Words and Symbols

I was taken aback by the Pope Francis's full throated attack on capitalism a couple of weeks ago and wrote a spirited response to His Holiness.  His views were not simply an appeal for people to do more to help the poor, but an assault on capitalism itself.  This assault came within weeks after I attended a panel discussion of three Nobel Laureates who showed that capitalist reforms were responsible for lifting hundreds of millions out of abject poverty in China, India and elsewhere and that it is starting to do the same in Africa.

The Pontiff ratcheted up the rhetoric on his trip to South America, deriding the pursuit of money as "the dung of the devil." His words harkened to Hugo Chavez's attack on George Bush at the U.N. in '06,"The devil came here yesterday.  And it smells of sulphur still today."  Chavez further skewered Bush, "As the spokesman for imperialism, he came to....preserve the current pattern of domination, exploitation, and pillage of peoples of the world."  The Pontiff echoed these thoughts almost precisely, "Once capital becomes an idol and and guides people's decisions, once greed for money presides over the entire socioeconomic system, it ruins society, it condemns and enslaves men and women, it destroys human fraternity, it sets people against one another and, as we clearly see, it even puts at risk our common home."  The Pope went on to call for "overthrowing an empire of money," and denounced "the new colonialism."   His themes and even his choice words were virtually indistinguishable from those of Chavez;  the former Venezuelan president has evidently been reincarnated with a miter.  

But it gets even worse.  Over the last few weeks we were caught up in the symbolism of the Confederate flag because many found that it symbolized slavery and bigotry.  I understand the power of symbols. When Evo Morales, president of Brazil  offered a gift of a crucifix shaped like a hammer and sickle to the Pope, while initially surprised, accepted it and later affirmed that he was not offended by it.

By heritage, I am part Lithuanian and Polish and grew up in a neighborhood with others from the former Eastern bloc.  I heard the stories of the murder, torture and starvation perpetrated by the Stalin regime under the symbol of the hammer and sickle.  My best friend's father witnessed his buddy shot in the head on a road in the Ukraine by the KGB.  The parents of another childhood friend of mine escaped one of Stalin's concentration camps in Siberia, and were chased by dogs through the woods before it to America.  Because they were schoolteachers, they were deemed part of the intelligentsia and would certainly have been killed.  There were millions like them that suffered under the boot of Communism (for an excellent novelization of the Lithuanian deportations, read Between Shades of Grey by Ruta Sepetys).

The hammer and sickle represent death, torture, and tyranny to me and nearly everyone I grew up with.  It is no less offensive to me than the swastika is to a Jew.  That the Pope chooses words that are nearly identical to those of Hugo Chavez and chooses to accept a symbol of death to my people tells me that I may not have a place in this Church while he is its leader.  His recent exhortations are antithetical to all the values I hold dear.  Indeed, freedom, democracy and capitalism have provided a decent, dignified life and have liberated more people across the globe than any other system.  It is the brutal, corrupt regimes that fly under the banner of the hammer and sickle that crush the human spirit, brutalize and impoverish.  As a result, I am taking a sabbatical, a trial separation from the Catholic Church and I do not know if I will be back.  I cannot be part of an organization that would so willingly embrace the symbols of totalitarianism and reject the things I hold most dear. 

Getting It So Wrong!

It's been a tough few weeks for advocates of individual liberty, capitalism, and the rule of law.   The competency and fiscal responsibility of the State has been on full display over the past few weeks.  Yes, government tried to make us feel better by bathing the White House in multicolored lights to celebrate the Supreme Court decision on gay marriage and there was lots of self righteousness on display as South Carolina was pressured to pack up its Confederate battle flag (has anyone even thought about that flag over the past 20 years?) in the wake of the tragic killing of 9 black churchgoers by a lone sick white supremacist.

But instead of all the hoopla over 150 year old flag, perhaps a better discussion should be around risk assessment and the competency of the state to deal with those risks.

And this administration's batting average in its priorities and actual actions in this area have been atrocious and, indeed, frightening.

• Yesterday, Katherine Archuleta, director of OPM resigned after it was discovered that the Chinese had hacked into the OPM system and swiped the records of 21 million federal employees, which records included sensitive information and social security numbers.  Many have called this intrusion the equivalent of Pearl Harbor, yet we get no statement or strategy from the President.  This fiasco comes on the heels of the botched rollout of the Obamacare website.  Perhaps Archuleta and Sebelius should start an IT consulting firm that develops websites that are too clunky to be hacked.
• After mocking Romney mercilessly for asserting that Russia is our largest geopolitical threat, Obama's nominee to the head the Joint Chiefs now says that Russia poses an existential threat to the U.S. and that it's recent geopolitical actions are, "nothing short of alarming."
• Of course, Obama's derision of ISIS as the J.V. stands as one of the largest blunders in assessment of all time as ISIS continues to ravage whole swaths of the Middle East and North Africa, murdering and destroying antiquities in the greatest display of genocide since Srebrenica.  After months of admitting he had no strategy, Obama last week said that "Ideologies are not defeated with guns.  They are defeated by better ideas and more attractive and more compelling vision."  That was it.  After months of not having a strategy, our strategy appears to rely on Obama's powers of persuasion.  Good luck with that.
• Now we learn that the South Carolina shooter, Dylan Roof's background should not have permitted him to have a firearm but that the FBI did not log him properly into its system.  So we can pass laws and take down flags if that makes us feel better, but again, lack of execution on the part of the government has turned out to be the real culprit.
• Undeterred by the consequences of the last time government meddled in housing markets, the Obama administration launched new rules attempting once again to discover "patterns of segregation".  It is a heavy handed way to force upper crust communities to house the poor in their midst.   Evidently current fair housing laws aren't enough, so the federal government has to meddle even more into people's local communities. What could possibly go wrong?
• Kate Steinle, a beautiful young woman, dies in her father's arms, crying, "Daddy, help me" after an illegal immigrant shoots her in the back.  The perpetrator was deported multiple times but was protected by San Francisco under its "sanctuary (read: defy federal law) laws."   There is no comment from President Obama (Maybe, "she was a beautiful young woman just like my daughter").   Why is it not OK for a state to defy federal law on gay marriage but it is fine for local governments to defy federal law on immigration?
• After Ferguson, the Obama justice department descends on local police departments to ensure that police aren't unfairly singling out black youths for heavy handed treatment (while offering no evidence that this was epidemic).  The result-- murder rates and violent crimes have spiked. Obama policies have actually caused more deaths in the black community.
• The Iranian negotiations drag on despite the ridiculous demands of the mullahs and our constant retreats.  No anytime anywhere verifications.  No divulging history of its past nuclear activities.  No "snap back sanctions."  A $150 billion signing bonus.  All while the Iranians affirm their commitment to wipe Israel off the face of the map and their parliament and citizens are chanting "Death to America."  The esteemed Henry Kissinger and George Shultz have warned Obama not to do this deal.  Yet he plows ahead anyway.

This is just a depressing sample of the horrendous judgment (and misjudgment) of this administration.  I can't remember a president that was so consistent in making bad calls, and then either having no strategy, or a strategy that is certain to result in the opposite of what is intended.

No Hope for the Pope

 When Pope Francis was elevated to lead the Catholic Church, I had high hopes for him.  He eschewed the regal trappings of the role, opting for more modest dress and living quarters.  He immediately began to signal that he wished to de-emphasize sexuality as a centerpiece of church doctrine.  He halted the hostile takeover of the Leadership Conference by Women Religious (organization of American nuns) by bishops from the Vatican.  He took steps to clean up the Vatican bank.  These steps were even noted at the Booth School of Business at the University of Chicago in an article by Italian Catholic professor Luigi Zingales, praising his management skills (http://www.chicagobooth.edu/capideas/magazine/winter-2014/is-the-pope-a-good-manager).  As a fairly recent returning Catholic, I viewed a Pope that could turn the Church into a modern institution that understood the realities of the real world as a welcome development that could steer the Church away from the rigid, imperious, hierarchical, doctrinaire church I left so long ago.

The Pope's encyclical on climate change and economics smashed all that.  The Pope could have and should have said we need to be good stewards of the environment and that the wealthy have a moral obligation to find ways to help those less fortunate.  That's it.  But that is NOT what he said.  Instead, he launched into a diatribe against a "perverted economic system" and condemned the "short-term consumerist patterns" and that people allowed technological and economic paradigms to tell us what our values ought to be."  Richer nations should hand over "superfluous wealth" to poorer ones. "Those who possess more resources and economic or political power seem mostly to be concerned with masking the problems or concealing their symptoms,"  he asserts.   As a result of the consumer oriented West, the poor of the world are being exploited and the environment is being turned into "an immense pile of filth".  This view, in essence, is pure Obamunism--the notion that the West has exploited the poorer nations for their labor and resources.  Not content with making statements on helping the poor or taking care of the environment, he launches a frontal attack on capitalism.

The Pope inveighs against our "perverted economic system." What system does the Pope think will be an improvement?  Communism?  Feudalism?  Monarchy?  Military juntas?   We have tried all those.   It is only when capitalism begins to take hold that we see poverty lifted.  One need only look at poverty levels in all of Asia to see what liberalization has done.  All other systems in which the State controlled production have ended in disaster, misery and, often, mass murder.  Is that what the Pope wants?  Does he want to replicate his homeland?  Argentina should be a wealthy country.  Instead, it is a basket case, in constant turmoil and economic crisis caused by its redistributive policies.

Moreover, how are we supposed to transfer "superfluous wealth" to poorer countries?  Who seizes the wealth?  Who decides what is superfluous?  Why is that a better use that using that wealth to invest in companies, people and technologies that have promise?  Are we, in the West, supposed to hand it over to corrupt and authoritarian regimes that have impoverished these people?  Or distribute it directly?  Isn't it better that these people rise up and rid themselves of the thugs that rule them?  Has he not seen that these very regimes are much more devastating to the environment than liberal democracies?

The Pope also took issue with technology and progress.  What part doesn't he like?  The amazing medical breakthroughs that have eased the suffering of so many?  The drugs that have conquered devastating illnesses?  Does he not like the technology that has revolutionized agriculture, permitting us to feed millions more cheaply and on less land and control pests?  Or the advances in methods of distribution that permit us to deliver more and better food to more people more efficiently?  Or does he not like the technology that permits me to respond to my daughter instantaneously even when she is half a continent away?  Or, perhaps it is the technology that developed fracking and permitted the U.S. to move away from coal as an energy source?

He asserts that, "some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world.  This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and sacralized workings of the  prevailing economic system." As a counterfactual, I offer Robert Lucas's observation that, "the poor in China, i.e., those subsisting on less than $1 a day, look very different today than they did 35 years ago."  Are we to exclude these millions, along with the millions in India and elsewhere in the Far East and now, increasingly in Africa, from the Pope's calculations?   

The Pope's encyclical echoes of Paul Ehrlich's work of 45 years ago (which I have read) and whose predictions were wildly wrong.   The advocates of "limits to growth" rely on extrapolation of data, i.e., "if present trends continue," blah, blah, blah.  But present trends never continue.  Things change. Technologies emerge.  This is the same crowd that talked about a new ice age 40 years ago, "peak oil" (we are now drowning in the stuff), and Ehrlich predicted worldwide mass starvation by the 1980's (actually, we have an obesity problem).

Finally, does he not see that his "limits to growth" position directly contradicts the Church's position on abortion and birth control?  More people, less innovation,  elimination of economic incentives will lead inexorably to something that looks more much more like North Korea or Cuba than the relatively prosperous, educated, healthy, and happy societies we have in the West.

Yes, I am skeptical of the climate change hysteria.  The Pope's encyclical, like Al Gore's book, is riddled with errors and massive errors in logic.  But most insidiously, it is a condemnation of a form of government and economic system that has alleviated more poverty, brought more justice and respect for individuals and individual rights, eased more suffering and has evidenced more respect for the environment than any other.  The Pope has joined in the chorus of people that wish to use climate change to advance their own agenda for a much larger role of government that will ultimately dictate how we should live.

There are many (and I among them) give as much credit Pope John Paul II as Ronald Reagan for the collapse of Communism.  He saw the devastation that system wrought on the human condition, and he rejected it entirely and helped to hasten its downfall.  Francis, in contrast, is using the climate change boogeyman to embrace and promote the redistributive policies of HIS native land, which have sent that country into a tailspin (http://www.economist.com/news/briefing/21596582-one-hundred-years-ago-argentina-was-future-what-went-wrong-century-decline).

The Pope has strayed far afield from his span of knowledge and waded directly into science and economics and has mixed them in a way that has proven itself time and time again to be toxic and deadly to the human condition and has pitched rocks at the system that has by far the best track record of elevating humanity.  I am shocked and dismayed by his hubris and overreach.  I can't help but conclude that he is not much better than the left wing populist politicians that have so ruined the economies of Latin America and South America and is merely pandering to his constituency.

For the second time in my life, I am in a crisis over my religion and am contemplating leaving the Catholic Church.  Several years ago, I answered the "Catholics Come Home" initiative, which attempted to bring back Catholics that had fallen away and attempted earnestly to practice my faith again.  After a promising start, Pope Francis has shaken my relationship with the Catholicism in a significant way.  I will have to think hard about whether I remain with this institution.  If I do, it will certainly be with much less enthusiasm.

No Strategy

It's  now clear to me that President Obama likes to think about the things he likes to think about--mostly redistributive and identity politics and golf, and hopes everything else would just go away.

Ten months after he made the stunning announcement that "we don't have a strategy yet" to deal with ISIS, President Obama this week announced that we STILL don't have a strategy for ISIS.  He carefully laid blame on the Pentagon and on the Iraqi government (whatever that is) for the vacuum, but it is clear that after the fall of Mosul, Ramadi and Palmyra, this administration is completely and frighteningly at sea when it comes to assessing and dealing with foreign threats.  Moreover, we are now sending more men and women into harm's way without a strategy.  Worse, Obama appears not to have any ability to identify the threat or develop a coherent strategy or lead an effort to appropriately confront it.  Our enemies now know this and are acting accordingly.

We are seeing patterns emerge.  Obama consistently refuses to either acknowledge the threat or to correctly identify the enemy or its aims.

Every high school football coach in America knows that you NEVER underestimate your opponent.  In sports and war, upsets happen.  Look at our own Revolutionary War.  Obama consistently downplays our adversaries.  In the '08 election, he sneered that "Iran is just a tiny country and doesn't represent a threat to us the way the Soviet Union did (he has evidently never heard of the EMP (electromagnetic pulse from a single nuclear detonation).  In the 2012 election, he mocked Mitt Romney when Romney raised Russia as a threat, "The 1980's are now calling to ask for their foreign policy back because ...the Cold War's been over for 20 years." Less than two years later, Putin took Crimea and now asserts that he considered using nuclear weapons over it.  And, of course he famously stated that, "If a JV team puts on a Lakers uniform, that doesn't make them Kobe Bryant."
The JV team has been rolling up victories through Iraq, Syria and now has a point of entry into Western Europe through Libya (created by Obama's "leading from behind" initiative).  Reports are now that ISIS has stolen enough nuclear materials to make a dirty bomb.  The JV has evidently made it varsity.

Obama has also misidentified the threat. He has continued, in a cartoonish way, to assert that ISIS is not Islamic.  ISIS begs to differ.  Graeme Wood wrote a masterful article in The Atlantic, "What ISIS Really Wants." (http://www.theatlantic.com/features/archive/2015/02/what-isis-really-wants/384980/).  The punchline is that ISIS IS Islamic.  Failure to comprehend that and ignoring that has had devastating consequences.  Obama's failure to talk about and condemn their atrocities against Christians....BECAUSE THEY ARE CHRISTIANS is both appalling and puzzling because his handpicked UN ambassador Samantha Power's signature work centers around the prevention of genocide, and in her book, The Problem from Hell, the savagery of ISIS falls squarely within the definition and demands forceful action.  Have we even heard a peep from Power?  No.  She has been completely MIA during the rise of ISIS.   Ironically, Obamas rationale for deposing Gaddafi was to prevent genocide.  All he accomplished was to pave the way for ISIS the perpetrate its own and open a conduit to Europe.  We left the Libyan people completely stranded.  The "you break it, you own it" principle has evidently gone the way of the dial phone.  The reality is that Obama's policies are now responsible for more deaths in Libya than the lunatic regime of Muammar Gaddafi.

In the same week that Obama admitted that he had no strategy for ISIS, he unveiled a strategy to diversify wealthy neighborhoods through HUD.  He simply cannot stand the fact that some people live in nicer places than others.  Beheadings of Christians don't really get his blood boiling.  But a gated community?  Intolerable.  THAT he has thought about a lot and has a clear strategy for.

The frightening reality is that Obama has no strategy for ISIS.  But ISIS has a strategy for the West.

Trifecta!

The University of Chicago is a phenomenal place.  I had a once in a lifetime opportunity to attend a presentation of three- count them- three Nobel Laureates in economics this weekend:  Robert Lucas, Jr., Lars Peter Hansen, and James Heckman.  Moreover, I had the opportunity to spend some one-on-one time with Mr. Hansen at the cocktail reception that followed.  It was an amazing experience to have so much real intellectual heft in one room at one time...and an even more marvelous experience to be able to spend some time with Mr. Hansen.

Lucas spoke about the tremendous progress that the world has made since the industrial revolution (chart below), and pointed out that in Adam Smith's time, sustainable economic growth simply did not exist. And over the past 35 years, the per capita GDP of Asia has shifted completely over to the right.  He chided the Left's claim that income equality is THE MAJOR issue of our time.  "If Jeff Bezos has more money than I do, so what?"  The overall progress has been astounding. "We live in a lucky time," he said, "and it's going to get better.  If you really like equality, 1750 was your year," he joked, referring to the universally low per capita GDP.  

Heckman spent most of his presentation debunking the commonly held notion that Europe has more social mobility than the U.S. and showed that the U.S. pays a greater premium for education than European countries.  Denmark, in particular, provides free tuition because it has to.  There is no great economic incentive to pursue higher education.   Absent government transfer payments, there really isn't much difference.  Heckman also argued that the one place that government should spend money is in basic research.  "There is a huge return on that.  There is no return on police pensions."

Lars Peter Hansen talked about his work in risk and uncertainty and the limitation of models.  His slide of Mark Twain's quote that, "Education is the path from cocky ignorance to miserable uncertainty," was a succinct summary of his comments.  "Models are often very wrong," he asserted, and this notion has applicability in the current debate on climate change.

In my private conversation with him, I asked, "You said in your presentation that you had your own thoughts on the macro-economy, but then didn't elaborate.  What are they?"

"We are going to get back to historical growth levels.  Larry Summers is trying to argue that our economic performance is permanently altered and that we are in an era of secular stagnation.  He is trying to make the case for permanent stimulus [i.e. permanently bigger government].  I do not believe that."

After 6 1/2 years of a tepid, halting recovery, I came away with some optimism for the future.  And in any event, it was a tremendous experience to get the thoughts of three truly brilliant, world class minds.

I couldn't help but make the observations that Mr. Hansen won a Nobel Prize for what Yogi Berra recognized a long time ago, "It's hard to make predictions, especially about the future."

The King is Gone

I've been blessed with a wonderful memory.  I can selectively remember vivid and minute details of events decades after they occur.

I have a very clear recollection of watching Don Kirschner's Rock Concert in 1973 in which The Guess Who, Melanie and B.B. King performed.  All of them played so well that I remember that particular show to this day.

Of the three, the performer that enthralled me most was B.B. King with his rendition of "The Thrill is Gone."  That song remains in my top 5 songs of all time list to this day.

As I age, I'm piling up some regrets and the ever expanding bucket list.   Sadly, seeing B.B. King live was on that list and now it's not going to happen.   I made an earnest effort at it over the past few years but each time, a family or work obligation interfered.  Sigh.

I will leave it to others to appropriately eulogize and pay tribute to him and his contributions to the blues, to rock music in general, and to our lives.  But what most inspired me was not only his rise to stardom from being the son of sharecroppers to music legend,  but that he NEVER stopped.  Well into an age where many people have been retired for two decades or more, B.B. King kept up a full touring schedule, only recently slowing down to "only" 100 shows a year.  Sadly, in the last year of his life, he had to cancel some shows and in others, he began to falter.  But until then, he kept rolling, doing what he loved and what God gave him a tremendous gift for doing.

B.B. King, his guitar Lucille and his music left an indelible impression on me.  Rest in
peace.

Train Wreck

Illinois is dying.  People are fleeing the state in droves.  It has lost 300,000 manufacturing jobs over the past 15 years.  The state cannot pay its bills.  Its corruption is a national joke.  4 of the state's last governors have done time.

In the bluest of blue states--the state that gave us Barack Obama--a miracle happened.  The voters elected to dump the status quo and vote for a successful private equity guy to try to straighten out the mess.


I attended a Turnaround Management Association breakfast at which Governor Rauner spoke.  It was a breath of fresh air.  He spoke like a businessperson--focused, energized, and cognizant of the dire task at hand.  He wasted no time laying out the challenge.  Illinois has high sales taxes and the highest property taxes in the country and it is a bureaucracy dying of its own weight.   "The core challenge," he said, "is that the government is run for the insiders' benefit, not the benefit of the taxpayers." The default strategy of "wealthy people paying more is simply not going to happen."

Rauner talked about two fundamental problems.  First is lack of good management talent.  The state is rife with mismanagement, conflicts of interest, and inefficiencies and is especially lacking in IT.  The 800 lb gorilla in the room is its pension, which is enormously underfunded. Unfortunately, the pension had automatic COLAs baked in and a Constitutional provision prohibits the state from changing it except in case of emergency.  Rauner's plan entails maintaining the current pension benefit for current retirees and accrued benefit but to change the plan on a go forward basis for unaccrued benefits, which seems eminently fair and sensible.  However, that will entail a Constitutional amendment that will certainly be fought tooth and nail by the unions.

He evidently is close to Mitch Daniels, who got Indiana out of its mess.  "Living next door to you is like living next to the Simpsons," he joked.  But in other respects, it's not so funny.  Daniels asserted, "Illinois's hostility to business is dragging down the whole region."

Rauner, like a good executive, distilled his turnaround plan into a one page set of easily understandable bullet points.  I left feeling that there was an adult in the room and some hope.

A mere two hours later, the Illinois Supreme Court struck down a law to amend the pension system modestly, claiming it violated the Constitution, stating that "the state must pay" (even though COLAs exceed the inflation rate) and that  "The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and ...it is a crisis for which the General Assembly itself is largely responsible."

Undeterred, Rauner is plowing ahead and will seek a Constitutional amendment and seek to implement a Tier 2 pension plan.  He did not see the law as going far enough.  In the meantime, Illinois is constrained.  Higher taxes will drive more taxpayers out and inhibit businesses from forming or coming to Illinois.

Rauner is seeking to uproot long entrenched symbiotic relationships between the unions and politicians.  Politicians granted fat pay and benefit plans.  Unions elected them and kept electing them.  It was a nice, comfy relationship.

Until we ran out of money.