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Paul Krugman Gives Two Reason He Supports Bailout of Auto Companies

Posted on November 16, 2008 by Mike Bock

It was interesting this morning to see George Will confidently put forth an economic theory — only to have his theory be immediately contradicted by a Nobel winning economist. Ouch. Will probably still thinks he is right.

The discussion happened on the George Stephanoupolis program on ABC between Stephanoupolis and Cokie Roberts, Sam Donaldson, George Will, and Paul Krugman.

George Will’s theory of why the depression became the great depression is that government intervention prevented the markets from working. Krugman disagreed and said it was the collapse of the financial system that was at fault, and it was an increase in taxes, along with a policy of balancing the budget that Roosevelt imposed in 1937. Wow. I need to go back and study my history.

Krugman said that only an enormous government public project — World War 2 — eventually turned the economy around.

About the question of bailing out the auto companies, Krugman said that if the question had been asked in 1999, when the economy was strong, his advice would have been to allow the auto companies to go bankrupt — chapter 11. The companies would have continued to operate on borrowed capital and under the bankruptcy rules, they would be required to undergo major restructuring.

Krugman says that because of the bad state of the overall economy he reluctantly favors a government bailout of the auto industry. He gives two reasons:

The credit lines normally available to the auto companies are now frozen, so a Chapter 11, bankruptcy, would quickly turn into a chapter 7, liquidation. Such a liquidation would mean that over one million jobs would evaporate.
And so, the net result to the economy would be a negative stimulus, and in the terrible slump we are in, a negative stimulus is the last thing we should be engineering.

Posted in Special Reports | 11 Comments

Was Hamlet A Thoughtful Person?

Posted on November 15, 2008 by Mike Bock

The characteristic that most clearly defines what it means to be educated, I believe, is the quality of thoughtfulness.

I’m influenced by the thinking of Abraham Maslow. I put thoughtfulness at the top of Maslow’s pyramid, along with self-actualization.

Schools so completely emphasize the lower rungs of this pyramid — the development of a knowledge base, the development of specific skills — that the upper rungs are generally ignored. Schools do what they are rewarded to do, and developing thoughtfulness simply isn’t on the evaluation list.

We are developing a whole culture that defines education only in terms of the lower rungs of the pyramid — “the need to know and understand” discrete knowledge and skills — and misses the point that the purpose for developing the lower rungs is the development of the upper rung. It is within the upper rungs — thoughtfulness, self-actualization — that the hope for our better future lies. It is there that we find the inspiration, the creativity, and the insight needed for our future.

We have a debased view of what it means to be educated. The upper rungs of Maslow’s pyramid are generally ignored.

I imagine that Hamlet, as Prince of Denmark, had a top notch education for his time. He, no doubt, knew a lot of history, literature, science. He, no doubt, was an excellent writer. Shakespeare shows him to be a brilliant poet. I imagine he would have knocked the socks off of the Denmark Graduation Test, if there was one, or the SAT. But the question is: to what degree was he educated? To what degree was he thoughtful?

I got to thinking about Hamlet the other day, when I heard someone comment, “After all, the prototypical thoughtful person was Hamlet, and he wound up dead.”

There is really a distrustfulness of actual thoughtfulness — there is a feeling that thoughtfulness leads to trouble, or worse. But the opposite is the case. It is the lack of thoughtfulness that leads to trouble.

As the play unfolds, Hamlet reveals that, in fact, he is not thoughtful — not as I’m defining thoughtfulness, anyway. Hamlet’s mental turmoil — his dithering about, his making brilliant analysis, his sounding logical — should not be mistaken for thoughtfulness.

I recently reread the plot of Hamlet. I had forgotten how many people were killed in that play — bodies lying everywhere. Hamlet was responsible for the mess. I’ll not accept the notion that this destruction was the result of the actions of a thoughtful person.

Hamlet dithered and debated, but, in the end, Hamlet allowed his brilliant mind to be obsessed by one point of view — a view of revenge and duty. A mind obsessed is not a mind that is thoughtful.

Humans have evolved these millions of years and nature has endowed us with the tools we need to survive. We have an amazing capacity for insight. Brilliant minds misuse the great gifts nature has given to us and, driven by revenge or duty or religion or country or greed or power, such brilliant minds, if given a chance, are certain to bring the human race to destruction. We need to redefine what it means to be brilliant, what it means to be educated, and emphasize that our highest calling is to be thoughtful. We need to create a new culture of thoughtfulness. I’m encouraged that our new president may take the lead in doing so.

Suicide bombing is a great tragedy. A suicide bomber is driven to make a deadly, bloody mess of things, and some suicide bombers, like Hamlet, have, no doubt, been brilliant students and impressive thinkers. The grievances and thinking that guide the actions of a suicide bomber, no doubt, to the bomber seems compelling and logical. But, a mind absorbed in a prison of thought is not a thoughtful mind, regardless of how it spins its wheels — no matter if that mind is a poor Palestinian’s, or the Prince of Denmark’s.

Posted in M Bock, Opinion | 1 Comment

Jeffrey Hart Says Republicans Must Reject Bushism And Rediscover Eisenhower

Posted on November 13, 2008 by Mike Bock

Jeffrey Hart, a former editor of National Review, and former speechwriter for both Richard Nixon and Ronald Reagan, writes that the conservative movement that backed George W. Bush “is now dead.” He urges the Republican Party to move away from “Bushism,” and Reaganism and begin to model the Party to align with the thinking and actions of Dwight Eisenhower.

Excerpts from his article The GOP Must Change or Die:

In a recent poll, 98 percent of historians rated George W. Bush the worst president in American history. Bushism was a disaster, and the conservative movement that backed him in everything is now dead.
The conservative movement has stuck to George W. Bush like a limpet on all his discredited policies: Iraq, banning abortion, the block on stem cell research, income tax cuts for the wealthy, attaching Social Security to the Stock Market (!), repatriating 12 million illegal immigrants instead of offering them a road to citizenship (“amnesty”). All of these have been losers.
The model for the revival of the Republican party should be the presidency of Dwight Eisenhower. It is no good conservatives trying to revive Ronald Reagan, for whom I used to write speeches. Historians may rate Reagan as a near-great president. But our problems now are different from the ones he addressed. And “supply-side economics” is now widely recognized as nonsense.
First, the Republican party must distance itself from evangelicalism as the policy preferences of evangelicals have only minority support.
Second, science today, empirically based, has great authority because of its manifold achievements, from the interior of the molecule and the human cell to the age of the universe (13.7 billion years). Therefore science also has cultural authority. No administration has been so comprehensively hostile to science as the Bush administration. It has cut funding for research and development, manipulated data on global warming, and exaggerated uncertainties about climate change so that millions of Americans think global warming and its causes are matters of opinion.
Third, both Bushism and movement conservatism forgot the founder of modern conservatism, Edmund Burke, who understood abstract (republican) theory as the basis for revolution in France, but also understood historical force of social change.
Fourth, Burke and Leo Strauss are the indispensable conservative political philosophers and should guide the leaders of any form of modern conservatism. But the immediate paradigm for the revival of the Republican party should be the successful presidency of Dwight Eisenhower.
In 1953 Eisenhower ended the Korean war with a nuclear threat against Beijing, built the nuclear-powered navy and brought forward the unstoppable Polaris missile, initiated the U-2 spy-plane flights, began to build the interstate highway system, and also balanced the budget three times. He certainly would not have trapped an American army in Mesopotamia. He was practical, solid, and surely a near-great president.
Movement conservatism, RIP. The common sense Republican party will rise again. It must. Or it will go the way of the Federalists and the Whigs.