An oath in the bleakest of winters

America swore in its 44th president, the first black man to takes charge of the White House, not even a century after black Americans were still living in segregation. In an age where the American dream appears to be fading fast, this day marking another peaceful transition of power in an often bloody world served a powerful reminder about America’s amazing ability to renew itself. Beyond the celebration however this president faces huge challenges that will require tough decisions in order to solve major problems such as failing schools, poor health care, lost jobs and tackling global warming. Accomplishing all of this in a time of economic crisis and soaring public deficits will be an even bigger challenge and Mr. Obama knows this comparing the current crisis to the bleakest winter of the Republic’s history, when George Washington’s battered army lay at bay at Valley Forge. He promised an end to “putting off unpleasant decisions” but we shall see how these good intentions will fare against taking on the well entrenched interests and lobbies that are at the core of this amazing and yet sometimes seemingly doomed modern American Republic.

Electing a messiah of change

The election of Barack Obama as the first black president of the United States of America is a historic event. Beyond his talents, Mr. Obama achieved this feast mainly by presenting himself (and being warmly embraced by the media) as a messiah of change. Of course politicians of all creed claim to embrace change during elections and we still remember Mr. Bush, like many of his predecessor, selling himself as a uniter  able to work with Democrats in his home state. Beyond the rhetoric, however, there are clear problems with Mr. Obama’s vision of change and the likelihood of it coming to Washington.

• Prior to election night, the Democratic party already enjoyed majority power and led congress for the last 2 years with little results. More importantly, given the huge expansions of government achieved by the former Republican party majority, it is clear there is very little difference between the two parties’ interpretations about the role of government (merely a tool to support their electoral base).

• Mr. Obama himself seems an old style politicians who has always duly followed his party line and happily leveraged the power of lobbyist (lawyers, unions, etc.) to raise millions and get elected. Like a good old politician he was quick to betray his promise to use public financing for the election which would have limited his campaign spending and was able to spent three times as much as the hapless Mr. McCain.

• While the rhetoric focused on change, the core vision of change being offered by Mr. Obama is little different from the status quo. Mr. Obama believes in a major expansion of government action to fix all sorts of problems – economy, health care, climate change, etc. This is the same trend that the US has adopted since the election F.D. Roosevelt and has led to the expasion of federal powers and public spending beyond the imagination and intent of the original constitution.

• The fundamental problem is that Mr. Obama like many of his predecessors believes that elites know better than the public. Unfortunately, like the depression that assailed the U.S. just as Roosevelt came to power, today economic crisis has its main roots in the failure of government and politicians and not in the failure of the markets, which are mainly communication systems often misread by greedy investors.

• As Milton Friedman proved, the depression following the market crash 1929 was caused by the idiotic policies of the Federal reserve, US government and the restriction of trade. Like Friedman, future historians will prove that the credit crunch of 2008 was caused again by the policies of the Federal Reserve, congress, and presidents eager to promote home ownership and to cushion the business cycle with easy money. Look at the facts: the crisis started and developed in the housing markets and banking industry, two of the most regulated sectors of the economy with a plethora of government agencies that failed to provide the proper oversight.

• Despite this, Mr. Obama faults the economic crisis on the lack of regulation when in reality the core problem remains the failure of a bloated government that in trying to do too much fails miserably even in performing its key functions: providing security (terrorism fostered), disaster planning (katrina mess), and market oversight (SEC, Fannie, Fed sleeping at the wheel).

We wish Mr. Obama well but until Americans elect a congress and president that understand what kind of change is truly necessary, we believe that even bigger disasters lie at the horizon. The global investors who have been buying American treasuries, that are vital to finance this ever bloated US government, will one day stop financing this madness as they realize that Americans can no longer pay their own and their public sector’s ballooning debts (just think how big the deficit and liabilities of social security and medicare already are).

Mr. Obama, like his predecessors, has clearly stated that he wants government to spend more in all sorts of things (yes we can, he says) and by doing that he will ensure that the day of reckoning will edge ever closer marking the crumbling of America as a superpower. Historic as this election was, the greatest Americans remain by far the founding fathers whose vision of small and limited government was truly revolutionary but could not last the rise of political parties and elites hungry for ever more power, which is after all the driving force of politics.

Power, gulags and intellectuals’ curse

“The Gulag Archipelago”, Alexander Solzhenitsyn’s account of Stalin’s terror is one of the most powerful indictment of a political regime and helped to bring down the Soviet system that ruined millions of lives. His death on August 3rd however is a reminder of how rare his courage remains. Dissidents are always a tiny minority of the official intelligentsia because often, especially in Soviet times, telling the truth requires great courage and brings fearful consequences. Unfortunately today many of Russia’s contemporary intellectuals, instead of defending the freedoms acquired after the end of communism, have connived in Putin’s project of strangling democracy for the sake of nationalism or for that perks their silence brings. As a result it is not surprising that a resurgent Russia invaded Georgia last month and is threatening other independent states of Eastern Europe as it slides unchallenged toward more authoritarianism. In China the intellectuals’ silence is easier to forgive because dissent is still sharply controlled and the Tiannamen crackdown in 1989 banished free thinking. The emergence of the internet and a publishing industry however has changed China less than it should have and with the economy flourishing for a lot of people and intellectuals life is good.

Western intellectuals who often enjoy a pampered existence as tenured academics often delight in savaging the very capitalism that affords them this luxury. More importantly Western intellectuals often complain about the demise of the intellectual as the cacophony of ideas produced by democracies drowns out their voices. In reality the challenge of democracy is not cacophony because ideas should not be suppressed but nor should they be worshiped. In 1848 two intellectuals published another powerful indictment of a system, and their “Communist Manifesto” went on to enslave half of mankind. The lessons of history shows that one of the best defense against bad ideas is an educated and skeptical people that are free to listen to ideas but not in thrall to them. Solzhenitsyn hated this lack of deference and the materialism in the West but like Sakharov’s, his some of his thoughts shall be treasured. Though the Nazis had unleashed atrocities on Russia, Solzhenitsyn serving in the Soviet army wrote “I remember myself in my captain’s shoulder-straps and the forward march of my battery through East Prussia, enshrouded in fire, and I say: ‘So were we any better?’” In one poem, “Prussian Nights”, he wrote:

The little daughter’s on the mattress,
Dead. How many have been on it
A platoon, a company perhaps?
A girl’s been turned into a woman,
A woman turned into a corpse