Showing posts with label FDR. Show all posts
Showing posts with label FDR. Show all posts

Tuesday, May 29, 2012

GLASS-STEAGALL 101

We are entering the section on economic policy making in my Introduction to American Politics class. Last week we made it to the Great Depression and discussed the rationale behind the Glass-Steagall Act. For those of you who are not familiar with the Glass-Steagall Act (1933) you can read about it in my book, or you can get a broader history from PBS here.


In brief, the Glass-Steagall Act (also known as the Banking Act of 1933) was passed by Congress in 1933. It specifically prohibited local commercial banks from doing what Wall Street investment banks do. It was enacted in response to the failure of nearly 5,000 local banks who, you guessed it, were using the bank deposits of their customers to gamble on investments and other projects they knew little about.

While Glass-Steagall was made possible by the stellar investigations done by the Pecora Commission, Franklin D. Roosevelt made it a cornerstone of his New Deal program.

Ferdinand Pecora

The Glass-Steagall Act gave the federal government more control over national banks, created the Federal Deposit Insurance Corporation (FDIC), and prohibited bank sales of securities. It didn't keep Wall Street from gambling with money from their clients accounts (see here and here) but it did protect the little guy on Main Street, for over 50 years.

Here's MSNBC's Dylan Ratigan explaining how Glass Steagall actually worked:





After being attacked by Wall Street for years Glass-Steagall was finally repealed in 1999 when President Bill Clinton signed the Financial Services Modernization Act (aka Gramm-Leach-Bliley). Commercial banks could now get into investment banking. Nice. This clip from 1999 reminds us that Senator Byron Dorgan (D-ND) saw a market collapse around the corner, even if he didn't know exactly when it was going to happen ...




The fact that we haven't done anything to bring back Glass-Steagall is just one of the reasons it's easy to argue that we're going to have another 2008 market collapse, again.

- Mark

Wednesday, November 3, 2010

OBAMA NEEDS HIS "FDR MOMENT"

"They are unanimous in their hatred for me
and I welcome their hate."

- Franklin D. Roosevelt,
speaking about the banks opposition to his policies  


Given successive wins for the Democratic party in 2006 and 2008, with the exception of Harry Reid in Nevada, things went about as expected last night. Simply put, your base can't get excited when Wall Street swims in record profits, while unemployment and debt are higher today then when you took office (even if President Bush's policies are to blame).

Still, we need to keep in mind that, after his wildly unpopular court packing scheme, President Roosevelt saw 82 House seats go to the Republicans in 1938. Here, President Obama needs to understand that, in addition to having to swim in the economic backwash of the 2008 market collapse, he did a terrible job of selling health care reform. Now he needs to stand with the unemployed and others who are on the losing side of the America's biggest wealth and income gaps since the Great Depression.

Simply put, embracing Wall Street in the hopes that they will do the right thing, and then playing nice with the Republicans - who smell 2012 blood in the water - will not stop his opponents from painting him as socialist-communist-fascist-big spending-big government-liberal.

There's a few things President Obama can take away from yesterday's election.

Lesson I: Don't do Wall Street's bidding, and then turn your back on Main Street and the unemployed with weak policies in the housing and jobs sector.

Lesson II: If Republicans can generate this kind of loss by saying "no" and watching you take credit for record foreclosures, record bankruptcies, and 10% unemployment - while America's moneyed elite party on - don't expect them to suddenly help you look presidential and accomplished over the next two years.

Solution: President Obama needs to channel his inner-FDR and develop his FDR Moment. President Roosevelt raised the ire of Wall Street's biggest financiers by telling America, "We know now that government by organized money is just as dangerous as government by organized mob.




Absent this - or an unexpected economic recovery - here's my prediction of what's probably going to happen over the next two years:


* Republicans will put out a couple of feel-good gestures over the next few months (appearances are important; and they're feeling giddy).

* Legislation is proposed/passed, but with baggage (i.e. with plenty of earmarks or culture war poison pills)

* Republicans claim (beginning around March) they can't work with an "inflexible" president.

* Gridlock, finger pointing, and Obama gets tagged as a failed president (as he continues to try and court Wall Street).

If President Obama thinks he can pull a Clinton after 1994 he's mistaken. He doesn't have the political or economic room for playing nice. There's too much debt and unemployment, which has the Republicans salivating (because they'll pin everything on him). With Wall Street and Republicans smelling blood, President Obama needs to know that America doesn't have the patience to stand by and watch as the financial sector turns on debtors and homeowners, while Wall Street and America's aristocracy swim in record profits and wealth.

The only problem for President Obama is that he hasn't set the table for his FDR moment. What a dilemma.

- Mark

P.S. For our local politicos, here are the election results for Kings County and Kern County. For those of you who are unfamiliar with California politics, Kings and Kern County are conservative strongholds in the southern San Joaquin Valley. The region is dominated by agriculture and oil money, and has more in common with Texas politics than it does with California's coastal politics.

Thursday, July 8, 2010

DELINQUENCIES OUTPACE HOME SALES

Another excellent chart from Chicago mortgage broker Michael David White. In a few words, monthly delinquencies on home loans are 16 times larger than average monthly sales.

What this means is that, with 4.63% homes currently in foreclosure, we could see another 5 million homes added to our nation's housing inventories over the next two years. This is especially the case because while housing prices have collapsed homeowner mortgage debt remains relatively the same ...


As the chart shows, while housing values fell from $20 trillion to $13 trillion (34%), total mortgage debt has barely nudged from $11.95 trillion to $11.68 (about 2%). With President Obama's Making Homes Affordable Program in shambles, and with banks foreclosing on homes with positive equity, it's clear that the banks - rather than homeowners - are the only ones benefitting from the banking/mortgage market crisis and the subsequent bailout.

No wonder the market conspiracies are starting to pop up again. Because Wall Street and the banks didn't have to take a hit from the market collapse, it's easy for some to believe the kooks and tin foil hat crowd who think some evil Dr. Doom is behind all of this. In fact, it's tied to political and regulatory capture in Washington, and a lack of political will. President Obama needs to find his FDR moment ...

- Mark

Thursday, May 20, 2010

TEA PARTY MOVEMENT: LITTLE MORE THAN DISGRUNTLED EXTREMISTS IN POLITICAL DRAG?

Yesterday's election results are interesting because it demonstrates that the Tea Party Mojo that Republican Party members like to claim as their own might be little more than Hate Talk Radio (+ Fox News) smoke & mirrors, at best. The energy that got President Obama elected is still alive, and might be the real center of our political universe. There's two reasons why this may be the case.

First, the Republicans lost a congressional seat in a district that John McCain won to Democratic candidate Mark Critz. This means that among the four congressional special elections held since President Obama was elected, Democrats have (1) won a seat Republicans had held since the 1850s (NY-23), (2) held Kirsten Gillibrand's tough seat (NY-20, a Republican leaning district), and (3) won in the only district in the country that McCain won after Kerry had carried it in 2004 (PA-12).

This suggests that, for all their talk about fearing Obama, Pelosi, Democrats and deficits (a Bush legacy) the American public just might fear letting the Republican Party have another bite at the apple even more. This is not good for a party that's been popping off about taking over the House, or that 130 seats might be up for grabs in November.

Second, since President Obama's election, electoral events in the Senate don't necessarily bode well for the Republicans. Scott Brown's victory in Massachusetts is seen less as a harbringer of things to come for Republicans, and more as an overhyped media talking point. Brown is no dependable Republican. More importantly, yesterday's results tell us that while Democratic progressives may be disappointed in President Obama siding with Wall Street, they're still pissed off and ready to go after lukewarm Democratic incumbents who seem too cozy in Washington.

Arlen "It's-All-About-Me" Specter is out in Pennsylvania. Democratic Senator Blanche Lincoln (a serious corporate tool) is on the ropes in Arkansas. This means that progressives, liberals, and Democrats are under no illusion that simply electing President Obama is going to fix the country. He's going to need to be pushed, and he's going to need help. Democrats seem to understand this, now. 

Worse, for the Republicans, is that they now have to deal with their newest Tea Party darling, Rand Paul, in Kentucky. Check out this interview. It's stunning for what it reveals about Paul, and the Tea Party.




In a few words Paul demonstrates that the Tea Party libertarian market views are really more in tune with a segregationist "States' Rights" platform than they are with America's historic mission. Seriously, for Paul to suggest that private commercial interests should be allowed to discriminate - while saying he's opposed to racism - is like saying you're a family values man, and then standing by and claiming it's a "family matter" when asked about your wife beating, child molesting friends (or is that more like proposing abstinence programs for teens while you're having an affair with a staffer?).

Look, if the state has no interest in preventing prejudice and hate from infiltrating society, even those owned by private parties, what's to prevent segregationists, supremacists, and outright racists from carving out entire regions of the country under the pretense of creating "free market" havens? It's been done before. Only then we called it states' rights.

As James Madison made clear, "If men were angels no government would be necessary." Guess what? We're not angels. Just because you (or your Tea Party supporters) have a Unicorn-like belief in markets will not alter this simple reality. You can't wish something true, no matter how much you believe it.

What becomes clear from the Rand Paul interview is that the Tea Party movement is slowly being exposed for what it really is: A mix of disgruntled Republicans and far right extremists in Political Drag. At the end of the day, while they get to play dress up and yell and cry like they belong in an institution, they're still nuts.



All of this is important because with Republicans stonewalling on any kind of financial reform, and weak-kneed Democrats pushing financial reform that doesn't quite do the job because of gaping loopholes, we're pretty much looking at another market meltdown. Those of you who follow this site regularly know why. Putting Tea Party candidates and their narrow-minded, Republican-on-Steroids, policies in office again would only make things worse. We can't afford another generation of misguided deregulation and tax cuts for the rich.

If there is a positive side in this environment (to the extent that there is a silver lining), we have this: If a market meltdown does occur before a strong slate of progressives are elected to office, yesterday's elections suggest that the adults of America are still at work. They aren't resting after President Obama's election. To be sure, they might be ready to pick up pitchforks and torches when the market meltdown occurs. But at least they won't add fuel to the fire, like the Tea Party libertarians seem ready to do.

If it's true that progressive and liberal groups are ready and organized enough to get real Democrats elected - and with the Tea Party being exposed every day as little more than the extreme wing of the Republican Party - we might actually get to see real some reform done over the next few years.

With that, let's keep in mind that FDR didn't create the New Deal in a year (or two). The extremists in political drag might not like it, but President Obama still has time. More work needs to be done. Stay tuned.

- Mark

Wednesday, November 4, 2009

POLITICAL PARTIES IN AMERICA

My Introduction to American Politics class is having a mid-term tomorrow night. I told them that I would post a brief overview of my lecture on political parties here on my blog. What I present below is also from an earlier, more contentious, post.

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The history of the two major political parties in America is not well known and often misunderstood. Up front we need to understand that political parties are nothing more than a coalition of interests. On their own these interests are often categorized simply as interest groups (among other names). As interests and groups change so do coalitions and alliances. This is an all too brief history of political parties in America.

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IN THE BEGINNING … POST REVOLUTIONARY PERIOD
A brief introduction to the history of the republican and democratic parties requires that we understand two basic points about each party. First, what we see as the Democratic Party was founded largely by anti-federalist, state’s rights supporters, and led initially by Thomas Jefferson. Since most of America was dominated by small farmers it should come as no surprise that the Anti-Federalists were early supporters of small farmers, local political issues, and states’ rights. This was the forerunner of the Democratic-Republican Party, which would become simply the Democratic Party.

The modern Republican Party, on the other hand, is a product of industrial Northern interests who were partial to the Federalists. This group was originally led by Alexander Hamilton. They focused on the need for a strong federal government to help deal with emerging industrial and growing business interests (like the value of money, tariffs, etc.).

In the first phase of party growth you generally had the Jeffersonians (anti-Federalist, small farmer supporters) and the Hamiltonians (Federalists, business supporters). Because the South was dominated by slave trading farmers, and the north was the home of emerging industrialists, we begin to see the basic contours of our current Democratic-Republican-party split: Democrats supporting local interests and small players, Republicans supporting money and business interests.

EARLY HISTORY … PARTY CONSOLIDATION
Led by Thomas Jefferson, the Anti-Federalists (soon to be Democratic-Republicans and, later, simply “Democrats”) focused on small farmers who did not want the federal government intervening in their affairs or undermining their sovereignty. This helps us understand why the south, filled with slave-holders, would embrace states rights and gravitate to “Jefferson’s Party.” Later, southerner and war hero Andrew Jackson united southern farmers and urban workers under a party that focused on a populist message, emerging machine politics, and city patronage (which grew significantly as immigrants streamed into the east coast’s cities). His personal style attracted newcomers, while westerners and the “New Frontier” advocates (Manifest Destiny, and all that) gravitated to Jackson, which allowed the party to consolidate a number of disparate interests into a strong Democratic party.

On the Federalists side things weren’t going as well. In fact, Jackson was so popular that opposition to Jackson was the real driving force behind the emergence of the Whig Party (the immediate predecessor to the Republican Party). The Whig Party broke down and reemerged as the Republican Party, putting together enough supporters from industrialists, Whig hold-overs, and Northern Democrats opposed to slavery. This coalition – and not simply the Republican party – got Abraham Lincoln elected in 1860.

And here lies a key point. First, Lincoln’s majority was really a coalition of anti-slavery Whigs, emerging business interests, and anti-slavery Democrats. Second, it was at this point that the Democratic Party began to split along two lines. Those who supported slavery (the south) and those who opposed it (the north), choosing instead to focus on machine politics, patronage, populist policies, the working class, etc.

POST-CIVIL WAR PERIOD
The Republican Party begins its history after the Civil War as a supporter of the business class (the northern industrial elites) and, when it suited them, opposition to emerging Jim Crow laws in the Democratic, slave-holding south. I say this because people often forget – or never learn – it was the Republican Party that agreed in 1876 to sign away the protective Reconstruction Troops placed throughout the south in the post-Civil War era. They did this so that they could get southern Democrats to concede the contested 1876 presidential election and get the incompetent Rutherford B. Hayes in office.

With the removal of federal troops from the post-civil war south the region was free to create its own social system. Jim Crow was on his way, as the Black Codes became a part of the southern law and culture (e.g. it was illegal for black men to be unemployed in some states, black men could not look at white women, etc.). It was at this time that the Civil Rights legislation of the 1870s (yes, there was a Civil Rights revolution then) was either ignored or broken down by the push for state’s rights in the south. Once established, Jim Crow pushed to every part of the country, and the southern caste system was generally accepted by the early 1900s (Democrat Woodrow Wilson was especially no help).

Southern Democrats continued to remain an integral part of the larger Democratic Party not because the party embraced their view on race (as did the Republicans), but because the party sided with southern farmers on the issue of tariffs and prices. Tariffs were key because northern industrialists needed them to keep out competition, which Republicans supported. But tariffs also hurt southern interests as importers of southern farm goods also kept tariffs artificially high, thus blocking out or reducing the profits of farmers.

It is at this time that the Republican Party becomes entrenched as the party of Big Business. Placing high tariffs on imports, the United States had the highest overall tariffs in the industrial world from the mid-1800s through World War I. At the same time, Republicans create a larger economic and political environment that was so industry friendly that regulations and codes were willfully ignored, while labor rights were ignored or put up for sale.

FDR AND THE MODERN DEMOCRATIC PARTY
Corruption became rampant throughout the political system, as state legislatures were regularly bought and sold (some of the stories of former California Governor Leland Stanford are quite interesting). This is one of the reasons a populist backlash emerged, which allowed progressives like Hiram Johnson in California, and Teddy Roosevelt nationally, to become popular, at least for a time (corruption was so rampant it was at this time that California got its referendum, recall, and initiative process). This Progressive Era subsided, but returned with a vengeance after the market collapse of 1929. It is at this time coalitions within parties begin to switch, or become uncomfortable where they are.

But before this happens a political tidal wave ushered in an anti-business environment, which led to the regulatory capitalism of the post-war era. Republican industrialists retrenched, while FDR wove together a coalition of organized labor, southern farmers, Big City machines (who weren’t wiped out by the progressive movement in the early 1900s), and northern liberals. By the 1960s, however, southern farmers were not happy with the emerging civil rights legislation and other “liberal” ideas associated with “northern elites.” Simply put, they threatened the cultural status quo of the south.

NIXON, REAGAN, AND THE MODERN G.O.P.
After Barry Goldwater was crushed in the 1964 presidential elections Richard Nixon, coming off his own defeat in 1960 (where, yes, JFK won with corrupt political bosses), he saw a political opening in the south. Disgruntled southerners opposed federal legislation, and argued for state’s rights, because they were opposed to emerging civil rights legislation (and other liberal ideas like women’s rights, labor rights, etc.) that would undo almost a century of Jim Crow.

Embarking on what would become known as his “southern strategy” Nixon deliberately played to the cultural fears of the south; e.g.. the "dangers" brought by civil rights and liberal thinkers which threatened to undermine a culture and a lifestyle. This attracted southern democrats to the Republican Party which, by this time, was also known as the Grand Old Party, or G.O.P. Southern Democrats who supported the Republican Party at this time became known as “dixiecrats,” were pandered to by Ronald Reagan in 1980, and eventually became – along with big business and, later, the religious right (another story for another day) – the base of the modern Republican Party.

- Mark

Wednesday, February 4, 2009

MARKOPOLOS TESTIFIES

Harry Markopolos, the private investigator who tried to blow the whistle on Bernie Madoff, testified before Congress today and told the story of a Securities and Exchange Commission (SEC) that dropped the ball on its oversight functions.

Saying that the SEC had become "nonfunctional" because of agency officials who were "financially illiterate" Markolopos made it clear that the SEC's inability to do its job made the agency "harmful to our capital markets and harmful to our nation’s reputation as a financial leader."

Those are pretty tough words for an agency that was created by FDR to make sure that market players played by the rules and actually did what they said they were doing. The SEC is not supposed to fawn over and cover for industry.

But I especially liked the testimony of Markopolos because it supports what I say in in my book about the regulatory environment that has governed our nation's economy since the early 1980s ...

. . . In 1987 the Federal Reserve Board voted 3-2 to allow banks to handle a limited amount of underwriting for financial instruments like municipal bonds and mortgage backed securities. By allowing banking institutions to take on the risk of distributing these types of securities the Federal Reserve was effectively undermining one of the principal firewalls of the 1933 Glass-Steagall Act.

Specifically, one of the Acts goals was to keep commercial banks away from selling (underwriting) securities, or getting involved in investment banking. The thinking was that banks might get reckless and, because of their F.D.I.C. guarantee, force the federal government into a bailout situation. Before the collapse of 1929 commercial banks had done this by pushing faulty investment products, but with little concern for their client’s interests. Investors and bank depositors lost millions because, ultimately, the banks “overriding interest was promoting stocks of interest and benefit to the banks.”

The voting members of the Federal Reserve in 1987, however, had been convinced that this could not happen in the modern era. Then Citicorp vice-chairman, Thomas Theobald, argued that corporate misbehavior couldn’t occur like it did before 1933 because the economy had seen the emergence of: (1) a “very effective” Securities and Exchange Commission, (2) knowledgeable investors, and (3) “very sophisticated” rating agencies. Three members were convinced. Two were not.

One of the “nay” votes from the Fed Board came from Fed Chair, Paul Volcker. He believed if commercial banks were allowed to get back into underwriting securities (like mortgage backed securities) they would lower lending standards in an effort to gain lucrative fees from underwriting bonds, which would strengthen their securities market position and generate more profits. Still, without veto power Volcker’s nay vote didn’t matter. His argument lost the day.

Paul Volcker notwithstanding, the Fed board members who voted to allow commercial banks to underwrite securities failed to recognize the weakness in Theobald’s argument. The SEC could always be converted into a toothless tiger if its chair and staff were governed by ideology rather than the public interest. Greed can get the best of investors in an increasingly deregulated environment. Ratings agencies could be co-opted, and even consumed by market euphoria. A running with the market herd mentality could quickly swamp market players who, as John Kenneth Galbraith pointed out in A Short History of Financial Euphoria, are filled with fast-profits and a sense of their own genius because of what they see as their “novel” wealth generating skills.

With the walls between S&Ls, commercial banks, and investment banks crumbling in the 1980s, U.S. banks dove into lucrative mortgage and security instruments. Rather than learn from the intoxicating effects of previous periods of deregulation, speculation, and debt-driven growth, caution was thrown to the wind. The commercial banking sector slowly came to depend on mortgage backed assets as their primary earning’s tool, jumping from about 28 percent of bank earnings in 1985 to more than 60 percent in 2005 . . .
Worse, as I point out in my book, this lax oversight environment crept into all aspects of commerce in America, and led market players to assume that they could get away with playing fast and loose with the books. This helps explain Bernie Madoff. It will also help us understand the "mini-Madoff's" that seem to be crawling out of our financial floor boards.

I'll have more to say about this on Saturday's program.

- Mark

Saturday, January 17, 2009

WHY WE SHOULD PROSECUTE BUSH . . .


Unfortunately, President Bush and his administration – and not liberals or the media – have drawn a new moral line in the sand for America. The issue of whether to charge and prosecute Bush administration officials who participated in torturing prisoners raises, once again, the issue of what America represents.

On one side, we have those who believe we are a City on a Hill, a shining beacon for humanity. On the other side are those who believe the ends justify the means.

Respect for “inalienable rights” and the belief that the rule of law is driving force in human history . . . or chaining naked and soiled prisoners together, then waterboarding them . . . which route best promotes American ideals? This used to be clear.

My friends, America represents an ideal as much as it is a country. And only America can live up to it's ideals.

We simply cannot persuade the world that we wear the White Hat when we embrace acts that are morally repugnant as a matter of policy. Let me give you an example how this works. After WWII the U.S. was faced with a dilemma: What do we do with captured Nazis? We had every excuse and – many thought – every right to seek reprisals against those who acted on behalf of a cruel, vile, criminal state. At the time many wouldn’t have cried foul if we had summarily executed, tortured, or even forced labor on those suspected of working with the Nazis.

In the end, however, this wasn’t the route Franklin D. Roosevelt took. Presented with two policy paths – one well known to human history, the other less recognized – FDR followed the lead of Frost’s fictional character, and took “the road less traveled”. And as history has demonstrated, the choice he made “all the difference” in the world.

Let’s take a look at what FDR – and Harry S. Truman – ultimately rejected.

In 1944, with victory over the Axis powers on the horizon, FDR asked the War Department to devise a plan for bringing war criminals to justice. But before he received it Treasury Secretary, Henry Morgenthau, sent his thoughts on the matter. His “eye-for-an-eye” proposal called for shooting prominent Nazi leaders on sight, and advocated banishing others to distant corners of the world. Under the Morgenthau Plan German POWs would be cast as modern slave labor, and forced to rebuild Europe. According to noted historian, Walter LaFaber, the treasury secretary's goal was to destroy Germany's remaining industrial base and turn the country into an agricultural, pastoral economic wasteland.

And then there was the Secretary of War’s proposal.

Henry Stimson saw things differently. Recalling how the serpents of Nazism crawled out from the rocks of national humiliation, economic depression and the tattered remnants of Versailles, Stimson was convinced that an economically healthy and vibrant Germany was necessary for European recovery.

The proposal Stimson endorsed called for trying responsible Nazi leaders in court. The Stimson Plan would label war time atrocities as war crimes and categorized the Nazi regime as a criminal conspiracy.

FDR was faced with a decision that many believed allowed for and justified punitive measures. After initially endorsing Morgenthau’s plan – vengeance is a difficult emotion to control – FDR supported the Stimson Plan.

In the process humanity won out. The significance of forgoing the enslavement and brutal treatment of captured Nazis cannot be overestimated.

Because of FDR’s decision the West was able to focus on discrediting a vile movement, their leaders, and their ideas. We established the Nuremberg Trials, which showcased Nazi ideals. This allowed the world to judge Nazi party hacks and their deeds on the merits. No martyrs were created. Nazism was exposed as a wretched idea, with those on trial exposed as humanity's backwash. The world saw how false nationalism and fear mongering, combined with a lack of conscience, had pushed the human experiment in the wrong direction.

By exposing the acts of ideologically driven zealots the United States not only showed how civilized societies function, but demonstrated that certain “inalienable rights” are a gift for the ages that can be shared with the rest of the world.

An added benefit was the imprint our actions left on the Germans who had lived through the excesses of Nazism. They – many of whom cheered Hitler’s tactics and his goons – saw with their own eyes how their POWs had returned. Family and friends had returned healthy and whole. This generation became admirers of America, and ambassadors of the American ideal.

The Nuremburg Trials served to transform Germany’s understanding of justice and human dignity. An ugly set of ideals was disgraced for generations. Today Germany stands as a lesson in democracy.

Over two hundred years the U.S. has experienced revolution, civil war, two global conflicts, and endured a divisive painful civil rights movement. Though the ugliness of war and racial conflict, what emerged was a set of ideals that legitimized America’s moral standing. We lost this moral ground over the past 8 years.

The Bush administration’s initial wink and a nod policy on torture, and Bush and Cheney’s now clear embrace of these disgusting policy tactics are once again pitting those who understand the American ideal against a group of zealots who had no problem sacrificing America's moral authority to the Alter of Fear.

Prosecuting those in the Bush administration who designed and participated in this ugly moment in American history would go a long way in rebuilding America’s moral authority around the world. We should bring culpable Bush administration officials up on charges.

Which side are you on?

- Mark

Thursday, June 5, 2008

A (kind of) SHORT HISTORY OF THE DEMOCRATIC PARTY, THE REPUBLICAN PARTY, AND RACE IN AMERICA

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So I was watching FOX News a few days back (I know, I know …) and the host was interviewing an individual that had written a book explaining the role of the Democratic Party in keeping slavery and Jim Crow alive in the south. Implied in the FOX News interview was that (surprise, surprise) today's Democratic Party is to blame for much of the ugliness that resulted from slavery.

The segment, no doubt, is part of a larger effort to confuse voters on the issue of race during the presidential campaign. It's all tied to Obama, so we'll see more of this nonsense. The tone of the interview also reminded me of a post I read and responded to a few years back on our campus Political Forum. I’ve made a few minor adjustments to what I posted back then, but the story below is the same.

For those of you who don’t have the time to read the post, the MORAL OF THE STORY is this: Elements of the Democratic Party that FOX News drags through the mud were never fully embraced by Progressive Northern Democrats (i.e. its Liberal Wing), eventually abandoned the party and, perhaps more importantly, are now the base of today's Republican Party.

If you want specifics, and the facts, here’s my post from a few years back with minor modifications.

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Dear ____________.

Your information on race and political parties is largely uniformed and misleading. Because it lacks context (on the larger history of political parties) what you present is the type of information that reflects incomplete thinking and leads to ignorant statements. I won’t address each specific point in your post (primarily because it would suggest the context is sound) but you should consider the following when you post or discuss political parties, race, and political interests in America.

First we need to understand that political parties are nothing more than a coalition of interests. As interests change so do coalitions and alliances. But first a brief history on parties in America.

IN THE BEGINNING … POST REVOLUTIONARY PERIOD
A brief introduction to the history of the republican and democratic parties requires that we understand two basic points about each party. First, what we see as the Democratic Party was founded largely by anti-federalist, state’s rights supporters, and led initially by Thomas Jefferson. Since most of America was dominated by small farmers it should come as no surprise that the Anti-Federalists were early supporters of small farmers, local political issues, and states’ rights. This was the forerunner of the Democratic-Republican Party, which would become simply the Democratic Party.

The modern Republican Party, on the other hand, is a product of up can coming industrial Northern interests who were partial to the Federalists. This group was originally led by Alexander Hamilton. They focused on the need for a strong federal government to help deal with emerging industrial and growing business interests (like the value of money, tariffs, etc.).

In the first phase of party growth you generally had the Jeffersonians (anti-Federalist, small farmer supporters) and the Hamiltonians (Federalists, business supporters). Because the South was dominated by slave trading farmers, and the north was the home of emerging industrialists, we begin to see the basic contours of our current Democratic-Republican-party split: Democrats supporting local interests and small players, Republicans supporting money and business interests.

EARLY HISTORY … PARTY CONSOLIDATION
Led by Thomas Jefferson, the Anti-Federalists (soon to be Democratic-Republicans and, later, simply “Democrats”) focused on small farmers who did not want the federal government intervening in their affairs or undermining their sovereignty. This helps us understand why the south, filled with slave-holders, would embrace states rights and gravitate to “Jefferson’s Party.” Later, southerner and war hero Andrew Jackson united southern farmers and urban workers under a party that focused on a populist message, emerging machine politics, and city patronage (which grew significantly as immigrants streamed into the east coast’s cities). His personal style attracted newcomers, while westerners and the “New Frontier” advocates (Manifest Destiny, and all that) gravitated to Jackson, which allowed the party to consolidate a number of disparate interests into a strong Democratic party.

On the Federalists side things weren’t going as well. In fact, Jackson was so popular that opposition to Jackson was the real driving force behind the emergence of the Whig Party (the immediate predecessor to the Republican Party). The Whig Party broke down and reemerged as the Republican Party, putting together enough supporters from industrialists, Whig hold-overs, and Northern Democrats opposed to slavery. This coalition – and not simply the Republican party – got Abraham Lincoln elected in 1860.

And here lies a key point. First, Lincoln’s majority was really a coalition of anti-slavery Whigs, emerging business interests, and anti-slavery Democrats. Second, it was at this point that the Democratic Party began to split along two lines. Those who supported slavery (the south) and those who opposed it (the north), choosing instead to focus on machine politics, patronage, populist policies, the working class, etc.

POST-CIVIL WAR PERIOD
The Republican Party begins its history after the Civil War as a supporter of the business class (the northern industrial elites) and, when it suited them, opposition to emerging Jim Crow laws in the Democratic, slave-holding south. I say this because people often forget – or never learn – it was the Republican Party that agreed in 1876 to sign away the protective Reconstruction Troops placed throughout the south in the post-Civil War era. They did this so that they could get southern Democrats to concede the contested 1876 presidential election and get the incompetent Rutherford B. Hayes in office.

With the removal of federal troops from the post-civil war south the region was free to create its own social system. Jim Crow was on his way, as the Black Codes became a part of the southern law and culture (e.g. it was illegal for black men to be unemployed in some states, black men could not look at white women, etc.). It was at this time that the Civil Rights legislation of the 1870s (yes, there was a Civil Rights revolution then) was either ignored or broken down by the push for state’s rights in the south. Once established, Jim Crow pushed to every part of the country, and the southern caste system was generally accepted by the early 1900s (Democrat Woodrow Wilson was especially no help).

Southern Democrats continued to remain an integral part of the larger Democratic Party not because the party embraced their view on race (as did the Republicans), but because the party sided with southern farmers on the issue of tariffs and prices. Tariffs were key because northern industrialists needed them to keep out competition, which Republicans supported. But tariffs also hurt southern interests as importers of southern farm goods also kept tariffs artificially high, thus blocking out or reducing the profits of farmers.

It is at this time that the Republican Party becomes entrenched as the party of Big Business. Placing high tariffs on imports, the United States had the highest overall tariffs in the industrial world from the mid-1800s through World War I. At the same time, Republicans create a larger economic and political environment that was so industry friendly that regulations and codes were willfully ignored, while labor rights were ignored or put up for sale.

FDR AND THE MODERN DEMOCRATIC PARTY
Corruption became rampant throughout the political system, as state legislatures were regularly bought and sold (some of the stories of former California Governor Leland Stanford are quite interesting). This is one of the reasons a populist backlash emerged, which allowed progressives like Hiram Johnson in California, and Teddy Roosevelt nationally, to become popular, at least for a time (corruption was so rampant it was at this time that California got its referendum, recall, and initiative process). This Progressive Era subsided, but returned with a vengeance after the market collapse of 1929. It is at this time coalitions within parties begin to switch, or become uncomfortable where they are.

But before this happens a political tidal wave ushered in an anti-business environment, which led to the regulatory capitalism of the post-war era. Republican industrialists retrenched, while FDR wove together a coalition of organized labor, southern farmers, Big City machines (who weren’t wiped out by the progressive movement in the early 1900s), and northern liberals. By the 1960s, however, southern farmers were not happy with the emerging civil rights legislation and other “liberal” ideas associated with “northern elites.” Simply put, they threatened the cultural status quo of the south.

NIXON, REAGAN, AND THE MODERN REPUBLICAN PARTY
After Barry Goldwater was crushed in the 1964 presidential elections Richard Nixon, coming off his own defeat in 1960 (where, yes, JFK won with corrupt political bosses), he saw a political opening in the south. Disgruntled southerners opposed federal legislation, and argued for state’s rights, because they were opposed to emerging civil rights legislation (and other liberal ideas like women’s rights, labor rights, etc.) that would undo almost a century of Jim Crow.

Embarking on what would become known as his “southern strategy” Nixon deliberately played to the cultural fears of the south (i.e. the dangers brought by civil rights and liberal thinkers that threaten to undermine a culture and a lifestyle) and began attracting southern democrats to the Republican Party. Southern Democrats who supported the Republican Party at this time became known as “dixiecrats,” were pandered to by Ronald Reagan in 1980, and eventually became – along with big business and, later, the religious right (another story for another day) – the base of the modern Republican Party.


MORAL OF THE STORY (again): Elements of the Democratic Party that FOX News drags through the mud were never fully embraced by Progressive Northern Democrats (i.e. its Liberal Wing), eventually abandoned the party and, perhaps more importantly, are now the base of today's Republican Party.

- Mark

Tuesday, May 27, 2008

"WE HAVE NOTHING TO FEAR ..." EXCEPT CONSERVATIVE FEAR-MONGERING



Whatever happened to “We have nothing to fear, but fear itself”?

… I’ve been commenting on this issue for a while now. Put simply, the Bush administration is still trying to get the telecommunication industry legal cover for helping his administration spy on Americans. The problem is that the Bush administration was asking for the industry's help months before 9/11.

Again, I ask, What was the national emergency before 9/11?

Now we have another Right Wing, Swiftboat-like group attempting to scare Americans into thinking that we need to give the Bush administration what they want. If we don’t, according to Senator Mitch McConnell, “some Americans are going to die.” Newsweek has the “Factcheck” goods on their fear-filled efforts here.

At the end of the day while these conservatives groups may be effective, they're pathetic losers. They need to get off their knees, change their drawers, and grow a spine.

America should be beyond living in perpetual fear.

- Mark

Wednesday, November 28, 2007

A QUICK LESSON ON POLLS/SURVEYS

There are those who think the interactive Zogby polls on Hillary v. Any Republican are a problem. And they are, if you (1) are concerned about good polls and/or (2) are a Hillary supporter (the polls have her losing). Simply put, internet polls are skewed by the participation of motivated, partisan types (but they’re not as bad as the lazy reporters who run with the story).

For those who don’t understand how poorly constructed polls are done consider this extreme example. In 1936 the Literary Digest had Republican Alf Landon beating FDR in a landslide (57-43%). We know FDR walloped Landon with 62.5% of the vote. So what happened? Among the many problems for Literary Digest is their poll drew heavily from telephone directories and lists of automobile owners.

Don’t think too hard about it … it was the 1930s … we were in a Depression at the time. Who owned telephones and cars? Who were they most likely to vote for?

- Mark