On the November Issue:
The Next Market Failure
To the Editor:
Noah Rothman has written a most admirable defense of capitalism and how it has benefited mankind worldwide (“Against the Anti-market Consensus,” November).
Starting with Adam Smith’s “Invisible Hand,” introduced in the mid-18th century, free markets have been a blessing to productive and industrious societies. “Creative destruction,” as described by the Austrian economist Joseph Schumpeter over a half century ago, has been an integral part of the almost continual rise of the standards of living for billions.
Rothman only briefly mentions, however, what it is that may bring this wonderful gift to an end. He correctly describes the financial meltdown a decade ago as not being caused by “market fundamentalism.” But is it right to say that it was caused by “economic tinkering made possible by the federal government”? Here I think Rothman grossly understates the role played by our economic elites, who pulled the strings that had caused this failure. Massive government intervention won the day then and continues apace. The moral hazard that led to the meltdown is alive and well. The huge bailouts paid for by the taxpayers may go down in history as an inflection point in our nation’s economic history.
It took 230 years for the U.S. government to build up an accumulated national debt of $10 trillion by the time President Obama entered office. In the decade since, the debt has skyrocketed to more than $22 trillion. Balanced budgets, which were once a hallmark of prudent governance, are now a concept that belongs to past. We look at trillion-dollar annual budget deficits. This has been facilitated by the elimination of free-market pricing mechanisms and the monetary printing presses at work on quantitative easing and low and negative interest rates. Reluctance to allow for market cleansing recessions, beginning in the 1990s, has led to unimaginable debts and too-big-to-fail behemoths. We are taking the inheritances meant for our grandchildren and spending them now to keep the illusion of prosperity going. Everyone realizes that this game must come to an end at some point.
The demise of capitalism and the ascendency of total centralized government controls will undeniably result in the weakening of our constitutional republic and its democratic ideals. Listening to the Democratic presidential candidates’ agendas, that day may not be that far away.
New York City
Noah Rothman writes:
It does not sound as if Fred Ehrman and I are in much disagreement. As he notes, the moral hazards that led to the collapse of the mortgage market and the necessary bailouts that followed are still in place, and they are attributable to public policy—not the marketplace. A well-meaning impulse to extend the benefits of homeownership to those who didn’t own homes due to financial constraints created the bubble. When it burst, another well-intentioned effort to spare Americans the worst of a total economic meltdown gave rise to a populist backlash that resonates still today. We are still reckoning with those legacies, but they were the product of politicians catering to constituencies, not the demands of the market.
More important than the retrospective on how we got here is where we are going, which Mr. Ehrman alludes to in his letter. We are now entering the decade in which the debt for our long record of fiscal profligacy will come due. Social Security’s costs are forecast to exceed its revenue in 2020. The program’s trustees estimate that the fund that allows Medicare to fully reimburse hospitals and nursing homes will become insolvent in 2026. By the early 2030s, both Social Security and Medicare will not be able to pay the full cost of their obligations. It’s true that estimates change with the tax code, actuarial tables, and demographic trends, and they may change again. But no longer does the crisis loom decades in the future. By the end of the next decade, policymakers will face the very real prospect of a debt crisis.
In such a political environment, it’s hard to imagine that policy-makers will respond by advocating austerity and privatization. The public will demand comfort and protection from the vicissitudes of the market, even though the market will have had nothing to do with the instability and credit crunch that will result from an insolvency crisis. And, as you note, the Constitution is often no match for the fierce urgency of now.
The New Cargo Cult
To the Editor:
Josef Joffe is absolutely right in his assessment of climate-change fanaticism (“The Religion of Climatism,” November). The biblical references are spot-on.
In reading Joffe’s description of the faith of Climatism, I was reminded of Richard Feynman, who, in his 1974 lecture about cargo cults, said this: “Details that could throw doubt on your interpretation must be given, if you know them. You must do the best you can—if you know anything at all wrong, or possibly wrong—to explain it. If you make a theory, for example, and advertise it, or put it out, then you must also put down all the facts that disagree with it, as well as those that agree with it. There is also a more subtle problem. When you have put a lot of ideas together to make an elaborate theory, you want to make sure, when explaining what it fits, that those things it fits are not just the things that gave you the idea for the theory; but that the finished theory makes something else come out right, in addition.”
Today’s global-warming cargo cultists ignore inconvenient historical facts, such as the glacial and interglacial cycles that have characterized the past million years, not to mention the four ice ages that have preceded the most recent one. None of those, or the emergence from the Little Ice Age, were preceded by CO2 change. They also studiously ignore the exponential decline of the greenhouse-gas effect of CO2, first noted by Arrhenius, with 50 percent of its impact in the first 20 parts per million (ppm), so that in this fifth half-life of that decay, the next doubling to 800 ppm will increase the effect by less than 2 percent.
But they will be among the blessed of Greta and Gore.
The Jewishness of Bernstein and Robbins
To the Editor:
Terry Teachout underestimates what Leonard Bernstein really knew when it came to Jewishness (“What Jerome Robbins Knew That Leonard Bernstein Didn’t,” November). Even if we grant that Jerome Robbins came to terms with his Jewishness by working on the choreography to Fiddler on the Roof, his work there, notable though it may be, does not compare to actually writing at least two compositions where Jewishness was primary—as Bernstein did with the Kaddish and Jeremiah symphonies. While I am inclined to agree that these are “pretentious pieces of musical costume jewelry,” as Teachout has described them, Bernstein, at least, had the ability to combine his Jewishness with his creative talent on more than one occasion. Robbins could manage only one such effort, after which he abandoned the medium in which he was so successful in that vein. Even if Teachout derides Bernstein’s condescension toward Broadway, it did not, ultimately, spoil to any significant degree Bernstein’s overall reputation.
So in the end, who knew what better? If Bernstein had returned to Broadway, following Jerome Robbins, would we have had the Kaddish symphony? Would we have missed out on at least the effort to enlighten the public on one of the most important of Jewish prayers? Or is 1600 Pennsylvania Ave (and who knows how many other possible flops) ultimately more desirable?
A Global Jinx
To the Editor:
Ivery much enjoyed Bruce Bawer’s article “The Global-Citizen Fraud” (November). I especially appreciated the part dealing with Maurice Strong. This was a man who drifted across the world stage like a cloudy day. He reminds me of the Li’l Abner character Joe Btfsplk, the world’s worst jinx adorned in his black slouch hat and tail and trailing bad luck wherever he went.
Following Strong’s recent death, it was reported that his aunt was the famous/infamous American “fellow traveler” Anna Louise Strong. Her career was as a journalist, author, and propagandist—first for the Soviet Union and then for the Peoples’ Republic of China. She was one in a long list of American leftists who found their true home in a “workers’ paradise.” Perhaps Strong’s true education came at the hands of his aunt, and it was from her that he developed his love of the PRC. In any event, among his volunteer positions was one with the World Council of Churches, the Soviet Comintern’s vehicle for the co-option and subversion of religion.
New Brunswick, Canada
Correction: In Michael Medved’s article, “‘I Will Make of You a Great Nation’” (November), the author refers to the “assassination of Czar Nicholas II” in 1881; this is incorrect. It was Czar Alexander II who was murdered that year.