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Frameworks, Process, Politics, Mechanism and Implementation Introduction
We have an idealized and naïve view of how public policy is made which is ignorant of what goes on “inside the sausage factory” where intended policy is turned into actual legislation and then translated into implementation. Influenced, if not entirely controlled, by interest groups, partisan politics, political maneuvers and other backoffice activities. Yet these things are inherent, endemic and historical. In fact the “if you can’t stand to watch the sausage being made” aphorism was originally coined by Otto von Bismarck, well over a 100 years ago. To understand how good intentions go thru the slaughtering, processing and packaging we start with the commonest failure – the thought that good intentions without thinking thru the consequences count. That failure to ask the next question (preferably at least five layers deep) often results in bad, or worse, unintended consequences because we fail to account for the incentives created. If we’d like to live in a better world we need a better approach. One key to that better approach is understanding that politics is not just about the typical left and right discussion but, in the process of dealing with real world consequences is also about mechanism. That is, how are you going to implement policy. Which then leads us to framing a strawman policy agenda designed to address the key issues we’ve been ignoring for three decades and suggest the things we should do that are pragmatic, workable and centrist. But no discussion of policy is complete without understanding how policy is influenced by private concerns, the maneuverings of the special interests groups whose Positions, Power and Politics have more to do with the final outcome and the resulting implementation than civics textbooks will tell you. The other governing factors are the interests and concerns of the voters and their choice-making – in particular why the idea of a rational voter is a myth in the textbook sense as well as the psychology of how they actually make their decisions. Consider this a post-graduate introduction to the real world of policy making. Even if you’re not interested in it for its own sake the results govern your life. And if you’re at all interested in what can reasonably be expected from the sausage factory we hope this is a start on the operating manual.
Table of Contents
1. Politics & Policy: Take the Next Step 2. What World Do You Want to Live In? 3. The Sage of Omaha: Values, Integrity and the World We Want 4. Unintended Consequences: Blowing Off Our Own Feet 5. Putting the Pieces Together: Framing, Crisis & Linkages 6. Finding the RadCenter: Making Politics Work? 7. Framing the Radical Center: a Policy Agenda for the 4th Republic 8. Hidden Issues and Government Reform: the Politics of Special Interests 9. Party on Grasshopper: Digging Deeper....into the Policy Agendi 10. Inside the Sausage Factory: the 4P's of Political Reality 11. Rational Voters, Public Choice, Economics and Futures 12. Voice, Leadership, Messages, Realities: Living in a Tough World 13. Peace in the Public Square: the 100 Days and Re-emergence of Civitas 2 2 3 5 9 11 12 14 15 18 20 25 27
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Politics & Policy: Take the Next Step
http://llinlithgow.com/PtW/2008/01/wrfest_20jan08politics_policy.html January 25, 2008 Well here's the final post for last week's readings. The prior two covered enough ground we decided to delay these. Below you'll find interesting readings on the current US election, including an interesting piece on "How Voters Think" that tries, somewhat successfully, to address the surprises so far in this campaign. There are also two pieces analyzing the underlying economics of racial behavior and the costs/benefits of the Iraq War. Both of which we highly recommend. Another piece on the "Durably Democratic" nature of American society and another on a recent discovery by Chinese scientists on the main biological pathways of drug addiction. You may be wondering what they all have in common. Well, to some extent they are indeed our usual potpourri of interesting readings across a spectrum of interests. But one thing they do have in common, particularly the readings on racial spending patterns and the costs of Iraq, is taking a look using a disciplined approach to understanding the deeper structures and casual patterns of things. Tom Sowell makes an interesting point when he calls for taking the next step. (Basic Economics: A Common Sense Guide to the Economy, Applied Economics: Thinking Beyond Stage One) As he point out all too often you hear people and policy makers complaining about the unintended consequences of things. The so-called "Black Swan" effect. But what actually happens is that the unfortunate outcome is usually perfectly natural and likely, and not as afterwards thinking but beforehand. But almost always policy is made focused on intent without asking what are the changes in incentives created. In other words what is the likely behavior going to be as a result of the policy. And furthermore have you asked and "then what happens ?". It's this taking the next step based on basic investigations of the deep structure that all too often result in unfortunate outcomes. In other words on a willful denial of the nature of things combined with a deliberate blindness. Bluntly, people and policy is made by deliberately and determinedly screwing up. So instead of relying on hope we prefer to actually examine things in a systematic AND systemic way to try and understand what's going on. Of course a major part of such an approach is the understanding that most decisions will be, as the Buddhists put it, "UNSKILLFULL" :). The readings on spending patterns and Iraq are perfect exemplars of digging in and understanding things as they are. BtW - the prior post on the problems in the economy and the policy moves are a good example in two ways. First, the consequences of such blindness that creates a mess. And second, what happens when you've got to clean it up.(Pump Priming, Rates Cuts and Crameritis: More on Economic Outlook). Finally there are more posts in the Science & Culture section - one on the searches for new forms of artificial life that could be as big a breakthru as Pharmaceuticals, Plastics and Electronics were post-WW2. Another on Europe's strangely peaceful interlude since then, which is fascinating inasmuch as it talks about the Continent that brought us all our World Wars and now is the most peaceful (albeit artificially). And the final two excerpts - one on leaning to appreciate wine based on your own preferences instead of the common shibboleths. Point made ? :) And another about a Man who became a deserved Icon - Beethoven's last symphony and his life.
What World Do You Want to Live In?
http://llinlithgow.com/PtW/2008/01/wrfest_27jan08_what_world_do_y.html January 28, 2008 An interesting question, is it not ? At the end of the day a lot of the sturm und drang in the elections, or elsewhere, are really disputes about just that question. If it wasn't clear then let me admit our attempt at sketching such a world was captured in a series of holiday posts, capstoned by Welcome to Ganesha's World: Obstacles, Foresight and Action, which also lists the prior links and has some interesting readings in its' own right. Several times this last week we've seen some other posts and stories that ask this essential question. But to put it more directly our ideal world is one in which everyone has a reasonable opportunity to live a decent life, develop their own attributes to their best potential and strife is reduced to the workable minimum. We've argued, perhaps a little too
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implicitly, that such a world is possible and achievable but requires a stable order, a system of justice that people believe is fair, defense against both external and internal enemies and a sound, progressive economic system. There's lots more to say and explore but let's at least take that as a strawman to work with. In this week's readings you'll find several that point at the topic and, in fact, point at the results. Below you'll find a nice little summary from the Economist that illustrates how more people have made more progress in the last 2+ decades at better lives than at any time in human history. Progress that is in fact the result of the gradual emergence of the key characteristics we listed above across wider and wider stretches of the world. This contrast to another article that finds US "Hegemony" is fading. Well Bravo - not because I'm anti-US. Far from it. In fact I'd argue that the US had made larger efforts in its' history to help the world move in the right directions than any other power in history (THE case in point being made by the Marshall Plan as related in the "Most Noble Adventure"). Rather it's time for the rest of the world to move to "that natural state of opulence" that they can achieve thru justice, good government, fair taxes and a strong defense (paraphrasing Adam Smith of all people). Let me put it another way - even if the US slice of the pie gets relatively smaller it's possible to make the whole pie so much bigger that we're all better off. Oddly enough for the Dismal Science this is a fundamental proposition to which 99% of all mainstream economists would agree. •
UPDATE: in browsing the online archives of the Charlie Rose program ran across an interesting program that, by-n-large, captures the points about the US role in being the primary supporter of the current international system. While I don'necessarily agree t with all points they largely are on target. BtW on these lines have you ever consider that it' the US Navy s which defends the sea-lanes for free access for oil for all countries of the world? Despite all the rhetoric and arm-waving China, India and Japan count on the USN to protect this vital underpinning of their economies and societies :)!
Some of the other readings below talk about the US elections in which this is becoming, as it really always was, the central question. Combined with the other of character and leadership. At the heart of all these issues, in many ways, lies the question of values and choices. By both citizens and leaders. I found it extraordinarily refreshing and encouraging that most of my fellow citizens don't view questions of "Values" as code-words for social policies, unlike the punditocracies. They view them as critical attributes like honesty, integrity, courage and a willingness to do what's right. Another complement can be found in what occupations we admire the most - if you skim those two excerpts or read the backup articles hopefully you'll find it as encouraging as I do. One of the most interesting explorations of values, believes and religion is one by ExperimentalTheology who is currently, as both a devote Christian and a professor of evolutionary psychology (think about that for a minute :) !), exploring the meaning of Peanuts as a source of theological insight on values, life and living. Highly recommended. At the end of the day the "What World" game is one we can all play. In fact we play it whether we want to or not. So, whether you feel like chiming in in the comments, riffing over somewhere else or just kicking it around, ask yourself the question. Then do yourself and all of us a favor and add two more. 1) How do we get there and 2) what are the mechanisms and institutions for making it work ? Hint take the next step (WRFest 20Jan08(Politics & Policy): Take the Next Step)
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January 30, 2008
The Sage of Omaha: Values, Integrity and the World We Want
http://llinlithgow.com/PtW/2008/01/the_sage_of_omaha_values_integ.html The prior post, while our regular weekly collection of interesting stories and links, had a couple of central themes. One of which is what kind of world do you want to live in ? A question that's with us every day in how we live our lives but is also central to this year's elections. On both a personal, micro level and on a community, national and macro level. In fact it is, at least subliminally, THE central question of the election though not yet at center stage among the punditry. It IS however center stage with voters, especially for the younger folks. I recently ran across an interesting set of comments on these topics by, of all people, Warren Buffett. The Investment guru of the century and the folksy sage of Omaha. Now as it happens he was supposed to be speaking about security analysis and investments. But he began his time with a focus on the values that make for a happy life. And ended it with comments on the nature of the world and what kind of world we'd like it to be. Now I'd recommend watching all ten parts of this vidclip series but the picture at right will take you to Part 1 on individual values, which is as good an argument for living a life of integrity, finding good work that you love and being satisfied with a reasonable lifestyle as any I've ever heard. And a pragmatic and workable one as well. Zenlike in fact when you parse it out. Part 10 which talks about the nature of the world is, in my view even more interesting. It riffs on Warren's idea of the Ovarian Lottery. That if you're in his audience you've already WON because you're an American, a college student and have the drive, ambition and intelligence to leverage your opportunities. He's not, emphatically NOT, picking on anybody in particular but putting some real ground truths out there (and bear in mind this speech was circa 1998). Here's a paraphrase on his model Supposed God dropped by and asked your help in re-designing the world? Here's the catch - once you put your specifications out there then your name goes back in the lottery bowl and gets re-drawn. Suppose God reaches in and pulls out 100 marbles and your name is on one. In '98 the chances were about 1 in 20 at best that you'd even be an American. Of that one maybe 1 in 3 or 1 in 4 would be a college student. Which is no guarantee of anything. Nonetheless with a reasonable level of effort such a person is going to live a life that's healthy, fairly well rewarded, eat good food, drink good wine, see interesting places and have a fair shot at doing rewarding work to make their way. What about the other 19? Their chances ain't so good. Well that makes things pretty darn clear to me - I'd like a world where a larger portion had a better chance. Where that portion grew fairly rapidly and their share of things got better and better. The thing is that's not just me or idiosyncratic - it's been the goal of most people now and throughout history. But now, more than at any other time in history more people have a shot. And more and more will have a shot if we can keep the wheels on the wagon as it roars down the hill. Let me put it another way.
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In fact try these three:
1. Would you rather have a larger slice of a smaller pie or a smaller slice of a much bigger pie ? 2. Odd paradox - I'm better off when we're all better off. And y'all are better off, all things being equal, when I'm better off. Making it really intellectually painful btw that's a fundamental tenet of economics. And the basis for the socio-biology of our evolutionary history as a social species. 3. If we don't build a world where everybody has a better shot at a bigger slice there's always a pretty chance we can end up spending all our time squabbling over who gets which slice of a smaller pie. And in the process dropping the whole thing on the floor and making a mess. So, back to the beginning: what kind of world would you like to live in? Warren' or Attila' s s?
Unintended Consequences: Blowing Off Our Own Feet
March 31, 2008 http://llinlithgow.com/PtW/2008/03/unintended_consequences_blowin.html Take a look at the cartoon (click to enlarge) on the Bear-Sterns rescue and tell me/us/yourself how you react to. Right on brother? Yeah, yeah, sure, sure ? Well there are some elements of truth in the argument but more that are missed, wrong-headed and fundamentally dangerous. And by dangerous we're talking about the collapse of civilization dangerous - with not too much hyperbole. First off the bank's not getting bailed out the Fed is guaranteeing debts that suddenly turned into nearly worthless to keep BSC from declaring bankruptcy. And the real central truth is that Bear was involved in so many other links to other banks and financial institutions that if they had much of their paper would have followed, we'd have had a cascading run on the financial system and we'd have re-created the factors that led to the Great Depression. We'll diagnose that and related economic problems some other time. Though if you want some wonky discussions you can try these (Five "Funny" Things on the Way to the Market, Continuing the Dialog: Facing Realities in the Credit Market). What we'd like to focus on is the unintended consequences of well-meaning policy choices that turn out to cause longer-term and deeper problems than they purported to solve and didn't solve the problems they were targeted at. Instead they created new ones. In fact much of the last forty years of domestic policy has turned out to be social engineering on a grand scale and almost all of the consequences have turned out badly. We're going to explore that some more here with some examples and start with an illustration from wildlife management in Yellowstone Park where the restoration of the wolf population has re-created a natural and healthy balance. Over the weekend we got involved in three major threads of exchanges about the economy, credit collapse, the dangers of inner city collapse, social policy and on and on. There were three constant struggles common to all: 1) figuring out what the facts were, 2) figuring out how to analyze the problems and 3) figuring out why most people seem to willfully ignore those in favor of simple, ideological choices. The latter is the most important because the policy failures that are causing us so much trouble are largely of our own choosing - that is politicians gave us simple solutions to complex problems because that's what we wanted. Interestingly many of my discussants weren't entirely immune from the problem when it gored their own ox. So one of our key challenges is to find a way to explain these things simply enough to be grasped without damaging the accuracy. And the bigger challenge is to do so in a compelling and convincing fashion that causes folks to step back. We're still looking for the magic beans that make that possible, let alone
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easy, but in the meantime let's start with at least explaining some of the cases. Just to set the stage though you might find this essay by Paul Graham a worthy introduction to the art of reasoned discourse (How to Disagree)
We're going to start by introducing a series of "small-scale", that is mostly local, policy choices that are good examples of Unintended Consequences (UiC) and some key ways to think about them, which you can see at right. When people and politicians complain about UiC sometimes it's reasonable because of the complexity. More often, in fact almost all of the time, it's because a simple solution that sounded "right" was adopted but not thought thru. Not because it couldn't have been. And there's actually a simple way to think about it. Ask the question - "what happens next?". In other words what are the rippling results from these choices. And usually the way to start answering the question is by asking how do the incentives for the players change - who benefits, who gets hurt and what are the costs and benefits. All driven by the oldest of economic physics - when the price goes up people want less and conversely. For example during the 80 years war with Spain during the Dutch Revolt the City of Antwerp, the commercial capital of northern Europe, was under siege by the Spanish Army but because so much food was being smuggled in they survived very well thank you. Then the city fathers passed a series of price controls that capped what could be charged, the smugglers were no longer compensated for their risks, the city began starving, the Army conquered and sacked the city and it was replaced ever since by Amsterdam. After years of holding out things were completely reversed in months. Can't happen here you say? Think again. They failed to work their way across the columns of the table.
Wolves in Yellowstone
Here's one example of of a fairly complex problem where suppression of the wolf population led to a rise in the elk population in Yellowstone. When wolves were re-introduced a more natural ecological balance was re-created that led to the restoration of the original ecology. An ecology which was and is much healthier, more stable and robust and more appealing. Lessons from the Wolf Bringing the top predator back to Yellowstone has triggered a cascade of unanticipated changes in the park's ecosystem. In the dead of winter in 1995 the National Park Service and the U.S. Fish and Wildlife Service brought 14 wolves into Yellowstone by truck and sleigh. Gray wolves (Canis lupus) from Canada, these were the first to call Yellowstone home since the creatures were hunted out of existence there early in the 20th century. A year later 17 more Canadian wolves were added. Biologists hoped that the reintroduction would return the mix of animals to its more natural state. They expected, for instance, that the wolves would cull many of the elk that lived in the park. The wolf introduction has had numerous unexpected effects as well. The animals' impact on the flora and fauna in the park has been profound. Indeed, the breadth of change has been so far-reaching that researchers from around the country have come to study the alterations. The wolf-effect theory holds that wolves kept elk numbers at a level that
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prevented them from gobbling up every tree or willow that poked its head aboveground. When the wolves were extirpated in the park as a menace, elk numbers soared, and the hordes consumed the vegetation, denuding the Lamar Valley and driving out many other species. Without young trees on the range, beavers, for example, had little or no food, and indeed they had been absent since at least the 1950s. Without beaver dams and the ponds they create, fewer succulents could survive, and these plants are a critical food for grizzly bears when they emerge from hibernation. Although the jury is still deliberating the effects of wolves, early evidence strongly suggests that the canids are unwitting restoration biologists. By simply doing what they do--mainly preying on elk--they are visiting great changes on the Yellowstone ecosystem. Many of the changes are positive for those things humans value, and for experts to accomplish some of these same goals would be hugely expensive. Wolves have brought other lessons with them. They dramatically illustrate the balance that top-of-the-food-chain predators maintain, underscoring what is missing in much of the country where predators have been eliminated. They are a parable for the unintended and unknown effects of how one action surges through an ecosystem.
Misguided Social Policies
Now let's consider several representative social policies that have badly damaged the economies of many major cities in this country and around the world, always and without fail. The chart considers Rent Control, Corporate Taxes, Minimum Wages, Land Use Controls and Drug Laws. And for each we trace thru several stages of the what next question by examining how the incentives worked themselves out. If you'll look at each you can see, we believe, how none is a surprise. For example imposing rent controls increases demand but decreases upkeep because renters get below market prices while landlords can't get a return. As that keeps working less housing is built and the situation worsens and worsens until the inner city often looses affordable housing all together. Yet where luxury housing is often exempted the market leads to new construction. If you wondered why housing in NYC is expensive, scarce and limited to the high-end there you go. For some of the data and analysis behind this see either/both Basic Economics: A Common Sense Guide to the Economy and/or Applied Economics: Thinking Beyond Stage One by Thomas Sowell.
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All Together Now
Worse yet these things work together synergistically. Rent control to create affordable housing does the opposite, corporate taxes lead companies to quit investing and them move thereby eliminating many middle class jobs, minimum wages increase the demand for higher-skilled labor, make capital using technology more profitable and make it more difficult for under-educated minorities to get on the job ladder and develop skills and experience. And so and so on. When you put them all together you have the working folks driving hundreds of miles for minimum wage jobs as energy and food prices increase and those left in the city become an underclass prone to violence, gang warfare and never-existing opportunities. All because wellintentioned folks tried to do the "right" thing that really suited their own prejudices without examining the consequences. Take a look at the "synergies" summary and see if our take on how all the pieces work together to get a vicious downspiral of socio-economic decay. All because of good intentions, bad judgment and intellectual laziness.
The Parable of the Homeless Dog
A story that illustrates that attitude in part for me is a common experience we all have. Meeting a stray dog who wags his tail and after we pat him to make ourselves feel good starts to follow us home. Well we aren't prepared to acquire another responsibility so we chase him away. The morally correct choice in my book would be to walk on by in the first place rather than raise the dog's hopes and then dash them. Now don't take this as condescending or patronizing - it's not. Or not intended that way in any case (hmm...more UiC?). What it does is illustrate how doing the emotionally satisfying thing in the moment and walking away is irresponsible and immoral. If you really want to fix the dog's problems you need to find him a way to get fed and housed, preferably on a more permanent basis. For some good examples that use real world problems to depict consequences you might see some of the more interesting episodes of NUMB3RS. Gang war in LA was and is a recurrent theme and we all "know" it and the associated crime levels are endemic. But it wasn't until hearing some of the stats that the extent of the problem came clear(er) to us. • •
"The OG": When Don and his team are called to the murder scene of a Los Angeles gang member, they learn the victim is a fellow agent who had been working undercover. "Sacrifice": A researcher is murdered in his home, and Charlie must reconstruct data erased from his computer while Don investigates possible suspects.
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The last one is a head fake, as Randy Pausch calls it, because it's based around the ability (hypothesized of course) to develop Sabermetrics for socio-economic analysis. We'd change the direction of the story to decide how and where to invest in bad areas not disinvest. And speaking of Pausch - a final note. Have you considered that besides all the other things we said in the prior post (Sunday Morning Reflections: Ramblin Randy's Rules of Life, Living and Love) that over and above everything else he was facing reality as it is. Not as he wants it to be.
Putting the Pieces Together: Framing, Crisis & Linkages
April 19, 2008 http://llinlithgow.com/PtW/2008/04/putting_the_pieces_together_fr.html A friend suggested that this blog had so much loaded up that he couldn't see how the pieces all tied together so it seems like a good idea to show the framework that underlies all the postings. But just showing the framework leaves us with an abstraction - a powerful, useful tool for understanding how all the myriad bits and pieces fit together into a more comprehensive whole. That's nice but so what? Well we're facing an accelerating series of crisis, e.g. the Black Swan of the exponentiating world food crisis, which we need to address both nationally and internationally. What each of these problems have in common is this: they all inter-relate and are themselves built of component parts. If we want to address them we need, as my intellectual hero Robert Heinlein puts it, "know how the buzz saw works". Good intentions are no substitute for being able to run the sawmill if you need lumber to build houses, provide jobs and all the other things that are bedeviling us. And TANSTAFFL - there ain't no such thing as a free lunch. Telling people what they want to hear instead of telling them how things work and pretending the easy answers are feasible is disingenuous at best and dangerous. But not at worst. Worst is when all these problems metastasize into crisis and catastrophes. Fortunately we can solve most of them with a combination of realism, hard-work, skills & knowledge and discipline. In fact there's no crisis I'm aware of that's not capable of being addressed, if not readily solved. But let me appeal to Hans Rosling in the 2nd (http://www.ted.com/talks/view/id/140 ) of two great TED talks he gave on how things all work together. In the accompanying video he uses his great toolkit to show us where we've been and are going, introduces some realism on how things really work and points the way to the critical factors we need to address. It'll take you 19 min. but it's such a well-spent 19min that you may want to watch it more than once. The table summarizes Han's final points about which are the critical factors and how they serve as either means or ends - as you'll see an
The Dimensions of Development: Rankings of Importance & Criticality
Human Rights Environment Governance Economic Growth Education Health Culture
+ Important but not Critical ++ Important and Critical +++ Very Important and Very Critical
+ + ++ +++ ++ + +
+++ ++ + 0 + ++ +++
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important and vital distinction. After the break we lay out some more of our framework - one we hope you find answers the challenge. Now we'd like to do a couple of things. First, briefly illustrate how supposed Unintended Consequences (UiC) arise from a failure to understand and deal with the complexities of major policy issues and then introduce a simple version of a general framework for looking at these sorts of things. It's quite a bit more abstract than Hans' talk but lays out a way of thinking that can be applied to each.
Unintended Consequences: Major Policy Problems
Here we look at several major policy challenges including Energy, Environment, Education, Healthcare, Welfare and Retirement. Each of them are their own complexities of course and they all have inter-relationships. What we've briefly done is sketch out how we arrived at our current situation though in each case by failing to ask the most fundamental policy question what happens next? That is if we adopt your goal and pass the "right" legislation how's it going to work? What's the buzz saw? In each case what we find is that wellintentioned, badly thought-thru and terribly executed policies have resulted in perverse outcomes that nobody should really want.
Generalists and Specialists
The same friend pointed me at an interesting chart that illustrates how we need to think about these things generally. Each of these topics requires experts but in fact those experts need to be a team. And as, or perhaps more, importantly we need to have generalists who can link the pieces of a problem area together into a cohesive whole. And link these areas in turn to others. It's a conceptual chart but it pretty well captures the notion of combining depth with breadth with linkages. Take a look at the chart for a minute and see if it works for you. Every problem we'd like to address needs to have a specific chart/analysis/model built for it whether it's Energy, Education, reducing inner-city poverty or whatever. This is the kind of thing that Hans is talking about. For example in our assessments of why a reasonable outcome in Iraq is important we built a specific chart that looks at the linkages within Iraq to Iran, the
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broader ME situation and the worldwide geo-political situation. And then re-used it to frame a discussion of the strategic situation in the ME.(WRFest 16Mar08(Middle East):Diversity, Complexity & Confusions).
Socionomic Dynamics: a Strawman Framework
In this particular "simplified" framework you see what we think are the key factors in any socio-political situation, and the linkages between them. Rather like Hans we think that the state of the Economy is the most important and critical factor to start with. It is the sine qua non - that without which there is no other. According to Hans economic growth explains 80% of the well-being of a country for example. At the same time marketbased economies don't function without a proper institutional framework which includes the rule of law, safety and security of property and a stable government able to protect its' citizens. But both the political and economic systems function in the context of a society - in other words who gets what by right of social position. It's literally taken us millennia to learn that a static, rigid and hierarchical society which prevents people from achieving their dreams provides mediocre economic progress. At the same time it takes a certain amount of wealth to support a more inclusive and open-ended society. Hence the dynamic linkages - the more an economy grows the more it depends on good government. The difference between Africa and Western Europe, because both have the "propensity to truck, barter and trade" lies in the ability of sound governments to provide the long-term stability and security necessary for major investments. And at the end of the day the other major governing factor are Values, in addition to Institutions. People have to see that they have a chance and believe in the justice and legitimacy of the system as whole or they not only don't support, they can't afford to. People have to work with each other in a system they trust and in turn the system has to support the people, not subsets of special interests, as a whole. That's a key trick in growing the pie for us all instead of letting some get bigger slices of an ever-decreasing pie. If not then they fall back to reliance on more primitive social structures. This turns out to be exactly the problem with tribes that we face in Iraq and throughout the ME. Finally of course just working hard just gets you in the game - it is the progress of Technology, broadly defined to include not just science and engineering but organization and general knowledge, that makes us more efficient and effective. There you have it in brief - this is our framework and why we think it's important. You won't find a post on here that doesn't slot into one or another of these categories and usually slots into several along with the linkages that tie them into a larger whole. More importantly we don't think you'll find a serious issue that you can about or that impacts you that doesn't need to be thought of in this sort of systematic and systemic way.
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Finding the RadCenter: Making Politics Work?
April 22, 2008 http://llinlithgow.com/PtW/2008/04/finding_the_radcenter_making_p.html We're going to start with a confession of being tremendously jealous of the Brits and what their political system has managed for them. If you've ever seen The Hitchhiker's Guide to the Galaxy you've got a perfect picture in the Borgons of what their system was like after decades of socialism and wrong-headed policies - a level of dysfunction we thankfully never reached. So when Thatcher came on board and proceeded to Roto-rooter the arteries and blow out the accumulated sclerosis we applauded. And hoped that Reagan would do the same for us. Which he did, but not to the same radical extent. The question then was what was the next step? Once you got the blood flowing again it was time to pendulum back off the extremes, which Major proceeded to do. And when Bill Clinton came in '92 he and the DLC proceeded to promise to maintain a healthy, growing adaptive economy, continue to free us up from regulation and find new, innovative ways to achieve major social policy reform. After being in power too long the Tories lost to Labor in Britain and Blair started his reign as the longest serving Prime Minister since Pitt. Yet, oddly, he continued Major's major policy thrusts at the expense of alienating the diehard ideologues in his own party. Clinton turned Healthcare over to Hillary who proceeded back to 1963 with a huge, unwieldy, unworkable, high-tax and politically un-saleable proposal for a giant "moonshot" of a program. At which point we got the "Contract with America" which turned out to be as ideological and unworkable in the other direction. So the Brits got 25+ years of continuous, thoughtful and workable adaptation and we got increasingly partisan, bitter and special interest based politics. Which we apparently wanted because we kept voting for these idiots. Before you start thinking we're entirely nuts about all this we've got a few things for you to check out. First off the graphic at right will take you to a worldwide survey and you can find out where you stand. Now it's a European survey and while you're there take the time to look at the examination of European politics if you don't think the US is both different and more conservative on the whole. Since '95 as the partisanship has grown Americans have gotten increasingly dissatisfied with Washington, the infighting and the breakdown. Which, IOHO, is central to this election. Before we go on though we think you ought to know there's a 3rd Way forward, it works and it's got some darn good leadership with names like Bloomberg, Schwarzeneggar, et.al. Take a pause (it's a full hour but it's chock full of really good insights) take a look at this: A conversation with Mayor Michael Bloomberg, Mayor of New York City and Governor Arnold Schwarzenegger, Governor of California. [PAUSE] Now we've been here before and with worse challenges. When Industrialization took off in the late 1800's we had no mechanisms for dealing with the growth of the economy, industry, urbanization, public health, education or any of the other things that we're threatening to break down our society. That was the Progressive Era and we had two great almost back-to-back presidents in Roosevelt and Wilson who helped lead us thru the morass. But they didn't get it started or done by themselves. It was started, tested and developed on the state and local levels by concerned citizens who knew we had to find ways to change. And didn't have a clue to start with but invented them and then put them in place. In fact this country is run today on the socio-political innovations of that era. Which have obviously been successful but need to be significantly, if not radically adapted, in combination with
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the adoption of new innovations, to deal with the challenges we face. Which are not at crisis proportions yet but could be if we don't Gung Ho - "all pull together now" - these things. By and large we've actually reached a point of national consensus on what we'd like to accomplish though with significant differences remaining. The real problem is the means not the goals. We've been our own victims for years and decades now by creating UiC galore thru choosing to believe the easy answers and opt for the quik fix. The second graphic captures that, at least conceptually. If you'd like to see some changes then vote for the candidate who a) tells you the truth, b) recognizes how hard and complex this is and c) is willing to work in the center and not on the extremes. Otherwise, par for the course, we'll get what we deserve. Again. And if you don't believe us check out the readings below which range from the previously unknown and hidden story of how Newt the Grinch and Slick Willie almost worked it out but got sideswiped by Monica and the partisan warfare that resulted. There are so many ironies here since it was Newt who created this attackdog political process in the first place and which has hamstrung us ever since. IOHO the reason Barry's had so much appeal this time is that's been speaking toward this Radical Center. Let's hope we can all find it. And oh yeah, in case you were wondering the first graphic are my results :) ! UPDATE: This is a great interview with Howard Fineman, a noted political commentator, on Charlie Rose. It starts with a discussion of the Penn. primary contest but the real interesting part is his new book on the 13 American Debates discussing the key questions we've argued over since the founding of the country. Obviously I think well of this and it's alignment with my basic argument. See what you think!
Framing the Radical Center: a Policy Agenda for the 4th Republic
April 23, 2008 http://llinlithgow.com/PtW/2008/04/framing_the_radical_center_a_p.html After the break are several of this week's interesting excerpts on key policy issues, which we'll leave you to skim as you would. [UPDATE: two new readings on Education have been added recently]. We're going to use them as an excuse and fulcrum to sketch a framework for thinking about an integrated set of policies. They point toward a set of pragmatic and workable paths for where we need to go to tackle all our "Black Swan" challenges. Let's start with a diagram we've used before to illustrate the dynamics and dysfunctions we face and explain where it comes from, in part. Just to frame it we return to one of our favorite Adam Smith quotes (the real one not the popular financial columnist): "Little else is required to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice."
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We've used the diagram before to analyze why the parties and politicians retreat to the extremes, where the electorate tends to converge on the middle and how the major policy clusters map to the political spectrum. In case you were wondering the party mappings come from the last 20 years of partisanship and the voter mappings from the last several years of polls. But the policy mappings are the most interesting and come from our accumulated analysis of what's the best portfolio of policies that satisfy Smith's Criteria of Prosperity. Notice he essentially uses the same three categories we use of Defense, Economics and Social administration, as understood in his day. Our proposals build on the string of analysis you've seen being built up from the framework, the issues of making politics more about serving the national instead of special interests and the examples of what happens when the politicians and the voters (that means US) choose short-sighted, soundsgood over sound, sensible and workable. The posts are listed below if you want to track them down. We start with the great paradox of a Prosperous society - this isn't tribal warfare where you win and I loose. It's a non-zero sum game where if we cooperate the pie gets bigger even though my share may be relatively smaller - a proposition that seems to have escaped most statesmen and societies for millennia and still today. Oddly enough what's really a fundamental and provable tenet of Political Economy sounds rather like a fundamental principle of Moral Philosophy (Smith's 1rst book was "Theory of Moral Sentiments" btw and he was famous for it in his day). Or Religion even, if we may be so bold. From that over-arching 1rst Principle we go to each of the areas - not just by derivation but also because the sub-principles stand along on their own merits as well. First, we need to be constructively engaged with the world both because of the gains and, as we should have all learned and known, the need to avoid the losses. That just keeps us safe - to make us satisfied we need food, clothing, shelter etc. In other words we need a healthy economy. Finally economics alone is not enough - both as an end goal and as a means. For everybody to get into the game the playing field has to be level and accessible. And finally society needs to have citizens who believe in it because it works and they know these principles. Which we call and define as Civitas.
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At the end of the day we don't owe you a win in this game but we owe you a fair chance to play and visa versa. There'll always be differences in ability, character and history. The trick is to not let the fortunate abuse privilege to reduce access for the rest. As Buster says in Gettysburg, "I want to be judged for myself, as a man, on my own merits. Not on who my father was or his position. And damm all gentlemen to hell". You can break all those principles down a bit more in each of the areas and also make the big picture stuff more operational IOHO. Our breakdown of the Critical Philosophies is not so much new as a return to the principles that have underpinned our entire history. The big change maker is to re-discover that the implication is that on a level field with equal access you are then self-responsible, not owed or excused from playing. To make that work we need to re-visit our governance machinery - not at the Constitutional level where it's one of the most brilliant and creative creations in the history of mankind. Rather we need to leverage the framework's adaptability to adapt yet again and change the machinery that's grown up in the last 40-50 years. Machinery that, all too often, sounded good but was distorted to support political agendii of one group, party or another. Finally in each of the Big Three policy areas you need to break down the principles to Policy, Strategy and Plans for the major issues contained in the larger buckets. While each list is not entirely exhaustive we will very strongly suggest it is comprehensive. That is the key issues listed taken all together span strategies and solutions for all the swirling myriads of details. In other words, among other things, you can think of this as a filter and analysis toolkit for sorting things into graspable and workable categories. Solve the key issues and the rest can be cloned. Or so we opine, though not without a little work, investigation and thinking. But test it for yourself on the excerpts below - or in fact any prior post. We think you'll find that things do slot in fairly well.
Hidden Issues and Government Reform: the Politics of Special Interests
June 02, 2008 http://llinlithgow.com/PtW/2008/06/hidden_issues_and_government_r.html Well thru the last post we built up an interesting series of posts on the role of good government in the overall wellbeing and longevity of society. Which leads, eventually, to a set of imperatives for US Foreign Policy. But the lessons and implications come much closer to home. They are in fact the central but very hidden issue in these elections. And something we've posted on in terms of describing the symptoms, growing public dissatisfaction and consequences in several prior posts. We'll list those after the break for a refresher. But week before last David Brooks of the NYT had a magnificent column on what we think is the central issue. Here's a brief excerpt with the whole below the break:
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Talking Versus Doing Barack Obama’s vote for a recent farm bill may help him win Iowa, but it will lead to higher global food prices and more hunger in Africa. In 1965, Mancur Olson wrote a classic book called “The Logic of Collective Action,” which pointed out that large, amorphous groups are often less powerful politically than small, organized ones. He followed it up with “The Rise and Decline of Nations.” In that book, Olson observed that as the number of small, organized factions in a society grows, the political culture becomes more divisive, the economy becomes more rigid and the nation loses vitality. If you look around America today, you see the Olson logic playing out. Interest groups turn every judicial fight into an ideological war. They lobby for more spending on the elderly, even though the country is trillions of dollars short of being able to live up to its promises. They’ve turned environmental concern into subsidies for corn growers and energy concerns into subsidies for oil companies. If you'd like to see real change our central challenge is to find new mechanisms of government that recognize the interests of narrow groups but don't allow them to dominate policy making at the expense of society as a whole. There is no single policy domain we've discussed that doesn't need a new institutional framework. In other words the mechanisms of government are as important as the policy goals. If for no other reasons than we now have decades of experience with watching good intentions being subverted by terrible implementation and the triumph of special interests. Consider the inter-linked social policies in the graphic. If we continue business as usual we'll get results as usual. What's the old saying …. something about the triumph of optimism over experience? Yet when and where have you heard this as a major subject of discussion in the election campaign so far? That's why we were and are so tickled to have a major, respected and insightful columnist like Brooks put it on the table. We've talked before about the economic crisis facing us as well as the performance problems in education and other social policy areas that we face. If we'd like to see them addressed we need new mechanisms. After the break you'll find a longer excerpt from Brooks as well as a lengthier excerpt from a young think-tanker who wrote an interesting article that triggered Brooks' interest. That's followed by a set of other excerpts that talk about many of the symptoms in various areas. But, we repeat, if you'd like to see constructive change give some thought to the HOW...as well as the WHAT.
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Party on Grasshopper: Digging Deeper....into the Policy Agendi
http://llinlithgow.com/PtW/2008/06/party_on_grasshopper_digging_d.html June 20, 2008 Like we argued in the last post we're anticipating a shift to more emphasis on policy and a tad less on pizazzaroni, depending on what we the voters ask for. At least so we hope and anticipate given the seriousness of the multiple challenges that have come home to roost. In sharing that post with several friends there was general agreement and a couple of constant themes in feedback. One was Barry supporters wouldn't cut the slack for John-boy they gave their own guy and visa versa - sobeit. May the best man win. Another and stronger one was for more depth on policy - a challenge we've actually been building up to with prior deep dives on particular issues, particularly economics. That said our primary goal here is to take another turn of the crank and break down the Principles/Strategies/Categories to the next level of detail. A third was the objection, a reasonable and accurate one, that no voter is going to dissect things this way. Quite true and rational - people spend more time on picking a car than a President because it matters more, more immediately and they control the whole decision rather than being a minuscule part. Yet wrong in another way. People, at least IOHO, judge the status of these issues by the surface symptoms they see and experience combined with the inputs from friends, neighbors and commentators they trust. And at the end of the day they'll look to the candidate they think will do best on these issues as they can best judge it - even if not using analysis worthy of the Kennedy Skul. Yet strangely enough not only do we have to live with this collective wisdom but, over the course, of time the people do tend to converge on a collective judgment that's relatively sophisticated, accurate and deep. Strange isn't it how socio-biology works itself out? Anyway just as a reminder the opening graphic was our attempt to capture the key policy issues taken all together. While we laid out what we thought was a balanced strawman proposal in priority order, given how things work in reality and the challenges we face, the template is as important as the specifics. The intent was for you to use the blueprint to build your own house if you chose, with our suggestions as a starter kit. Though we're prepared to defend the specifics of course as being the only sensible strategy available to us :). That
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said let's capture the fundamental challenge facing us less abstractly. 'nuff said? We thought so though the excerpts after the break start with some prior posts on why shooting ourselves in both feet around the kneecap continues to be an inherent structural problem. Back to that reality problem-facing thing again Pogo. BtW - just for the record - when you vote for a solution, or the candidate who proposes it, that's based on short-term fixes that serve your own special interests and presume that water runs uphill when legislated you get your own slot at the trough. Oink, oink, oink... Like we said the central concern will be the Economy followed by Defense and Foreign Policy and then Domestic policy. That's based on our best judgment not of voters wants but their needs. However the way the dependencies work the sine qua non of a stable and safe nation is a secure defense coupled with a competent foreign policy. That then sets the stage for the next fundamental, which is a healthy and growing economy - which is the penultimate requirement for any social policy debate to be material. If you can't afford it you can't afford it. A combat medic calls it Triage. Then we can talk about Domestic policy and perform the same sort of trade-off Darwinian filtrations. Fortunately or not there are linkages and inter-dependencies.
Despite what you may hear the US hasn't just been influential it has been the architect and prime move of the post-WW2 world. The basic system design with the UN, World Bank, IMF, GATT/WTO, even the progenitors of the EU were all creations of US policy. Not to mention the Marshall Plan or the recovery and development of Germany, Japan, South Korea and Taiwan. And let's be real - it wasn't entirely disinterested nor should it have been. When a national decision maker is going to spend the national treasure and citizen's lives he has a fundamental obligation to allocate those resources in the best interests of his country. It just so happens that our best interests are served by supporting a stable, peaceful, law-aligning and progressive international regime. Nonetheless the world is changing and we need to change with it and help instigate the necessary adaptive evolution of a modified world system. We've talked before about why that's important in a series on the State-of-the-World and the nature of good governance (Peace, Stability and Prosperity: the Nature of Good Government) so we'll leave it there for your reference.
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Something we probably need to re-visit but have spent considerable time and investigation on in several prior posts - a few of which are referenced below. The fundamental requirement is Innovation which is the major driver of new jobs, economic growth and national wealth. In the short-term we're facing a major economic downturn triggered by breakdowns and malfeasant behavior in the real estate and financial markets as well as just plain oldfashioned greed, stupidities and illegal behavior. There are no clean hands. So in the next two years we've got to fix the breakage, keep the economy from tanking as much as possible and start laying the groundwork for the future. Among other things the boulder that kills many birds would be a twofer serious national investment and spending on revamping our infrastructure and on a concerted national energy program. Both of which by their very nature would help stimulate the economy and without which the tanking could get really rough. But both of which create longer-term jobs AND, the most important, change the structural nature of the economy. Infrastructure by making the operation of the national economy more efficient and creating new capabilities. The energy program by improving national security, lowering the cost of energy and oil and creating new technologies, which creates new industries, jobs and competitive goods for world trade. Voila'....a win...win...win..win strategy. Which also depends by the way on both Education and Healthcare cost reductions, performance improvements and increased Benefits:Costs performance in the long-run.
The "Pigs-at-Trough" problem means that for the rest of these strategies to be successful we can't just keep substituting good intentions for understanding how to run the buzz saw and the lumber plant. Hence the need for "institutional reengineering", i.e. we're actually pretty close on policy agendii but making them workout is a whole other problem. Now we're faced with a situation where Healthcare, Social Security and Medicare costs will destroy the long-term economic capacity of the US. Nonetheless the later two are relatively easy fixes with a combination of bi-partisanship (ha, no I'm not kidding) and realism on the part of the voting public. When SocSecur was established retirement was 65 and life expectancy was 65+. You do the math. Ditto for the Medixxx programs.
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Healthcare needs some major structural changes but we're starting to get a handle on that. In terms of timing, feasibility and so on it probably goes #1 in the queue because we can start making progress. But the #1 domestic policy agenda item is Education because without progress in teaching and training people for this brave new world it all falls apart. Part of the excerpts below are some pointers to various online programs, mostly from Charlie Rose, which start with an '04 appearance by Tim Russert which was supposed to focus on his book but ended up mostly discussing politics and policy. Notice that by and large if you didn't know the date nothing's changed. Now you can't discuss Russert without leading yourself to Danial Patrick Moynihan - one of the great public servants of recent American history and a brilliant and pragmatically insightful man. So there are two more shows of which he was a part that go back into the '90s. Guess what - the problems they're discussing are largely the ones we've just discussed. UP to us this time....Oink, Oink, Oink.
Inside the Sausage Factory: the 4P's of Political Reality
June 25, 2008 http://llinlithgow.com/PtW/2008/06/inside_the_sausage_factory_the.html Our last post (Party on Grasshopper: Digging Deeper....into the Policy Agendi) laid out a perspective on a comprehensive strategic policy agendii that covered Foreign, Economic and Domestic/Social Policy and related them to some over-riding principles. The goal was only partly to suggest specifics - it was also to provide a blueprint and checklist for your own thinking and to show how all the moving pieces fit together. We took our own best shot at the "right answers" of course but are more than willing for you to take yours. That said there's many a slip 'twixt cup and lip - or as a famous German statesman once pointed out if you can't stand the sight of blood but want to enjoy the results don't go inside the sausage factory. In other words no matter what our best intentions on Policy nothing will change unless we understand how things get translated. The key factors that control the results are Policy, Players, Position and Power. After the break we're going to take a deeper dive, again, and get a little abstract on you, again, but sometimes a picture or headline is worth a thousand graphics and arm-waving so let's shoot for a little motivation. Since the last major post several friends and I have had a running exchange on "CHANGE" and one of them put it very nicely - "Perhaps only an independently wealthy President can achieve his policy goals", talking about why a decent national energy policy has been available and frozen in limbo since '01. Of the major policy issues we outline there are none them not resolvable, IOHO, and most with straight-forward and available knowledge, resources and capabilities. So why ain't nuttin gettin done, Yogi? Consider the following headlines: Call for Change Ignored, Levees Remain Patchy Few of a presidential panel’s recommendations after the Midwest’s devastating flood in 1993 were implemented. Did Bank of America Write the Housing Bailout Bill? ." I don't understand why a realistic bill can't be hammered together. It should reflect the following realities:... It is not the taxpayers responsibility to bailout borrowers who are in over their heads, or lenders that made bad loans. How hard can that be? Economic Scene: High Medicare Costs, Courtesy of Congress Based on a pilot program, the price of walkers, delivery and setup included, will fall to about $80. Now, would you like to guess how the equipment makers feel about this?
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Reading those headlines/excerpts perhaps it's clear why the opening cartoon makes so much sense or why we started with "Institutional Re-engineering" as the sine qua non, the fundamental starting point without which we'll continue to remove both our feet at the shoulder or higher, as the critical initial point of our Domestic Agendii blueprint. After the break we'll dissect the whole problem in some more detail but consider the accompanying chart, which summarizes, some major policy problems that we've cheerfully been ignoring until the current stage of near-terminal feasturation has set in. BtW - this and other charts are part of a dloadable Powerpoint slideshow you can open and save. Please feel free to do so and share it around as widely as you like - better yet, mail it to your political representatives. Politics of Change: Strategic Agenda vs Interests
Assessing Where We're At
Let's start by taking a look at where we're at, have been and might/should be with regard to the major policy dimensions. Again, of course, IOHO. Feel free to disagree, dispute and fill it in any 'ol way you want. But fill it in - or come up with a reasonable alternative. If we address these issues and move forward on them we'll be in good shape. If we don't...well. The upper right compares each of the three areas with each other while the other elements break each down into the major components we're arguing need to be addressed. Think of this as the dashboard for our policy control center.
From Policy to Action
The next chart takes those highlevel rankings and breaks them out so you can see where we're at and the next level we ought to shoot for. But it also introduces the first stage of reality - you can't just wave a magic wand and, like King Canute, substitute wishes for fishes or wave the tide back. Instead for each area you have to decide what specific actions, resources, etc. etc. are required and available. And most likely make some hard choices in trading off all that we'd like with what we can accomplish given the level of capacities available. But that's a key beauty of this approach - we find out what's required, who's ox is gored and that those tradeoffs are. Rather than let decisions be made blindly in backroom vacuum.
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From Policy to Pragmatics: the 4P's
That's only the first level of practicalities. The real ground truth comes from understanding who the key Players are, what their Positions are - that is where their interests, public statements and private concerns lie, and what Power (clout, influence, baksheesh,...) are. And what kind of resources they have available to influence policy and implementation. For each one of Barry and John-boys simple-minded public statements the reality of what'll happen depends on a 4P analysis of each major issue. Conversely if you think something is the right thing to do you can judge the gap between likelihoods and your own preferences by understanding these gaps and requirements.
Nothing Is So Difficult
Change is not easy and history is more the story of people, organizations and cultures that refused to change in the face of necessities to do so. As Jared Diamond pointed out the Vikings on Greenland died out because the lifestyles and technologies they brought from home were wildly inappropriate to the ecology and resources available. Yet in a similar environment the Eskimos did and continue to prosper. One can make the argument that the fall of the last Chinese Imperial Dynasty was thru their refusal to adapt and adopt something modern China is well on the way to rectifying. The other thing the 4P analysis does for us is to measure the gap between where we're at and where we need to be and couple that with a specification of the folks most likely to defend the old way of doing things. The real problem is that the bigger the gap the faster the resistance mounts. And there's nothing new under the Sun - as the quote from Machiavelli a widely misunderstood political philosopher points out. Go back to the last chart in the first section - we repeat there's no major policy issue we're facing that a) is not addressable, b) where some pretty good blueprints aren't in place, c) (given proper tradeoffs) the capability isn't
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available and d) for which the primary obstacle has been our short-sighted choices. And decide whether the game's worth the candles to fix - or relax and party on Grasshopper!
Rational Voters, Public Choice, Economics and Futures
July 26, 2008 Over the weekend a friend sent me an interesting message talking about irrational voters making the wrong choices and not doing what they were told to by the academic economics community. Now as it happens there’s often a great deal of sense in what the economists have to say - on the whole their analysis pans out. On the other hand they often are too narrow in their views, as all specialists tend to be and neglect many real world factors and dependencies. This is such an important issues it seemed like it was worthwhile to share the exchange with you. Below is the original e-mail and my reply – which with my friend’s pronounced talent for tabling simple questions with painfully complex answers require some effort to respond to. Hence… But the reply, longish as it is, bears so much on the dilemmas we face in this election and the structural problems we need to resolve that it provides a very useful piece of background information. “These are serious times and we have serious problems….and we need serious people to address them. Your 15 minutes are up.” - Andrew Shephard
----- Original Message ----Subject: book on voters “I was reading a Jacoby article "These are (still) the good old days", which argued that our economic condition is much better than the picture alarmists paint. In the article he has a link to the book The Myth of the Rational Voter. When I clicked on it I was amused at the cover: http://press.princeton.edu/titles/8384.html It might be an interesting book, as among other things it urges "economic educators to focusing on popular misconceptions". Now if only we knew how to do that... “ My Reply: Interesting and fascinating from a couple of points. The author (Caplan) has a blog (http://econlog.econlib.org/) I used to follow and I first ran across the book via Mankiw' blog. Another s friend and I got into some discussions over my objections to the book. Which considering our current difficulties are really worth considering. Sorry if this is a longer reply than imagined but with your usual flair you' stumbled over a big, messy and complex issue. And let me note to start Jacoby should have ve explored some of this before firing off - they' really important. re The book is important in that it re-raises issues of public choice and the role of economics. It strikes me as pernicious in that it' unfailingly libertarian, beyond Sowell, in it' hidden assumptions and narrow, s s perhaps, disingenuous in the analysis. There are several thinks worth thinking about here that bear on public decisions. It should also be mentioned that these problems have been discussed and really well analyzed by a lot of 1rst class minds for some time, including Milton, George Stigler, Tom Schelling, et.al. The seminal work on how perverse results emerge from political processes is, in my mind, "Logic of Collective Action". As it happens there' a resource y' should know about s all (http://www.econlib.org/ - particularly the encyclopedia and podcasts: http://www.econtalk.org/ ) which I was reminded of looking for stuff on Olsen and this whole process. This short, simple and accurate Page 24 of 34
summary makes all the points I might have: http://www.econlib.org/library/Enc/PublicChoiceTheory.html There are in my analysis 3-4 major problems with either Caplan' views or Jacoby' re-iteration of we' s s re good. Let me dispose of the latter first. Economic progress in this country has been enormous and people' wealth and well-being as well as access to resources is unprecedented. And much of our current s malaise is the Boomer disease of forgetting where this all comes from and that the world is a difficult and uncertain place. All that said we enjoyed a golden age during the ' and ' and like all nouveau 50s 60s riche got ourselves in trouble and paid for it in the ' We tried to recover in the ' but really didn' 70s. 80s t. Please take a look at these three blog posts which serendipitously sketch some of this out: Bears of the Apocalypse I: Long-term Market Performance Perspectives, Bears of the Apocalypse II (LT Econ): Who' Fault is this Mess ?, WRFest 23Feb08(Int'Affairs): What Makes for Progress. The bottom line s l here is that we' in a natural secular, long-cycle as the benefits of the post-war surge in new industries re matured, we face some global adjustments and need to re-tool some education and social policies that haven'worked out well. By and large this is nothing new and not as serious as prior challenges. Which t is not to say the doing of it will be easy - and not least of our challenges our attitudes, complacency and political machinery. More specifically on Caplan let me work thru what are the major defects in his argument: 1) he narrowly defines rationality as choosing theoretical textbook economic solutions that got a check of approval at the AEA convention, 2) academic economists suffer from the "Flock of Dodos' problem as do almost all specialist disciplines - including classical musicians (& Barry btw), 3) the specialist solutions are often deficient in a more complex world where more factors are involved, 4) nearly all "free-market" solutions fail to account for the institutional foundations that markets are embedded in as part of a larger socio-politico context (for an extended discussion on alternative mechanisms, failures and strategies you might consider this dloadable file: "Notes on Regulatory Reform" ) and 5) voters make rational choices based on their immediate known interests constrained by the information available to them. Costly information btw is a major reason for the failure of simple-minded market solutions because bad information can lead to bad solutions.
Rational Voters Defined
I'll counter-define rationality as making the best choices among those available to you based on accessible information and our values and preferences. Let's remember btw that self-interest need not be narrowly defined. We know that fundamental preferences for the public good have always existed (why did George Washington do what he did - at least thrice or more saving the nation) and that's linked to long-term evolutionary characteristics of the species. And our forces in the military can certainly be said to be acting in their own narrow, private interests only by widening the definition so far it breaks. Public spirit is alive and well when it needs to be and people see the need.
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Specialists and Dodos
Any specialist organization that wants it' recommendations adopted by the wider populace it obliged to s present, defend and explain those proposals in terms that are comprehensible and convincing to the wider public. Or suffer the consequences. "FofD" problems come about when specialists, e.g. evolutionary biologists, a) lecture the public and treat them as children while not explaining themselves, b) presuming they are so entitled because of their privileged position which may in fact represent only their own narrow interests and conclusions and c) forget that they are dependent on the health and continued development of the larger socioeconomic system for their own support. In the vernacular if you keep crapping in your own well pretty soon you' poison yourself. Academic economists are particularly prone as a group to this deficiency. A ll classic example of predictable unintended consequences that were unanticipated is school busing where bad analysis and bad thinking created a major mess we’re still trying to recover from. So much for society wide social engineering experiments when you don’t know what you’re doing. Int'trade theory suggests that we are always better off because more people have more things at lower l cost. History, experience and empirics have born that out for centuries. Recently studies have shown that the lower income distribution population has benefited greatly from trade with China and the resulting lowering of costs. (America' overstated inequality ) s Yet trade theory has one major macro-deficiency - it assumes that displaced resources, e.g. workers, can be re-deployed to other uses. And further that the costs of the transition are far less than the larger-scale benefits. When the displacement is relatively small compared to the increase in overall output that' true. s On the other hand when the displacement is large, as it was when the US Midwest replaced E.Eur and Russia as the breadbasket of Europe in the late 19th C. and no substitute alternatives were available, the impacts can vastly outweigh the gains. The situation we face today is a combination of major adjustments costs and barriers combined with a huge reservoir of under-employed labor in the BRIC countries who will be in transition for decades. These are not the only examples but are a telling one. Political support for free-trade requires fairness, legitimacy and conviction - all of which the academics and blind free-trade supporters have failed of gaining. You can't legitimately lecture people for not adopting your solutions when those are incomplete, wrong or damage them more than you know and they are aware of. In fact you merely demonstrate your own dodoness - with all the implied consequences that in a just Universe would/should/could result.
Markets, Institutions and Government
Markets don'magically spring up but gradually emerge over long time periods - they require common t measures of goods, e.g. grain contracts, rules of exchange, enforceability which all require in return the presence of legal systems to enforce and adjudicated inevitable disputes and stable political systems that defend the rights that citizens think they have. (Books to Read: Structure and Change in Economic History by Douglass C. North, Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships by Mancur Olson ).
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Moreover markets often fail because many goods aren'well-suited to markets, e.g. defense and security t are shared among many people. Buying increments is impossible and without taxes and public decisions too many opportunists will free ride. Same arguments apply to Healthcare, Legal Systems, Public Education, Highways, Public Health, and so on. Markets also fail when certain outputs or inputs aren' t traded, e.g. the pollution created by a factory creates a public bad which the plant owners have no incentive to correct. Or when common fisheries are badly over-exploited. One needs a political system to establish public or private property rights and change these non-traded goods into controllable ones, either thru markets or regulation.
Voter Choices and Rationality
Voters always choose what they think is best for them, best including short- and long-term as well as private and family and general interest in the health of the society insomuch as it' recognized. Which s most do to some extent, greater or lesser. They may choose things that in fact result in bad consequences from mis-understanding, poor information, poor presentation or the machinations of special interests (Hidden Issues and Government Reform: the Politics of Special Interests) who gain so much from manipulating the public legislative and regulatory environment that they can afford to invest considerable resources in fixing those problems and changing things to suite.
The Challenges and Approaches
Very few of the policy issues we face are un-resolvable or unsolvable. The first if nothing else by definition though we may not like the outcomes. In the areas of defense, foreign policy and economics we actually understand pretty well since we have centuries of accumulated experience on the first two, decades on the third and a core consensus. Key challenges are resolving Energy and stimulating innovation to create the Next Big Things that will cause the emergence of new industries. On domestic social policy it' a much more mixed picture. On traditional areas, e.g. Public Health and Infrastructure s governmentts have provided those for centuries. There are admin challenges but we pretty well understand them. Our two biggest challenges are I) finding new models for social policy in those areas where big solution/government social engineering has failed miserably thru not understanding the complexities and II) creating new mechanisms of governance that are hybrids between markets and public regulation. These are frontiers of invention, innovation and deployment where we' still learning. re So, bottomline, we' facing many challenges, they' all hard, we' done well but are reaching re re ve exhaustion on our inheritances that requires us to suck it up. We know how to fix some things, we need to get creative on others and pursue the 3rd Way forward. Caplan on the whole makes a negative contribution thru his narrowness to all these challenges. And so, therefore by inference and linkage, does Jaccoby. The free-market and conservative revolutions started by Buckley and carried on by Friedman, et.al. and implemented under Reagan were necessary correctives to big government solutions inherited from FDR' "New Deal". Which are themselves s sensible and workable responses to breakages in the economy and socio-political system that no existing mechanisms handled. As FDR put it the two most dangerous men in America were MacArthur (the man on the white horse) and Huey Long (the populist panderer). Just consider the last century of dysfunctional oscillation in
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Latin America between militaristic oligarchies and populist demagogues. Or the recurrent breakdowns in Fr. gov'over the last two centuries. t
Posted by: Jon Entwistle | July 28, 2008 06:57 AM The linked article on Public Choice Theory is fascinating. The points that most strike me from that are: -- "The voter is largely ignorant of political issues and ... this ignorance is rational. Even though the result of an election may be very important, an individual's vote rarely decides an election. Thus, the direct impact of casting a well-informed vote is almost nil; the voter has virtually no chance to determine the outcome of the election. So spending time following the issues is not personally worthwhile for the voter." By contrasting voting with purchasing a car, Ms. Shaw makes clear that voters are acting rationally! (I don't think that makes me feel better though.) -- Re legislator's actions: "Politicians may intend to spend taxpayer money wisely. Efficient decisions, however, will neither save their own money nor give them any proportion of the wealth they save for citizens. There is no direct reward for fighting powerful interest groups in order to confer benefits on a public that is not even aware of the benefits or of who conferred them. Thus, the incentives for good management in the public interest are weak. In contrast, interest groups are organized by people with very strong gains to be made from governmental action. They provide politicians with campaign funds and campaign workers. In return they receive at least the "ear" of the politician and often gain support for their goals." And Shaw goes on in the next paragraph to demonstrate how this works to citizens' disadvantage. Between this point and the last, it seems pretty clear that government, due to its sheer size and complexity of competing interests, will often screw the public. Or at least result in highly inefficient use of the taxpayers' money. -- Then one of the conclusions: "Although public choice economists have focused mostly on analyzing government failure, they also have suggested ways to correct problems. For example, they argue that if government action is required, it should take place at the local level whenever possible. Because there are many local governments, and because people "vote with their feet," there is competition among local governments, as well as some experimentation." Sounds good to me. In fact, in general I'd vote for a platform that promotes pushing more of government to local levels. Else how to overcome the "organosclerosis" of this mammoth bureaucracy and its patent inefficiencies? Jon - glad you got so much out of. That short piece on Public Choice is a jewel though it doesn't go far enough. I took a "Law and Econ" class in grad school where many of those key texts were intro'd and found it a startling introduction. Shaped my thinking ever since. The interesting thing about the critical points you focused on are a) that they are sine qua non of understanding the political economy of gov't and b) are really so much common sense when you think 'em thru. Powerful, powerful, powerful. The shortfall is that the article doesn't go far enough. To the list needs IMHO to be added: 1) gov't is an inescapable requirement for organizing collective life - and the bigger and more complex the society so to the gov't...dancing bear syndrome (be amazed he dances at all not critiquing how poorly he does) 2) the problems you highlight have been endemic going back to large-scale chiefdoms and central to the rise and fall of all advanced societies....in fact they've killed most of 'em thru organoscelrosis. 3) what should have been married to the article is a discussion of how institutions and the control of power create the framework in which the gov't, society and economy operate; and how they develop and evolve: Peace, Stability and Prosperity: the Nature of Good Government But overall I have to thank you for triggering off the effort - as many hours as it took me :). Several people have commented quite favorably, surprisingly so in fact. And after turning it into a blog post, though the day is far from over, the traffic has been significantly up.
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Voice, Leadership, Messages, Realities: Living in a Tough World
July 30, 2008
The latest Real Clear Politics poll has it like this: Barry 46.3, John-boy 43.7, Difference 2.6(B). Not much of a gap and one that's narrowing, even after the triumphal world tour. We'll have to see how things play out of course. Every "objective" indicator from dislike of Bush, to the state of the economy, to accelerating voter anxiety about the future to the successes in Iraq would favor Barry. What's going on here? Well some of, if not most of it, is the dilemmas and lack of clarity we already discussed (Moral Clarity ? Good Intentions, Muddy Proposals, Directional Obscurities). And the cartoon, puts it in perspective. A caveat - while the cartoonist probably intended to take a shot at Barry IMHO it applies to John-boy as well, just differently. My bottom line is this - we have a pretty clear grip on the major policy challenges, both here on the blog in some depth and analytical fashion and among the general public. Who may be less analytical but has a darn good grasp of what the real challenges are. Where the rub's turning into pain and how serious it is. What we don't have a clear grip on is what either candidate is proposing to do about it. Let me wrap a couple of pictures around that, just for fun, illustration and to riff off of.
First, just as a reminder and to frame the discussion, here's how we see the major policy challenges. Including our recommendations for strategic directions to follow to dealing with them - basic or fundamental principles if you will. Now the categories and descriptions got built up out of the way things work - reality as best we can judge - and the way people end up thinking about these things, even when it's not so crisp. The directional recommendations are what our analysis suggests offer the best and most workable objectives to pursue at a high level. But of course the devil's in the details.
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So how're the candidates doing against the blueprint? And how will/are people judging them? The next picture we put together to try and frame those question from a couple of direction. As the last post discussed (Rational Voters, Public Choice, Economics and Futures) nobody's got the time or resources to do detailed evaluations on all the issues and alternatives, the candidates and their nonexistent proposals. So we all tend to the next best thing - judging on Vision, Leadership and Policy Principles. More or less - and it's not a bad way to go. If you combine that list with the policy principles blueprint you might end up with something like this. And apply it to the two candidates you might end up with the two-color triangles. Which aren't entirely fair but hey, what'd you expect for free graphics anyway? But they aren't entirely inaccurate either - Barry is a lot stronger on the Vision thing but sure seems to fade out fast on anything below that. On the other hand Johnboy gets to down to brass tacks on a few things where he's comfortable (his paint scheme should have been spottier for sure) but sure fades fast when trying to explain how he sees it all tying together. If Barry is running on eloquence John-boy's running on true-grit and track record and both might just be running on empty.
As Good As It Gets??? Where's Ronnie When You Need Him?
That's a complaint, not a diagnosis and not a treatment for sure but it may be as good as it gets. Going back to the "Policy Principles" chart we're in a world where there are major structural changes in every category. It's a brave new, multi-polar world where peace and love haven't broken out but there are major rising powers who need to be incorporated constructively into some new system. Meanwhile we're experiencing major structural shifts in the economy which is making people legitimately anxious about future growth prospects. And it's also leading to major pressures on society that are making people less comfortable with the old American verities. The only good news IOHO is that the culture wars have been back-burnered as the seriousness of these challenges mount up. The last time we faced a range and depth of problems this severe was in 1980 when we had an imploding economy, a failing foreign policy that was losing the Cold War and a mounting backlash against the failed social engineering of the '60s and the associated libertinism attacking our core historic values. And Ronnie managed to step forward, calm everybody down by offering a vision for the future and specific action plans that did address many of these problems. In a small way he shared Lincoln's abilities in finding simple explanations for complex problems and converting them into convincing stories. But also for the record he was badly wrong about much of his economics and we're still living with the consequences. On the other hand there was a lot he was right about; for example he and Volcker broke the back of inflation and restored a growing economy though supply-side turned out to be voodoo economics indeed.
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In other words he had a VOICE - he could tell us straight out what he thought was going on and what we ought to do about it, in a way we could understand and find convincing...or not.
Voice and Leadership
And therein lies the problem - neither of the candidates has found their VOICES as yet. They haven't come up with simple, clear and compelling explanations of who they are, what they stand for, what they think we should do and how we should go about. That's it in a nutshell. But let's set the record straight. The scope and seriousness of the problems we face now are not anything like the ones Reagan faced and those were nothing in comparison to what we faced at prior major turning points in the history of the Republic. So let's everyone get a grip - we got thru those. Maybe not with style and grace but overall not ineffectively either. We'll muddle thru these somehow as well - if nothing else by definition. The question then becomes will we like the outcome? Part of the problem is that for a long time politicians have been successful telling us what the think we want to hear because we haven't insisted on hearing painful truths. Well the fact of the matter is that the world is what it is and we're in a better position, now and for decades than almost any other entity. But there are serious challenges. The one of most concern is the economy and there aren't any magic answers, there especially. Most of the problems we face with regard to the Economy, and the associated problems with Energy and Education are the result of deep structural flaws that have been accumulating for decades. They are addressable....just not quickly, easily or cheaply. So? The bottomline of the bottomlines is that the central challenge is the short- and long-term economic issues. And neither candidate has demonstrated any comfort, competence or command there. Despite, at least in Barry's case, having as fine a composite team of business leaders and economists at his disposal as any I've ever known to be assembled. And John-boy's on the whole ain't to bad either. But that's in a nutshell - they need to find their VOICES on the Economy and we're running out of time. And with only a little over three months left this may indeed be as good as it gets.
Peace in the Public Square: the 100 Days and Re-emergence of Civitas (Updates)
April 28, 2009
Welcome to the "Brave New World", or as we like to call it the Land of Reset. If you listened to the 100-day press conference we think the President did a decent job but not a great one, unlike his economic situation and policy review. Nonetheless, excepting the die-hard ideologues, this is a remarkable performance. And, in our judgment, an effort to find centrist, pragmatic and workable policies domestically, economically and internationally. In each of these areas thoughtful, informed, bold and potentially revolutionary policies have been put forth. An assessment put forth by a wide range of pundits (some of whom you'll find in the readings). We're going to try and take that apart a bit and look at what went on (though there's too much to review in ANY detail), what some of the assessments are and, our typical schtick, what the context and consequences are and how things will play out structurally. Setting aside partisan posturings the three major criticisms that have been voiced (many by David Brooks initially and then picked up by others) are: 1) too much, to quick, 2) workability and execution (not in so many words but it
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is THE issue now that we're moving beyond ideological posturings) and 3) a radical shift in the line between the public and private spheres. All of them are legitimate, raise serious concerns and need to be addressed. But the bottomline here is that we're seen a remarkable 100 Days where critical markers have been laid down that set the tone, direction and strategies for most of the rest of the term and beyond. We are in fact engaged in an audacious reset at the most fundamental levels that will frame our outlook for decades. Perhaps most importantly with "Coach Carter" treating the voters like responsible adults and a slow shift in how they respond: from polldriven policy-faking to principle-based decisions that try to balance what's best with what's feasible and saleable. Now it's time to execute, execute, execute.
A 100-Day Assessment: Brooks, et.al.
In the readings you'll find selected excerpts and URL links to some of the more thoughtful pundits but so far the doyen and dean of reasonably balanced commentary is Mr. Brooks. Who, despite being a moderate conservative and a Burkian who worries about disrupting complex socionomic systems and unintended consequences, has applauded many of the decisions. For example calling the new Afghanistan policy bold but the war winnable or describing the economics speech as stunningly good or being dazzled and amazed at the sheer managerial competence of the Administration and how much they've managed to get done on so many fronts. We strongly suggest you invest the 30 min. required in watching the interview and taking notes because he covers an immense amount of ground quickly but insightfully. Some of the those major points deserve long essays in response. On the workability question we'll pursue some critical aspects later in policy focused posts but what Brooks and the others are missing is the repeated application of a systematic and systemic decision-solving methodology that seems to permeate each issue: gather the best people and ideas, pull them together, put a framework down, work out the details, start working the legislative process and selling to the voters. Review, revise,verify and extend as circumstances evolve.
Policy, Politics, Lizard-brains and the Disruptive Opposition
Let's get a little more analytical about some of the things swirling around. The accompanying graphic is a little busy but instead of building it up we compress several key ideas so that you can see how they all work together. Policy and politics have at least three key dimensions that must be addressed to be effective: what's the right policy, what constituencies does it impact and how do they react (the Political Spectrum) and how do you persuade sufficient support (the Mental Spectrum). Political interest combines the moderate and centrist leanings of the polity with the tendencies of party activists to retreat to the extremes while selling a policy has to balance the depth and density of information with the appeals to the hindbrain where decisions are really made. Clinton sold to the polls and told us what we wanted to hear - he got away with
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it because the times were good. Bush II told us what he thought we ought to hear based on his own ideologies. Obama is telling us what we must hear and not sugar-coating it. We'll see if the polity evolves itself enough to continue to respond constructively - so far there's more faith in the President than in his policies. We first used this chart during the elections and have modified it to show how a centrist candidate (Barry) sold his intent while a wannabe centrist (McCain) retreated to the right and more and more appealed to the hindbrain. Now President Obama has gotten even more information-rich and is doing a fabulous job explaining things. It's not clear he's selling them - which is in fact one of the two major weaknesses he's got so far. That's not a problem that goes away until more pudding is eaten for proof however. On the other hand the Rips are retreating faster and faster into pure hindbrain appeals and bad policies. It's all very well and good to be "sincere" but right counts first and foremost and they're pushing shibboleths that were appropriate in Reagan's day, had a positive impact for a while but are badly outdated and deeply flawed. But instead of re-thinking themselves the True Believers are getting increasingly self-destructive. Too bad for them and ultimately for the country - a set of observations that roughly Brooks agrees with btw ! Ironically (cf. the readings, especially the assessment by Matt Miller) Obama's major initiatives in Healthcare, Education and Energy are closer to a combination of a) what Bush tabled in several State of the Union speeches (on Energy for example what's emerging is pretty close to his 2001 National Energy Strategy) and b) what other moderate Republicans have proposed over the last 20+ years. The Republicans, as opposed to the Rips, should be getting behind these instead of pursuing power and advantage at the cost of what's best for the country.
The Public Square: What Makes the Agora Work
Any society consists of a private sphere where people conduct their lives and make a living, a public sphere where the society makes decisions for everyone and a civic sphere where culture, religion and values define the ecology of the private and public sphere. If you go to almost any city in the world you'll find a public square which typically has shoppers strolling around, shops and commerce, public buildings and civic institutions (libraries, schools and churches for example). In Ancient Greece the called it the Agora - where all the myriad facets of the life of the city-state came together into one organic whole. Have you ever stopped to wonder what makes the public square work? Like our mutual agreement that we have to have rules of the road so that we can operate our highways safely and efficiently we have to have rules that govern the Agora. Key among which is the agreement to abide by the rules, a recognition that they are necessary, tolerance for anybody who follows the rules to have the right to come to the square and be heard and a willingness to cooperate in it's creation, maintenance and safety. The public square has defined Civilization for millennia and, in it's modern, complex and gigantic form, it still does. We've spent the last two or more decades abusing the rules necessary for the long-term health of the public square and damaged both the private and civic spheres as a result. Largely thru the opportunistic pursuit of various interest groups of their own advantages and interests at the expense of the general health and well-being. Now the question is will we all be citizens together and act in our collective self-interest to return the square to health or not?
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Changes in Attitude: Paco vs the Consumer
This might be an odd sort of source to look at but Paco Underhill, who is one of the best consultants and strategists in the world when it comes to retail and consumer behavior, was interviewed on the Newshour last week. He had a lot to say that was "ostensibly" about change in consumer behavior. But his critical observations and insights were really about whether or not we can continue to sustain our old behaviors. This economic crisis is forcing major and radical changes in shopping but Paco think the changes in attitudes are going to be permanent. We happen to agree. As he points out - we can no longer afford to consume beyond our means. More importantly, fundamentally and even philosophically, we don't need to. Perhaps his most startling observation is that people need to learn, and are learning, that the next car or house or vacation is not only unnecessary. IT's NOT SATISFYING ! Now that's a SEE-change in our books. And when it comes from a guy who makes his living getting you to buy more and he's calling for changes in basic attitudes something is up.
UPDATES: the Difference Between Pundits and Executive Responsibility
Here's the link for the CSpan: Obama 100 Day Press Conference and the post-conference Rose panel that discussed it. We were struck in the first case by how closely our assessment of things mirrored the President's directional intent while at the same time was reinforced by the pundits. BUT that's NOT the most important thing THE important things are that the pundits don't talk at all about 1) whether the policies are right (which we've argued at length that they are), 2) what it takes to implement them (the question never came up among them) and 3) what it takes to explain and sell them to motivate the country in support of them. Yet as a matter of fact those are the central questions that must concern the Administration. The difference is between outside observers who've never stepped in front of the gun, even in a small way and the people who see dealing with all the elbow jostlers as just another part of their job but who's primary concern is getting it done, and getting it done right, workably and sustainably.
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