Occupy Boston Versus What Occupies Mayor Menino's Soul

"Men at some time are masters of their fates:
The fault, dear Brutus, is not in our stars,
But in ourselves, that we are underlings."
- From "The Life and Death of Julies Caesar", Act I Scene II

"Take a step outside yourself
Then you turn around
Take a look at who you are
It's pretty scary"
- From "Turn Around" (1980) lyrics by Mark Mothersbaugh and Gerald Casale

The "Occupy Wall Street" movement has spread to many big cities, including Boston. Recently Boston Mayor Thomas Menino has ordered the arrests of "Occupy Boston" protesters. On the surface, the Mayor has some valid charges: the protest was spilling over onto the Rose Kennedy Greenway, in violation of zoning rules. The protests have disrupted commercial activity. In particular, a lucrative food festival was cancelled because the protesters had taken over the space where the event would have taken place. Yes, we have the irony that an event that would have provided a lot of temp jobs was cancelled so that people could protest unemployment.

But cry no tears for the his honor the Mayor. The blame for the current lawlessness goes beyond the young people he is arresting. The true cause of the "Occupy Boston" controversy can best be explained by the following facts about Massachusetts politics:

1. Massachusetts is basically a one-party state, so much so that almost all elections are considered over after the Democratic primary;
2. This lack of any political challenge has created unusually powerful and long tenured public officials; and
3. Perhaps because of facts 1 and 2, the commonwealth of Massachusetts has suffered more than her fair share of government corruption (the last three House Speakers are all convicted felons).

Mayor Menino is the archetypical Massachusetts politician. First elected in 1993, Menino has rarely encountered more than token opposition in subsequent elections. He is popular for taking a no-holds-barred approach to the challenges of the office, often at the expense of our constitutional rights.

In 2005, there was a popular line of tee shirts emblazoned with the words "Stop Snitchen'". Menino condemned these shirts as discouraging cooperation with the police. When some Boston stores wanted to sell these shirts, the Mayor vowed to send officers into the stores to seize the shirts. Menino was advised that such a seizure would raise free speech issues, so he tried another tact. City inspectors discovered (who knew?) that the clothing stores that wanted to carry the shirts (and only those stores) had code violations. And once the orders for "Stop Snitchen'" shirts were cancelled, the inspectors found that these stores were up to code after all! Score 1 for Mayor Menino, 0 for the first amendment.

In January of 2007, the Mayor was rightly concerned that after an AFC playoff game, Patriot fans might engage in violence. The Mayor felt that TV news coverage of sports bars might inflame the fans. Lesser men might have urged TV newscasters to be cautious, but not our Honor the Mayor. With all the boldness of a honey badger, he told the Boston bar and tavern owners, a group that is even more under the city's thumb than clothing stores, to not allow TV crews into their establishments. With the fear of losing their precious liquor licenses, TV journalists were shut out of Boston bars. So much for an independent fourth estate; it's good to be the king.

When the Tea Party demonstration (the recent one, not the 1773 party) took place in Boston, the Mayor insisted that they needed permits and that they need to pay a substantial fee to cover expenses that Boston might incur. The idea that we have to get permits and pay fees in order to exercise our constitutional right to assemble is problematic, but there is an even more disturbing aspect to the Boston protest permit and fees system. Before "Occupy Boston", Mayor Menino enthused over the ideas that the protestors would be advancing. So unlike the Tea Party, no permits or fees were required of the Occupy Boston organizers. Civil rights attorney Harvey Silverglate, founder of the campus free speech organization F.I.R.E., is appalled that these fees and red tape are applied at the whims of the Mayor, even though he sympathizes with "Occupy Boston". This is not about protecting city finances: in police overtime alone, "Occupy Boston" has far exceeded all expenses related to the Tea Party event. This is about directing the city's finances to the political causes that the Mayor favors. These arbitrary fees and permits represent a new low in the abuse of power, even by Bay State standards.

So even after giving the "Occupy Boston" people a pass, his honor the Mayor is miffed that the demonstrators circumvent or ignore the laws that they don't like. Sorry Mayor, you do not have my sympathy. If you want Bostonians to show more respect for the law, you should model that behavior by showing some respect for the most important set of laws for our government officials: the U.S. constitution. The constitution asserts that all of us, as part of our basic nature, have certain inalienable rights, including the right to free speech and to assemble. Mayor Menino, could your persistent violations of the spirit, if not the letter, of the first amendment be viewed by the young men and women protesting that the law is not worth taking seriously? If the Mayor were to ask the arrested protestors where they learned to disrespect the law, they could justifiably respond with the 1980's Ad line, "I learned it from watching you!".

For the lighter side of Thomas Menino, check out the Official Mumbles Menino web site. The mayor speeches are filled with many inadvertent malaprops, spoonerisms, and novel phrasing, so the news commentators that cover them often have to do double duty as cryptographers. It appears that he has as much trouble with his own speech as he has with others. The "Mumbles Menino" site includes the funniest and / or most WTF Menino utterances.

On the heavier side of Tom Menino, in recent years he has suffered from significant weight gain. Imagine an overweight autocratic leader who speaks in a way that many people find hard to understand. That image seems familiar; I think I remember where I've seen it:

The New Industrial State is Not Too Big to Fail

"There is no remembrance of former things; neither shall there be any remembrance of things that are to come with those that shall come after."
- Ecclesiastes 1:12

"Your castles may tumble (that's fate after all)
Life's really funny that way
No use to grumble, smile as they fall
Weren't you king for a day?"
- From "Wrap Your Troubles in Dreams" (1931), lyrics by Ted Koehler and Billy Moll

The news coverage of Steve Jobs' retirement from Apple predictably discussed his greatest successes: the iMac, the iPod, the iPhone, and the iPad. But many articles about this event also covered his failed projects: the Apple III, the Apple Lisa, and the NeXT workstation. This is commendable, for Jobs' clunkers are an important part of the story. We learn more from failure than we do from success. If Jobs did not learn from his blunders, he might never have come up with the iPhone.

There is a failed project that can teach us a lot about our current financial crisis: the book "The New Industrial State" by famed economist John Kenneth Galbraith, based on a lecture series broadcast by the BBC. The main theme of this book is that the large corporations are no longer subject to market forces. Galbraith contends that the big industry leaders can use a combination of leverage, advertizing, and consolidation to squash any competitor that threatens them. The book focuses on several large corporations that J.K. Galbraith contends will always dominate their industry.

So what's the problem with this book? Well, it was first published in 1967, and as fans of Mad Men can tell you, the markets have changed quite a lot since the 1960's. Back then, General Motors made more than half of the cars sold in the U.S., as well as a significant share of some foreign markets. So naturally "The New Industrial State" assures us that GM is one of the companies that need not worry about competition. When it comes to computers, whether we are talking about hardware or software, the book asserts that the one company that matters will always be IBM. And what about retail? Remember, 1967 is before Walmart or even Kmart made it big, so the book's examples of the forever dominant retailers are Sears (currently on the ropes) and Montgomery Ward (went bankrupt in 2000, although recently revived as an online store). These 1960's corporate giants lost their market dominance to new companies whose innovations won over the customers. The history of the last few decades provides the definitive rebuttal to "The New Industrial State": even the largest corporations must remain competitive to stay alive.

The basic premise of "The New Industrial State" is widely believed today. If only I had a dime for each prediction that the internet will no longer be a venue of free speech because soon one company will take over the internet. Funny thing is, the company that is predicted to take over the internet keeps changing: Netscape, Microsoft, AOL, Google, and Facebook have all been projected to be our future on-line overlord. In 5 years, there will probably be some company not in this list that will be viewed as the future emperor of the internet.

Some very important insights in our current economy can be learned from the failure of "The New Industrial State".

• There is no corporation that is "Too Big to Fail". When a corporation falters, there are plenty of other companies that will pick up the slack. In the 1970's, A&P went from the largest grocery chain in the country to a chain that operated in a handful of east coast states. The closures of all those A&P stores did not cause mass starvation, for these closures were matched by openings of other grocery stores.
• The 2008 bailouts of failed large corporations were therefore unnecessary and counterproductive. At a time when the federal government could ill afford it, taxpayer dollars were wasted to reward poor corporate decisions at the expense of those companies that served their customers better.
• The government should not be in the business of picking market leaders. Keep in mind that John Kenneth Galbraith was an award winning economist who advised presidents FDR and JFK. If Galbraith could not predict which companies would prevail, what chance do we have that our current experts can safely invest our tax dollars in future winning companies? This is the sort of hubris that lead to the Solyndra debacle.

Like the Apple III, "The New Industrial State" is a flawed work, but we can learn a lot from its errors. One wonders if the president's economic team understand where Galbraith went wrong, so that they can avoid repeating his mistakes.

Solving the Budget Crisis Through Theft

"If you steal from one author, it's plagiarism. If you steal from two, it's research."
- John Burke

"PlagiarizeLet no one else's work evade your eyes
Remember why the good Lord made your eyes
So don't shade your eyes
But plagiarize, plagiarize, plagiarize
Only be sure always to call it please 'research'"
- From "Lobachevsky" by Tom Lehrer.

The federal budget fight has been unusually acrimonious. On July 14, Obama walked out of the budget talks. On July 22, Boehner walked out of the budget talks. And throughout these talks, the American public has been walking out from both parties, and for good reason: neither party has been serious about tackling the debt crisis. Sure, both sides crow about how they have proposed drastic cuts, but these spending proposals are "cuts" only in a sense that is accepted no where else than Washington. What they mean by cuts is that they propose spending less than projected 2011 spending. Neither the "Cut, Cap, and Trade" proposal nor the president's most recent proposal would reduce 2011 spending to less than the previous year, even after adjusting last year's spending for inflation and population growth. The Republicans have been reluctant to really address the looming entitlement crisis. Congressional Democrats are even worse on this issue, threatening to block any entitlement program changes, while hypocritically complaining that the Republicans are too inflexible about taxes.

We need not worry the August 2 deadline, however. For starters, the default deadline is bogus anyways: the government need not default nor miss sending Social Security checks if the debt ceiling is not raised by August 2. But now that both sides have propped up this phony crisis, they will have to save face by coming up with some compromise before the "deadline". The bigger problem is that the compromise that the president and congress will likely fall far short of what is needed to reassure the rating services such as Standard and Poor's. They want to see creditable deficit reduction if U.S. government bonds are to retain their AAA ratings. If U.S. bonds are downgraded,

1. Bond holders will be hurt; and
2. The costs of U.S. borrowing will balloon.

So we may dodge the August 2 bullet, only to be hit with the S&P bond downgrade.

Dramatic action is required to prevent our bond rating dropping to AA. We need a deficit reduction plan, and fast. One effective approach would be to find a previous successful budget, and steal it. In short, we can solve our money problem by theft - not of money, but ideas.

I propose that the 2011 budget be based on the U.S. budget from 2000, one of the last budgets assembled before the 2 recent spendthrift administrations. This budget covered the basic government functions while spending less than the revenues collected. This budget was put together by a Democratic president working with a Republican congress - if they could do it, why can't we? When you adjust the 2000 budget for inflation and population growth, it comes out to $1,965,999 million. This would allow us to meet the S&P deficit reduction limits without taking the perilous action of raising taxes in a troubled economy. So one simple approach would be to adopt the 2000 budget, adjusted for inflation and population growth. This is the one sequel that we would all welcome.

Critics will immediately point out how the world has changed since 2000. We are now fighting 3 simultaneous wars, we have a slew of new agencies that have cropped up to fight the "War on Terror", a bunch of new Czars, not to mention ambitious new programs such as designing and building a whole new rail system. How could the 2000 budget cover these programs that did not exist 10 years ago? To this argument, I would reply that a large part of the reason we are in this mess is that we adopted expensive new programs without figuring out how to pay for them. We simply cannot afford all of them, so we need to prioritize. Given that we almost certainly cannot do both, should we engage in nation building in 3 middle east countries, or should we rebuild our own nation? Do we really need all these agencies that we were able to get along without for two centuries, and if so, could we pay for them by making cuts elsewhere in the 2000 prototype budget? If we really need the TSA, could we pay for it by eliminating the Import-Export bank or by cutting farm subsidies paid to millionaire farmers?

Real budget reform is possible. In fact, it is inevitable: the only real question is whether we fix the budget ourselves now or let our creditors decide how to fix it in the future. With the 200 budget austerity program, we can avoid default, avoid a credit downgrade, pay down the deficit, revive the economy, and then we can party like it's 1999.

Should Someone Take the Fall for the Central Falls Pension Mess?

"Liberty means responsibility. That is why most men dread it."
- George Bernard Shaw, "Man and Superman" (1903)

"With great power comes great responsibility."
- Stan Lee / Steve Ditko / David Koepp, "Spiderman" (2002)

Many state and local governments are burdened with unfunded pension liabilities. Recently it was revealed that Central Falls, Rhode Island, a small, impoverished city, has a pension obligation of $80 million. This is more than the city could possibly pay, so Central Falls is looking into filing for municipal bankruptcy. The backup plan is to go into receivership.

I wonder if this rash of municipal pension problems is caused in part because there is no one individual who is legally liable when a municipality makes pension agreements that are not fully funded. Private company officials have done the "perp walk" for not funding their pension obligations. But who will go to jail for Central Falls' pension promises that cannot be met? The mayor? City councilors? The city's union contract negotiators? And who, if anybody, should go to jail for the California pension mess?

Please contribute your thoughts: who, if anyone, should be held liable if a municipality does not properly fund its pension obligations? And if we do not hold any one person liable, what is the best way to prevent future pension crises? Feel free to also discuss the mothers of all unfunded liabilities, social security and medicare.

The Great Fall of China

"To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm."
- F. A. Hayek

"Yeah, the harder they come,
The harder they'll fall
One and all"
- "The Harder They Come" by Jimmy Cliff.

The U.S. economy may have "recovered" according to some criteria formulated in D.C., but for most American citizens, this is the weakest economy they have seen in quite a while. The last time that unemployment was hovering around 9% for this long was before WWII. Over 2.7 million Americans live in a home with a mortgage that has not been paid in more than a year. The U.S. debt crisis has become a concern for the IMF.

The financial reports from Europe are also rather grim. The one country that seems to be avoiding the downturn is China. China benefits from a steadily growing GDP and now has a substantial middle class. But all is not well for the Chinese economy. An Australian news report indicates that China has a serious real estate bubble, and when it bursts, the impact could dwarf the 2008 U.S. recession.

China has a mixed economy, and the communists still control the real estate sector. Anticipating a rapidly rising upper middle class, the communists built vast cities of luxury apartment buildings. These apartment buildings are going up faster (much faster) than the ranks of Chinese yuppies who are supposed to be renting them. There are new towns where the apartment occupancy rate is 25%. The government doesn't provide statistics, but it is estimated that China has 64 million empty apartments.

Even more amazing is the story of the New South China Mall, the largest shopping mall in the world. This impressively designed mall is more than twice the size of the Mall of America. The mall, however, lacks two essential ingredients for a successful shopping center: merchants and customers. Since opening their doors in 2005, the occupancy rate has never risen much above 1%. The New South China Mall was basically born as a dead mall.

So how will this Chinese real estate bubble play out? Anyone who has lived in the U.S in 2008 knows the script. The building owners cannot keep tossing their money into these pits forever, and will have to figure out some way to recoup some of their investment. Undoubtedly, they will have to dramatically slash rents in order to get something for their empty spaces. This will drive down the value of real estate, and therefore any fund based on property values. This devaluation weakens the economy, which creates further downward pressure on rents, therefore making the real estate crisis even worse. The situation is like the 2008 American housing market, but China's bubble is much bigger. And when this bubble bursts, it will be felt across the globe.

The impact of a Chinese bubble burst would have a mostly negative impact on European and American markets, delaying any possible recovery. But there is some good news that could come out of a Chinese market crash.

• A real estate market crash will greatly reduce the prestige and power of the Chinese communist elites. It may even bring an end to one party rule.
  
• The economic success of China has been used to advocate authoritarian measures in the west. On "Meet the Press", New York Times columnist Thomas L. Friedman asked wistfully "What if we could just be China for a day" so that we could pass measures he likes without having to go through our messy democratic process. The failure of the Chinese command economy would end this sort of totalitarian nonsense.
• The crash would teach the nations of the world a valuable lesson, namely to avoid what Nobel prize winning economist F. A. Hayek called "The Fatal Conceit", that is, the belief that "man is able to shape the world around him according to his wishes." In the wake of China's failure to create prosperity on command, governments might take a more flexible, decentralized, market-based approach to decision making.

So hard times may be with us for a bit longer, but we will eventually come out of this both wiser and more prosperous. Unfettered by bureaucracy, humans always work out some ingenious methods to create wealth. As Nick Gillespie and Matt Welch put it in their excellent new book "The Declaration of Independents", we'll see a "future so bright, we gotta wear shades."

Warring Tribes Join Forces To Fight Smut!

"Pornography is now considered as addictive as drugs"
- Rev. Jimmy Swaggart

Katie: The internet is really really great,
Trekkie Monster: For porn!
Katie: I've got a fast connect, so I don't have to wait!
Trekkie Monster: For porn!
- From "The Internet Is For Porn" by Robert Lopez and Jeff Marx

It is hard to think of a time when pornography was not in the news. When the navy seals found Bin Laden, they found a stash of pornography in his lair. Several weeks ago, Sen. Orrin Hatch sent a letter to Attorney General Eric Holder demanding more obscenity prosecutions. Going back to the 1980's, Ronald Reagan's Attorney General Ed Meese created a Commission on Pornography. A presidential commission on pornography was assembled in the late 1960's, but when this commission recommended legalization, then President Richard M. Nixon rejected the commission's findings. In the mid-sixties, financier Charles Keating (a man who later had his own ethics issues) bankrolled an anti-pornography drive.

The most interesting anti-smut movement in my lifetime was the Women Against Pornography group formed in the late 1970's. Before this group was formed, most of the support for obscenity laws came from conservative religious groups. These early Christian right groups used to argue that pornography should not be given first amendment protection because it subconsciously alters the mind, causing both addiction and a host of anti-social behaviors. Reverends Pat Robertson, Jimmy Swaggart, Jerry Falwell etc. asserted that if pornography were legal, we would see a dramatic increase in rape, adultery, divorce, teen pregnancy and wife beating.

I was in college in the 1970's, and there was strong support for civil liberties and free speech on the campuses of that era. That ended with the arrival of Women Against Pornography, a group founded to advance the work of feminist authors Andrea Dworkin and Catharine McKinnon. Dworkin and McKinnon argued that smutty books, magazines and films, and even publications as innocuous as Playboy were a crime against women. What I found remarkable about this group's arguments on the porn issue was how close it was to the case made by the religious right. These feminists said that pornography had special mind-altering properties, that pornography is like an addictive drug, and that it causes a plague of social ills. Attending one of their rallies, I felt like I was hearing Jimmy Swaggart and Jerry Falwell dressed up in drag (sorry for that rather unpleasant imagery). To be fair, the anti-porn feminists did come up with one argument not previously made by the religious right: they argued that porn convinces men that women are only good for sex, and hence porn consumers will not accept females in professional positions. I didn't find this argument convincing, but at least it was original.

Amazingly enough, this group had a profound impact on college campuses. I was astounded with how many students and professors did a 180 degree turn on obscenity laws, and doing so on the basis of arguments that were soundly rejected a few years ago. It was not as though everyone had just discovered the genius of Pat Robertson. So what happened to the ideals, such as free speech, civil liberties, and sexual freedom, that we used to share? This experience demonstrated an important principle. Although most people think that their political / social / religious views are shaped by their ideals, what really shapes their views is group identity, also known as tribalism. They feel the pressure to conform with the prevailing opinion of the social group that they are members of. The Women Against Pornography story is really about one tribe (feminists) joining forces with an enemy tribe (the religious right) in order to fight a common enemy, smut peddlers. And as a committed civil libertarian, I found it appalling that this would be the issue that brought these sides together.

Fortunately, Women Against Pornography disbanded in the late 1980's, so now only the social conservatives carry on the battle against smut. The right has lost a lot of its enthusiasm over this issue: if P. J. O'Rourke and Greg Gutfeld got together to discuss porn, they'd probably end up talking about where to find the really good stuff. But frankly, this issue was settled in the 1990's with the invention of the internet. The internet made pornography more available than ever. If there was anything to the right (or left) case against porn, then the rise of the on-line community would have been accompanied by large increases in rapes, divorces, teen pregnancies, etc. But as this Hit and Run post pointed out, all of these social ills have actually lessened since 1991.

To this, I would add that the internet also disproved the theory that porn consumers could not accept that women can be good for something besides sex. Since web browsing hit the big time, women have been swelling the ranks of many professions. And as a man, I am happy to report that the popularity of the Chippendales has not produced a hoard of women who think that men are only good for the full monty.

When Will We See War Declared the Right Way?

"The Congress shall have Power... To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;"
- Section 8 of the U.S. Constitution

"Then it’s war!
Freedonia’s going to war!
Each native son will grab a gun.
And run away to war!"
- From "The Country's Goin' to War" by Bert Kalmar and Harry Ruby;

Pundits have criticized the U.S. bombing of Libya for its ill timing, its lack of planning, and for the fuzzy end goals. As serious as these issues are, there is an even bigger problem with this military action: is it constitutional? According to section 8 of the constitution, the power to declare war resides with congress. The decision to set up a no-fly zone was made without a vote in the house or the senate, or even consulting with most Senators and Representatives for that matter.

Does the President have the constitutional power to do this? Voices as disparate as Rep. Dennis Kucinich (D-OH) and Rep. Ron Paul (R-TX) agree that this action is clearly a violation of Obama's oath to uphold the constitution. In fact, some feel that this is an impeachable offense. One former Senator and presidential candidate said in 2007, that if then President George Bush unilaterally took military action against Iran, he would move to impeach him. That candidate was Sen. Joe Biden, our current Vice President.

In December 2007, the Boston Globe asked the Presidential candidates

"In what circumstances, if any, would the president have constitutional authority to bomb Iran without seeking a use-of-force authorization from Congress? (Specifically, what about the strategic bombing of suspected nuclear sites -- a situation that does not involve stopping an IMMINENT threat?)"

Candidate Barack Obama's response started with

"The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation."

Absolutely correct, candidate Obama! Now can you please impart this constitutional expertise to President Obama?

To be fair, section 8 of the constitution has been ignored for many administrations. The last American war officially declared by congress was before the Korean war! The U.S. has not fought a war as proscribe by the constitution in my lifetime, and I fear that I might not live to see a constitutionally declared war. But previous presidents have at least had some sort of congressional vote to approve wars that did not involve a threat to the nation. Obama has crossed a new threshold with the Libyan no-fly zone.

Instead of waiting for congressional approval, our President acted on the approval of two other bodies: the United Nation and the Arab League. This is troubling for reasons other than the fact that these bodies have zero congressional authority: neither of these bodies are elected by U.S. citizens. War can impact U.S. foreign relations for generations. The cost of American wars is born by U.S. taxpayers. Our wars also kill many of the our best young people. Given the burden on U.S. citizens, shouldn't war decisions be made by a body elected by these citizens?

The wars in Afghanistan and Iraq are being fought, in part, to bring democracy to those countries. But who's fighting to bring democracy to America?