October 11th, 2005

Voted for Dean

The New Capitalist Man

I've been thinking, for a couple of days now, about an essay in the Sunday New York Times by Nicolai Ouroussoff, entitled "How the City Sank." It's based on an interview with Kevin Martin, one of the pump operators at New Orleans city Pump House Number One, about what they went through in the aftermath of the storm, then some analysis by Mr. Ouroussoff about what that experience means. I think his perspective on it is interesting, I'm glad I read it. But it's not quite where I'd go with the same facts, which are these:

Pump House #1 has 8 big pumps, connected to 12' diameter pipes that draw water out of the city's drainage canals and pump it (back) over the levees. If it hadn't been for these pumps, and others like them, the city of New Orleans would never have been anything more than a tiny, sleepy little town. These pumps are what drained the swamp and made a place for people to live. Anyway, at Pump House #1, the current 8 pumps were built in 3 stages. Pumps 1 & 2 were built by the city government in 1913. Pumps 3 to 6 were built by the city government, using the same engineer, in 1928. Pumps 7 & 8 were built by a public/private partnership in the mid 1990s. Pumps 7 & 8 are expensive, high tech, and much more powerful than pumps 1 through 6. And when the water rose, what happened? Pumps 7 & 8 crapped out almost immediately. Then two of the 1928 pumps failed. But the remaining 1928 pumps, and the original 1913 pumps, kept drawing water and pushing it over the levee right up until the pump house itself went under water. The pumps failed in reverse order of age. The older the pump, the longer it lasted, and the more reliable it has been.

Similarly, in other articles I've read that the Lake Pontchartrain levee, which was built by the lazy, unqualified laborers of FDR's Works Progress Administration, guys who'd never done an honest day's work in their mostly-immigrant lives (like my grandfather), paid barely more than 3 hots and a cot, and who got paid the same amount whether they worked or not, whether they worked well or not, stayed up. The 17th Street Canal levee was built in the 1990s by a public/private partnership, by a skilled engineering firm of proven credentials, with economic incentives to get it done right, cheap, and on time. It washed away under the same pressure.

This is not a "Golden Age" narrative. As a huge fan of Eric Hoffer's first book, I've warned you again and again to be suspicious of anybody who spins a yarn for you about a lost golden age that they want to return to; that person is a would-be demagogue or fascist, and wants to dupe you into being their enthusiastic slave and suicidal soldier. I do not want to return to 1913, and I certainly don't want to return to 1928. However, this story is yet another example, perhaps the most elegant one yet, to prove a point that I've been trying to make for quite a while now, and that is that in the 1980s, the United States made a wrong turn. That wrong turn is turning out to be as disastrous for us as a nation as Russia's wrong turn (in the opposite direction) was in 1917. We do not need to go back to 1913 or 1928 or 1939 or 1979 and stay there, those were terrible times. But we absolutely must turn around.

By 1980, America had lived through the railroad stock bubble, the Teapot Dome scandal, Prohibition and the resulting corrupt mob-controlled city government era, the Great Depression, the Watergate scandal, and massive economic incompetence during the Johnson and Carter administrations. So when Ronald Reagan stood up and said proudly, "Government is not the solution. Government is the problem," he was roundly applauded. The ground had been prepared for him by decades of propaganda from ardent anti-communists like Ayn Rand. Their most effective weapon was an out-of-context quote from Adam Smith about how the "invisible hand" of the markets runs things better than any government. They found it convenient to ignore Smith's warning that, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." And so, since 1981, we've seen job after job that would have been done by the government before, or under close government supervision, handed over to corporations, with economic incentives in place that we hoped would magically encourage them to do what was right for the public and magically persuade them to never do anything that was wrong for the public. And all through the 1980s, defense contractors foisted off boondoggles on the public like the Sergeant York automated anti-aircraft gun, or the famous thousand-dollar toilet seats. Then, encouraged by the first Bush administration in the 1990s, the state of California handed their electricity grid and all generators, including ones that had been built by the taxpayers, to Enron. We saw how that turned out. However, rather than admit failure, we the people clung to this failed idea so fiercely that it even took over the majority of the Democratic Party, leaving no non-fringe opposition to stand in its way. We "know," with a religious fervor, that the invisible hand of the market will result in people becoming virtuous, or at least doing what is virtuous. We "know" this even though the results have been the opposite. To reconcile these beliefs, we push the libertarian utopia out into the near-term future, until we've finally finished deregulating and then the invisible hand of the market has had time to perfect our economy.

And it occurred to me, this week, that I've heard this all before.

In 1917, the entire royal family of Russia were assassinated, and at least 11 different parties took up arms in the single most complicated war in human history, the Russian Revolution. Eventually control ended up in the hands of 2 of those parties, the larger of which immediately used its power to exterminate its smaller partner. The winning Bolshevik Party, the Marxist/Leninist branch of the Communist International Party, believed in the perfectibility of mankind. They ruled as harshly as the Czars, they were as cruel as the Czars, they were as Machiavellian as the Czars, and they starved the peasants to funnel riches to themselves even more thoroughly than the Czars, and yet they were convinced (and so were a lot of Russians) that the Bolsheviks, unlike the Czars, were the good guys. Why? Because they had good principles. Because they were only doing these things as a short-term exigency, to make sure that the Communist Party didn't lose power. Because only the Communist Party was the vanguard of the proletariat, and only they could be counted on to guide society and educate the young towards a world where people did the right thing because it was the right thing. A world where enlightened self interest would naturally cause people to work their hardest and share the fruits of their labors, because a world where none of their neighbors were poor and starving would be what was best for them, too. And they had a name for this future enlightened race of humans: The New Communist Man. And after 72 years of this crap, the Russian people said screw this, it's not working, and they threw the Communists out, went back to square one with primitive gangster capitalism, and since then they have been trying to do something right this time. The Chinese had their Communist revolution later than the Russians. They haven't fallen yet, even though the Chinese Communist Party has adopted every single economic practice, both the corrupt ones and the legitimate ones, of the capitalist west in order to survive. They cling to their single party rule for the same reason that the Russians continued to trust their Communist Party long past the point of sanity: faith in the coming of the New Communist Man.

In her manifesto, The Virtue of Selfishness, and in her fictionalized "Old and New Testaments" The Fountainhead and Atlas Shrugged, immigrant Russian anti-communist Ayn Rand offered her own promise of a future economic utopia. In that future utopia, completely unfettered capitalists would be guided by their own selfishness to do only what was right for the public, and never what was wrong, through the magic of the Invisible Hand of the markets. It took decades to sell this goofy idea to the American public, but now they've bought it, and they don't want to let it go. They can plainly see that unfettered capitalists guided by their own selfishness rip off their customers and the general public, delivering shoddy merchandise then taking the money and running, leaving their companies to wither and rot when the corruption is exposed. But even though we can plainly see from the savings and loan crisis, from Worldcom, from Enron, from Arthur Andersen, from Adelphia, from Tyco, and from countless other examples that this isn't going to work, we keep electing the Republican Party. We keep electing the Republican Party even though the Republican Party has just as thoroughly adopted all of the excesses and corruption that the Democrats did during their period of single-party rule. The Republicans steal just as much as the Democrats, take just as many bribes and from the same sources, and run up the same huge deficits or even bigger ones ... and in the end, hand the actual work of governing over to people who sell us machines like Pump 7 and Pump 8, that don't work when they're actually needed. But even watching all of these failings, the American people keep electing Republicans, and the Democratic Party keeps nominating its own pseudo-Republicans, because they think that only these Neo-Conservatives have the right economic principles to guide us to that perfect libertarian future. So let's call Ayn Rand's heroic libertarian capitalist by his real name: The New Capitalist Man.

The New Capitalist Man is just as much of a sham as the The New Communist Man. Neither one of them is ever going to get here. It's time to stop listening to the lie, and turn around, and go back and do some things over, and do them right this time.