fed's strategy was that it gave the money to the wrong people. By giving the money to the bankers it encouraged them to keep bad loans on the books and continue to squeeze the debtors. But the whole idea of bankruptcy is debtor relief. It's designed to create a new deal, if not a New Deal, a new hand to play.

What was true for America a few years ago is true for Europe now. The problem there is that, since we're talking about countries rather than companies, we have creditor countries and debtor countries. Creditor countries like Germany want to be paid. Debtor countries like Greece can't pay. It's a standstill, unless a bankruptcy process can be worked out the debtor can live with, and until bad loans are written off, the lenders recapitalized.

The “growth crisis” of our time has happened because business has become political. Creditors control governments on both sides of the Atlantic, and they want their money. But debtors – the people of the United States and the states of Europe – don't have the money. Bad loans have to be written off, bad banks have to be taken out, and the whole system needs to be recapitalized.

There are a lot of young fools in this country following a man named Ron Paul, who bases his economics on the Austrian theories of Ludwig Von Mises, which are frankly bullshit.

They're bullshit because they don't account for change. They don't account for the natural deflation of mass production (let alone Moore's Law), and they don't account for this essential, eternal struggle, a game where both sides must be made safe to play again before growth can happen. After his theories were shown to be false in the 1930s Von Mises moved to the U.S., where under the claimed banner of “liberty” they metastasized into the intellectual heart of the modern conservative movement.

That heart is faulty. That heart is broken. That heart is heartless. Any heart that makes Sheldon Adelson a hero is worthless.

At the heart of the present crisis is saying adieu to this false heart, and acknowledging the reality of the modern world. Their side has the money, and they want the rest of it. But if they get the rest of it, what then? They're eating their own seed corn, destroying the markets they depend on, and despite their ownership of the media, despite their uncontrolled political spending, they have to be stopped.

That's the struggle of the current election year. That's the crisis. Using the tools of democracy to save capitalism from itself and allowing the game to be restarted, freeing the debtors of their debts, and growing once again.