Chicago Boyz

Presidential candidates are talking about every issue except the one that matters most for America’s future: “American Exceptionalism.”

President Obama, a former professor of constitutional law, rejected the notion of American exceptionalism. Conservative writer Jonah Goldberg in Suicide of the West (2018) argues that the political abandonment of American Exceptionalism is eroding liberty, society and prosperity. Parenthetically, Taleb, Skin in the Game (2018) concludes (pg. 86) ”the west is currently in the process of committing suicide” by tolerating the intolerant. The “mass suicide” metaphor became a reality when religious cult leader Jim Jones told his followers in 1975  “I love socialism, and I’m willing to die to bring it about, but if I did, I’d take a thousand with me” which he did in Jamestown, Guyana three years later. “He wanted the world to think this was some uniform decision, that they willingly killed themselves for socialism to protest the inhumanity of capitalism” but armed guards made sure the reluctant chose the Kool Aid and exited the Johnstown dystopia for the promised socialist utopia in the next life.

Suicide of the West

Goldberg’s history of politics and human nature begins with humans first walking upright, concluding in 2017 with U.S. domestic political choices. Ideas promoted by John Locke and bequeathed by the British that the state is the servant of the people, are the core of American exceptionalism as opposed to the opposite ideas of the Frenchman Rousseau that individuals are the servant of the state, the governing principle of authoritarian socialist economies and in practice social democracies as well. What’s exceptional in the U.S. political system bequeathed by the Founders are the strict limits on federal powers in the two written documents, the Declaration of Independence and the U.S. Constitution. This is the cornerstone that allowed the many secular and religious institutions of civil society to deepen as a pre-requisite for and complement to entrepreneurial market capitalism, the source of virtually all human economic progress.

In the American version the state guarantees “life, liberty and the pursuit of happiness,” whereas the French national motto “liberty, equality, and fraternity” is an oxymoron. Individual liberty erodes at each stage as decisions are elevated from the marketplace to private, local, state, federal and ultimately international governing bodies. Competitive market capitalism’s “creative destruction” and entrepreneurial innovation produces relative winners but benefits all, whereas political favoritism comes at the expense of the typically poorer less politically favored.

The Deep State is Sovereign in a Democracy

In a recent Wall Street Journal article, political theorist Francis Fukuyama argues that “American Democracy Depends on the ‘Deep State’” run by professionals protected from politicians. Progressive President Wilson used entry into the war as the means to create the “modern” sovereign state” to which Fukuyama refers under the motto to “make the world safe for democracy,” never mentioned in the Founding documents. What took a Revolution to produce was protected only by the willingness to adhere to paper documents that Wilson basically ignored.

Individual dependence on the modern pater welfare state corrodes the institutions of civil society and inevitably leads to identity politics, tribalism and cronyism. With the state the master, many democracies evolve into one party rule, e.g., the communist “peoples’ democracy” of China, North Korea, East Germany or in capitalist countries the PRI in Mexico (in spite of a Constitution modeled after that in the U.S.) and Peronism in Argentina where the party is the master of the state. The rightist regime in Chile brought in the Chicago Boys to help implement free market reforms that produced a growth miracle, but that proved difficult to sustain as subsequent socialist governments burst that bubble.

The 2016 Presidential Election

In 2016 candidate Trump promised to drain the swamp and “end America’s endless wars” both direct attacks on the deep state, particularly the military-industrial-congressional complex (Eisenhower’s original censored version) that manages the economy as well as foreign policy and military adventure. Reagan promised to roll back the deep state but failed. Clinton declared “the era of big government is over” but it barely paused. The Tea Party, composed of older more conservative voters tired of Republican false promises of limited government, launched a grass roots political campaign to limit government, which also failed. Once the state (or the Party of the state) is sovereign, the process has proven irreversible through political means.

That leaves the Supreme Court. Candidate Trump committed to nominating conservative Supreme Court Justices who would stay within the original intent of constitutional limits, the primary issue cited by his supporters. The abortion issue is a ruse, a litmus test for progressive precedents to trump constitutional intent.

The U.S. deep state is immune to accountability. A recent docudrama The Report tells the story of CIA torture after 911. The Agency lied to two Presidents, lied and stonewalled Congress over 8 years, violated the separation of powers and squashed the biggest seven thousand page Congressional oversight investigation in history. Only the stature of Senators Feinstein and McCain eventually got the Report released, but no one was held accountable, sending a clear signal that the deep state was immune. When President Trump alleged (later proven by the Mueller and Inspector General Reports in spite of deep state resistance) that the intelligence community was involved in election rigging in 2016 and a subsequent coup attempt to remove him from office when that failed, Senator Schumer warned him: “Let me tell you, you take on the intelligence community, they have six ways from Sunday at getting back at you.” Impeachment is (only) one way.

The 2020 Presidential Election

On domestic policy, progressives arguably fared better under the Trump Administration than they would have from any of the other Republican candidate (e.g., victories on the budget and trade protectionism) and better than conservatives during the Obama Administration. Many conservatives (including Goldberg) join progressives in abhorring Trump’s personality and attacking his character (questionable, as is that of his political antagonists, e.g., Congressman Schiff). His lies and exaggerations may stretch the limits of political discourse, but the main stream media has regressed to Infamous Scribblers. The biggest cause of Trump derangement syndrome – and his source of political support – is likely his politically incorrect speech.

But Supreme Court appointments remain the existential issue for progressives and conservatives alike (as the Kavanaugh Hearings demonstrated), although limiting the power of federal government leaves progressives with free reign at the state and local level where they have had substantial success. Even “popular democracy” in big states like California is rigged by the state, forcing the oppressed to ‘vote with their feet’ leaving progressive states like California and New York with deficits, which then seek federal bailouts.

The electorate is divided along generational lines, with democrats appealing to younger liberal voters and republicans to older conservative voters. Lowering the voting age to 18 dramatically increased this demographic (why Democratic Speaker of the House Nancy Pelosi proposed lowering it to 16). Yet current Democratic candidates are divided among the ”electable”“moderate” 78 year old (by inauguration) Joe Biden campaigning as the former VP of a decidedly immoderate administration, authoritarian Michael Bloomberg who is almost a year older that Biden, socialist Bernie Sanders who is more than a year older than Biden, and Progressive Elizabeth Warren who would be 70 by inauguration. The young intolerant radical anti-capitalist progressives/socialists will undoubtedly be in control should victory be achieved by any of these elders following Taleb’s thesis (pg 69) that in a democracy the intolerant dominate.

What explains the strong Democratic appeal of 18-29 year old voters? Goldberg (pg. 340) quotes theologian Eugene Peterson: “humans try to find transcendence-apart from God through the ecstasy of alcohol and drugs, recreational sex, or … crowds (i.e., mobs or cults).” Millenials are less religious than older voters and sex has declined relative to past generations. Non-college graduates have turned to drugs – 70,000 deaths annually.

Promises of debt forgiveness and free stuff by Socialist Sanders – and Warren obviously appeal to the typically deeply indebted college educated. But so does their attack on business. Once taboo, socialism is now chic on college campuses as anti-business progressive ideas pervade college professorial ranks, particularly among historians and economists. This goes back to the early days of progressivism as socialist/communist historical myth makers accused business leaders of being “Robber Barons,” vastly over-stating the extent of American cronyism. Economists have generally under-appreciate the fragility and benefits of capitalism focusing instead on “market failures” real or imagined requiring government intervention, to be expected by a profession started by a German educated progressive to train Americans in the visible hand (fist) of state economic management

So millenials may be lured to join the cult and drink the Kool Aid: as an aging baby boomer, I’ll cling to religion and, Inshallah, sex and alcohol (bourbon, of course).

Kevin Villani

—-

Kevin Villani was chief economist at Freddie Mac from 1982 to 1985. He has held senior government positions, has been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath.