This year’s Conservative Political Action Conference has had something of a deflated feeling floating about it. The crowds are smaller, the panels are fewer, and the entire enterprise has a sneaking feeling of being scrimped on. For Rand Paul, however, CPAC was bigger and better than ever.
At last year’s conference, Paul was freshly coming off of his launch into the full national spotlight thanks to a filibuster of John Brennan’s nomination to the CIA in protest of Justice Department equivocating on executive domestic droning authority. Yet for all the positive attention he received from that filibuster, Paul was still treading softly on the Republican political ground. Libertarian politics had not been overly welcome in the wider GOP, especially after a decade of Bush II foreign policy. So he took to the 2013 stage with a rock star’s reception, complete with Metallica’s “Enter Sandman,” but deployed a sophisticated rhetorical strategy intended to make libertarianism more comfortable for conservative ears.
What a difference a year makes.
When Paul arrived behind the podium Friday night, he walked and talked with the assurance of a man confident in his base of support, and spoke more to rally the faithful than sell the skeptical. From the beginning, Paul centered his remarks around liberty, telling the audience he was not calling for more Republicans, but more “friends of liberty.” And where last year’s speech was essentially grounded, a friendly pitch to make common cause, Paul deployed much loftier rhetoric, interspersing (as he often has) quotations and references to classic thinkers like Madison and Montesquieu in his rousing call to arms. The running theme was the “great battle” coming, and an urging to not be “lemmings” rushing towards destruction, but rather men who would defend their inalienable rights.
Paul castigated a progressive majoritarianism run amok, whose free-floating definition of legitimacy puts all minorities at risk, whether the racial minorities persecuted in generations past, or minorities of ideas at risk in the present day. He made frequent reference to his fight against the security state’s overreaches, and insisted upon the imperative importance of specific warrants and open, free trials instead of general warrants and secret determinations of guilt.
Finally, Paul closed on a muscular message rejecting the gradualist’s insistence on a hesitant program of changes, telling the CPAC crowd that their job is not to minimize liberty lost, but to maximize liberty.
Paul packed in the biggest crowds of the conference by far, and walked off to the adoring cries of his supporters, who then launched him once again to the top of CPAC’s straw poll, as he pulled in 31 percent of the vote. With the enthusiasm of Ron Paul’s supporters rallying behind a son of considerably more political savvy and talent, Rand Paul has more enthusiasm and organization than any other potential 2016 contender could hope to claim. It seems without question that Rand will be able to marshal more support than Ron.
It remains to be seen whether Paul will be able to ride a tide of libertarian enthusiasm all the way through the primary process on a platform of maximizing liberty, or whether Republicans will demand he make painful, perhaps too painful, concessions to the various constituencies of American conservatism.
Late last night, McClatchy reported that the CIA inspector general has asked the Justice Department to investigate allegations that the CIA illegally monitored Congressional staff investigating the Agency’s secret detention and interrogation programs. The Senate Intelligence Committee spent four years and $40 million investigating the use of waterboarding and enhanced interrogation techniques in secret overseas prisons, producing a reportedly “searing” 6,300 page finding excoriating the Agency’s actions.
As part of this investigation, intelligence committee staff were required by the CIA to use Agency computers in a secure room in Langley to access millions of sensitive documents. Congressional investigators reportedly agreed to use those computers under the condition that their work not be monitored by the CIA, in accordance with due respect for the separation of powers and the integrity and independence of the investigation. Apparently, the spy mentality proved too strong to resist, as earlier this year the committee determined that their work had in fact been monitored in possible violation of their agreement.
The Senate Intelligence Committee report was finalized 15 months ago, and submitted to the CIA for classification vetting. Sen. Mark Udall (D-Colo.) is now asking President Obama to strip the vetting control from the CIA, which may have been dragging its feet in allowing the release of a document that, according to McClatchy,
details how the CIA misled the Bush administration and Congress about the use of interrogation techniques that many experts consider torture, according to public statements by committee members. It also shows, members have said, how the techniques didn’t provide the intelligence that led the CIA to the hideout in Pakistan where Osama bin Laden was killed in a 2011 raid by Navy SEALs.
Sen. Ron Wyden (D-Ore.) apparently was referring to this situation back on Jan. 9 when he asked CIA Director John Brennan whether the federal statue banning unauthorized computer access applied to the CIA. Brennan demurred.
McClatchy describes the situation following the criminal referral by the Inspector General to be “an unprecedented breakdown in relations between the CIA and its congressional overseers.”
A reduction in the size of the military has been a long time coming. And now, it appears to have finally come. The New York Times reported last night that Secretary of Defense Chuck Hagel, largely invisible since his confirmation a year ago, would be announcing “what officials describe as the first Pentagon budget to aggressively push the military off the war footing adopted after the terror attacks of 2001.” The budget, according to the Times‘s anonymous sources, would be ”a military capable of defeating any adversary, but too small for protracted foreign occupations.”
The military-industrial complex is not likely to take the cuts lying down, as there are many interest groups targeted for outright cuts or reductions in growth. And already, the Times reports, the lobbies are ramping up:
For example, some members of Congress, given advance notice of plans to retire air wings, have vowed legislative action to block the move, and the National Guard Association, an advocacy group for those part-time military personnel, is circulating talking points urging Congress to reject anticipated cuts. State governors are certain to weigh in, as well. And defense-industry officials and members of Congress in those port communities can be expected to oppose any initiatives to slow Navy shipbuilding.
The cuts come across the board, including the Air Force’s entire fleet of A-10 “Warthogs,” which Kelley Vlahos recently profiled in depth.
Post-Iraq, and soon to be post-Afghanistan, the Army was already “scheduled to drop to 490,000 troops from a post-9/11 peak of 570,000,” but “Under Mr. Hagel’s proposals, the Army would drop over the coming years to between 440,000 and 450,000.” The Times reports that Hagel has the sign-off of all the Joint Chiefs, but in a recent Hagel profile, Kelley Vlahos mentioned that such a number “conflicts directly with what Army Chief of Staff Raymond Odierno says is an acceptable readiness level.” This will require a transition away from the Cold War-era “two wars” doctrine that required the military to maintain the capacity to wage two simultaneous land wars. Now, according to the Times report, “the military has been ordered to be prepared to decisively win one conflict while holding off an adversary’s aspirations in a second until sufficient forces could be mobilized and redeployed to win there.”
Last week, just as the East Coast descended into a terrifying world of ice and snow, Norm Ornstein proposed “A Plan to Reduce Inequality: Give $1,000 to Every Newborn Baby.” As Ornstein described the details:
It is called KidSave, and it was devised in the 1990s by then-Senator Bob Kerrey of Nebraska, with then-Senator Joe Lieberman as cosponsor. The first iteration of KidSave, in simple terms, was this: Each year, for every one of the 4 million newborns in America, the federal government would put $1,000 in a designated savings account. The payment would be financed by using 1 percent of annual payroll-tax revenues. Then, for the first five years of a child’s life, the $500 child tax credit would be added to that account, with a subsidy for poor people who pay no income. The accounts would be administered the same way as the federal employees’ Thrift Savings Plan, with three options—low-, medium-, and high-risk—using broad-based stock and bond funds. Under the initial KidSave proposal, the funds could not be withdrawn until age 65, when, through the miracle of compound interest, they would represent a hefty nest egg. At 5 percent annual growth, an individual would have almost $700,000.
By reviving a Democratic communitarian policy proposal from the 1990s, Ornstein, a resident scholar at AEI, would probably wind up pegged in the camp of what Ben Domenech branded the “Beltway Burkeans” in an essay last summer. Domenech said, “The Beltway Burkeans talk a good game about shifting the right’s coalition, but the truth is that their agenda represents a much more modest shift, in large part a reworking of the same ideas they’ve been pitching for years.” Domenech argued this Washington-centric view could hobble Republicans by disconnecting them from the populist opportunity that the Tea Party uprising afforded them. To Domenech, “A bolder approach to remaking the coalition would ditch the false promise of technocratic paternalism in favor of a bias toward individual liberty and a rediscovery of the populist agenda.” Paine is the Republican future, not Burke, then. And to the small-government populists, Ornstein’s closing sentiment, “If the cost, in the end, were even $20 billion a year, that is chump change in a $17 [tr]illion economy—and, of course, money that would all be invested in America,” is anathema.
Yet if one thumbs back through history, Tea Party favorite Thomas Paine proposes a roughly similar policy agenda. In his 1795 pamphlet Agrarian Justice, Paine makes the Rousseauean natural law case that “The most affluent and the most miserable of the human race are to be found in the countries that are called civilized. … Poverty, therefore, is a thing created by that which is called civilized life. It exists not in the natural state.” While acknowledging the property right of those who have improved the land and thus created wealth from it, Paine held that those landowners owed the community a “ground rent” for the value of the land before improvement, which belonged to the whole human race equally. So Paine sought to remedy civilization’s poverty, by providing out of that ground rent (collected as a 10 percent estate tax as the improvers of the land turn over) a sum of 15 pounds sterling to every person upon reaching their 21st birthday. Read More…
In the latest issue of Pacific Standard, John Gravois tells a remarkable story about the origins of artisanal toast in San Francisco. Yes, artisanal toast. At four bucks a slice. Yet far from being one more jeremiad filled with lamenting about Silicon Valley casual wastefulness upcharging the most mundane of foods, Gravois traces the toast craze back to its very humble beginnings in a place called Trouble.
Giulietta Carrelli, the 34-year-old proprietor of Trouble Coffee & Coconut Club, had a hard life on her way from the Cleveland of her childhood to settling down in San Francisco. Plagued by schizoaffective disorder, she bounced around the country, burning her way through friendships and periods of stability at roughly equal rates until she ultimately found a coffee shop in the Bay Area whose owner had a higher tolerance than most.
Eventually encouraged to start her own shop, Carrelli carved out a tiny lot in an obscure neighborhood near the water, and began building a community that could ground her. Her toast, cinnamon sugar, was a source of comfort from a childhood that couldn’t afford any fancier dessert. Her shop was founded, in the most simple sense, to make friends. Even after years of running Trouble, she still struggles with her own troubles, and can have lapses of hours, days, or longer. As she told Gravois, “I’m wearing the same outfit every day. I take the same routes. I own Trouble Coffee so that people recognize my face—so they can help me.”
Gregarious, tattooed, and certainly memorable, Carrelli runs a coffee shop, with a single toaster on the counter, to continually build her network of support, to catch her and remind her of who she is and where she wants to be. The most moving and remarkable about Carrelli’s network of friendships, though, is this feature Gravois describes:
Most of us dedicate the bulk of our attention to a handful of relationships: with a significant other, children, parents, a few close friends. Social scientists call these “strong ties.” But Carrelli can’t rely on such a small set of intimates. Strong ties have a history of failing her, of buckling under the weight of her illness. So she has adapted by forming as many relationships—as many weak ties—as she possibly can. And webs of weak ties are what allow ideas to spread.
Carrelli’s coffee shop exists to make friends, but by partaking of a different sort of friendship than Aristotle or Nisbet would commend to us. Carrelli is the most vivid and compelling example I’ve seen of the essential power of weak bonds.
For all the value we usually place on strong bonds, a superfluity of weak bonds can show much the same strength, and perhaps be more valuable, more resilient in coping with powerful impacts. Moreover, strong bonds can come at a cost, brittleness, as civil engineers are taught. Often tremendous strength is maintained by immobility, a fragility that any wise engineer accounts for by building flexibility into a material, allowing it to bend within its environment and not shatter the moment it is pushed past its tolerance
A useful parallel in the physical world may be another basic staple of everyday consumption: water, formed by predominantly weak hydrogen bonds between each of the individual molecules of H2O. In our everyday encounters, water is permeable, loose, breaking to flow at any disturbance. But that collection of weak hydrogen bonds can make for a powerful static surface tension between whichever molecules happen to be on top at any given moment. It can resist the force of a sudden, powerful impact with the strength of concrete.
Those of us who put a premium on having an attachment to place, to locality, can often talk as if the only thing that mattered were strengthening the few strong bonds that tie us to those around us, especially in the face of modernity’s anonymizing assault on those strong bonds. And it is right that we should make such an emphasis.
But we shouldn’t lose sight of what Carrelli discovered in her journey to starting Trouble. That the multiplication of weak bonds are also essential to tying a people together, and can be especially vital in reaction to such overwhelming shocks that could shatter a few vulnerable but erstwhile strong connections. It is the many weak bonds that tie localities together, and afford them collective strength when faced with dangers that could wipe each out.
While President Obama famous labored over all the drafts of his one State of the Union speech (and documented those labors), the opposition party apparently worked overtime to make sure that their response was thoroughly recorded, with no fewer than four broadcast or streamed statements given by House Republican Conference Chair Cathy McMorris Rodgers (R-Wash.) in the official Republican response, Rep. Ileana Ros-Lehtinen (R-Fla.) in the official Spanish-language Republican response, Sen. Mike Lee (R-Utah) in the Tea Party Express response, and Sen. Rand Paul (R-Ky.) speaking for himself.
Past official responses have often been delivered by strong state officials, with many getting their first glances of Gov. Bobby Jindal of Louisiana and Mitch Daniels of Indiana in such forums. As Daniel Larison remarked yesterday, such a Congress-heavy slate of respondents risked “cement[ing] the current GOP’s identity as a mainly Congressional party” when Congress’s approval ratings are, as is now customary, at all-time lows. What is interesting about this all-Congressional slate of respondents is how neatly it cuts across the traditional divide of Beltway-establishment outside-the-Beltway-free thinking. Rand Paul and Mike Lee both were swept into the tradition-soaked Senate as Tea Party candidates in 2010, and Rodgers herself presented a somewhat new and more promising messaging than even the venerable outsider governors have been able to marshal in recent years. As I do not know a lick of Spanish, I regret that I have to refrain from comment on Rep. Ros-Lehtinen’s message.
Lee and Rodgers, when taken together, make for something of an interesting pairing. Most of the policy talk, or what passed for policy talk, in Rodgers’ address was regular Republican boilerplate. The framing, however, served a dual purpose of addressing the “cares about you gap” that hurt Romney so severely in the last election and in combatting the mostly unfounded “war on women” meme that many Democrats have been propagating. While framing American exceptionalism in its most vague generalities of economic growth and positive feelings, Rodgers rang a money line, that “That is what we stand for—for an America that is every bit as compassionate as it is exceptional.” Her compassionate pitch was not big government in sheep’s clothing, though, but a direct connection to American political conservatism’s most potent emotional appeal: the pro-life fights and defenses of the most vulnerable. By discussing her own middle child, diagnosed with Downs syndrome, as a manifestation of God’s gift rather than a tragedy her family would overcome, Rodgers draped drab Republican economics in compassionate clothing. Moreover, her discussion of her own marriage after coming to Congress, and rising to the fourth highest position in the House even as she continued to have children and grow her family, made her the highest exemplar of a Douthatian natalism.
Senator Lee has already been a favorite of the Douthat reform conservative-types, and last night he condensed the arguments he has been making over the past year into a concentrated recounting of conservatives making a positive case for their agenda just as the Founding Fathers did for theirs. He also continued to make the case for a libertarian populism-infused inequality definition:
This inequality crisis presents itself in three principal forms:
immobility among the poor, who are being trapped in poverty by big-government programs;
insecurity in the middle class, where families are struggling just to get by and can’t seem to get ahead;
and cronyist privilege at the top, where political and economic insiders twist the immense power of the federal government to profit at the expense of everyone else.
When combined with his family-friendly tax reform plan, for one night at least, American conservatives seemed to be represented by a party that both knew to value families and children, and how to serve them.
This can only end well.
Last night Reuters reported that Congress recently approved funding to send small arms and anti-tank rockets to perceived non-Islamist Syrian rebels, though it continued to withhold portable anti-aircraft rockets that could be used to shoot down civilian airliners. “The weapons deliveries have been funded by the U.S. Congress, in votes behind closed doors, through the end of government fiscal year 2014, which ends on September 30,” according to two officials.
Congress was apparently satisfied that the Obama administration and any intermediaries it was using would be able to reliably get the weapons to “moderate” rebels without strengthening the al-Qaeda-aligned rebel forces that have often proven militarily superior. Such funding had been suspended after reports of weapons filtering to more radical elements. It is unknown when this change of heart occurred, though the Reuters article notes that nonclassified defense funding passed in December.
While there is surely great diversity in Syrian rebel forces, the inclination of many prominent foreign policy voices in Congress and the media to follow John McCain’s lead in seeing a George Washington in every irregular colonel does not give one great confidence that classified Congressional appropriators are well positioned to put guns in good hands. At the very least, “moderate” may be the single least helpful adjective in foreign policy discussions. As Donald Devine wrote late last week,
Both administrations and the Journal view democracy and moderate leadership as their goals. But what does “moderate” mean? When this author was in Iraq in 2003, the moderate Shi’ite leadership was all for “democracy,” but freely admitted it was because their majority could institute their version of Sharia. …
It also wants to support “moderate opposition” in Syria and Iraq. But isn’t Maliki a moderate, who we allied with against Moqtada al-Sadr? Of course, he oppressed his Sunni moderates too, but who in the region does not oppress moderates? Do we support moderates generally in Iraq, only Sunni moderates, or only non-ruling Shi’ite moderates? In Syria, we support the Sunni moderates, but extremist rebels have defeated them at every turn, chasing the moderate military leader out of the country and turning back a recent moderate surge. The only one protecting Christian, Druze, and Turkmen minorities is the Shi’ite/Alawite dictator. There are no good choices in the Middle East.
Or, as TAC alum Michael Brendan Dougherty (who debuted his new position at The Week writing about the plight of Middle East Christians last week) put it:
“Want a gun?” “Yes!” “You’re going to kill Assad?” “Yes” “Going to kill Christian?” “Of course!..” *frowns* “..not” http://t.co/2h8jAhflcH
— Michael B Dougherty (@michaelbd) January 28, 2014
Also, while secrecy surely has a necessary place in foreign policy and military decision making, the sheer amount of uncertainty created by classified national security and military budgets necessarily undermines the possibility of democratic governance and accountability. The fact that not even the reporters breaking the story can quite nail down when the classified budget was passed makes combating waste and fraud seemingly a fool’s errand.
With the post-9/11 financial spigots drying up, and sequestration at least partially taking a bite, the U.S. military has been put in the rather unfamiliar position of searching for cost savings over the past few years. In a speech last week at the Army Aviation Symposium in Arlington, VA, General Robert Cone, the Army’s head of Training and Doctrine and Command, indicated that they may begin looking to borrow a technique from the private sector in responding to the need for cost controls: automation.
He specifically said that the Army is considering slashing brigade combat team sizes by a quarter, from 4,000 to 3,000 troops, and making up the difference with military-grade unmanned platforms, or robots. “I’ve got clear guidance to think about what if you could robotically perform some of the tasks in terms of maneuverability, in terms of the future of the force,” he said, as well as rethinking the size of the nine-man infantry squad. As reported in Defense News, ‘Over the past 12 years of war, “in favor of force protection we’ve sacrificed a lot of things,’ he said. ‘I think we’ve also lost a lot in lethality.’ And the Army wants that maneuverability, deployability and firepower back.” As Paul McLeary of Defense News pointed out, “It’s hard to see such a radical change to the makeup of the brigade combat team as anything else than a budget move, borne out of the necessity of cutting the personnel costs that eat up almost half of the service’s total budget.” The Army is already reportedly set to slash its forces by 120,000 by 2019 to 420,000 from 540,000.
With Google buying military robot manufacturer Boston Dynamics, autonomous war machines have bubbled back into public consciousness, just in time for the new RoboCop reboot. Military robots are often the stuff of technological dystopias, when the machines rise with uber-rationalistic calculuses that invariably decide that human beings are alternately too inconstant, cruel, self-destructive, or wasteful to continue existing as a species. These machines are often told as a fable of man’s overreach, a Frankenstein for the computer age offered as a cautionary hedge against flying too close to the sun.
Cone’s speech offers a valuable counter-narrative of the robotic rise, one likely closer to the path the near future will follow. In this narrative, machines are not the manifestation of man’s ambition, but his parsimony. Technology is not the path to imitating God, but rather coping with the very limits by which our mortal finitude constrains us. And robots may enter the field of battle not by letting slip the hydraulic dogs of war, but rather ladening down the gyroscopically-guided pack mules. Especially as our human soldiers have become ever more precious commodities, we invest tremendous amounts of money to keep them safe, making manned missions ever less economical. In this telling, ever more mechanized warfare is not nightmarish, but positively mundane.
That said, I’m sure the boys at the Defense Advanced Research Projects Agency (DARPA), the DOD’s personal sandbox of futurism, are hard at work on projects of sufficient dystopian potential to keep all of us up at night. And Google’s merchants of war in Boston are already halfway there.
(h/t Alexis Madrigal)
For all the outrage, indignation, and general tumult over the TV show “Duck Dynasty” and its starring family that took place over the holiday season, the one thing almost no one charged was that the Robertson clan were fakes. Yet that’s just the charge Daniel Luzer explored at Washington Monthly last week:
According to the GQ article:
“Perhaps it’s not exactly shocking that a deeply religious 67-year-old hunter from rural Louisiana would have, shall we say, enthusiastic ideas about what constitutes good Christian morality. That’s the unspoken red-state appeal of Duck Dynasty. They’re godly folk. “Real” folk.”That’s part of the appeal of that show, that it’s so “real.”
Except it’s not.
Luzer referred to a Political Blind Spot report from late last year titled “How a Wealthy, Clean Cut ‘Duck Dynasty’ Tricked the World for Publicity.” That report displayed a series of Robertson family photographs from before the show that contrasted strongly with the beard-laden, camo-garbed image the Robertson men have cultivated in the public eye.
In one photo, the brothers posed with golf clubs apparently in front of a pool:
In another, Duck Commander CEO Willie Robertson posed on the beach with his family displaying an even worse haircut than he currently sports.
Luzer comments, “Rednecks might sometimes play golf, but rednecks do not go on golf outings with their entire family. They do not pose with golf clubs and all of their brothers at the country club after a great game.” He goes onto to remark, with some justification on Willie’s family photo, “Seriously? He’s barefoot on the beach with frosted tips? This is a picture with enough touches of American haute-bourgeois wimpiness to make Pajama Boy look like the Marlboro Man by comparison.” Luzer concludes, “A&E appears to have taken a large clan of affluent, college-educated, mildly conservative, country club Republicans, common across the nicer suburbs of the old south, and repackaged them as the Beverly Hillbillies.”
So Hollywood swooped in and gussied up a suburban family business in all the extravagances it could dream of, and sold a bill of goods to the 14 million Americans that tune in for a red state experience. The actual rednecks or rural folk who identify with the Robertsons are, in one uncharitable interpretation, fools who got played like a fiddle, falling for a dolled up caricature of their wildest dreams.
And yet. Could there be more to this?
First of all, rednecks do go golfing, plenty. Whole families will go golfing as a matter of fact, often accompanied by copious amounts of beer. Usually not at the finely manicured country clubs of Pebble Beach and Medinah, but look at the pool chairs behind the men; Medinah, it is not. I won’t begin to defend Willie’s hair, however.
The best way, though, to shed light on how the Robertsons could simultaneously be (at least partially) constructed characters and participants in an authentic enterprise might be to turn to that other hallmark of redneck culture: professional wrestling.
A couple years ago, Grantland’s pro wrestling correspondent The Masked Man (David Shoemaker) relayed a story that makes the whole Robertson transformation make a lot more sense:
My grandfather used to tell a story about a wrestling show in small-town North Carolina. A reporter from the local newspaper was assigned to cover the event but he had someplace else to be on the night of the card, so he went by the arena the day of, watched the guys warming up, took some notes, and then asked the promoter who was going to win each match so that he could file his story ahead of time. He did. But, the story goes, there was a terrible storm that night, and the show was canceled. When the newspaper came out the next day with all the results listed, the townsfolk were infuriated and, in my grandfather’s words, about ran the guy out of town with pitchforks and torches. …
Note the punch line of my grandfather’s story: The townsfolk didn’t run the wrestlers out of town; they went after the journalist. They knew full well what the reality of wrestling was—they were in on the joke—they just expected that the journalist would stay complicit in the enterprise.
Now watch this part of the “Duck Dynasty” intro sequence that plays towards the beginning of every episode of Robertson family hijinks:
You have a Rolls Royce where the Spirit of Ecstasy has been replaced with a duck, stuffed with heavily bearded men in makeshift tuxedos wearing camo wading boots and fists full of rings, spinning a duck-headed cane, where the logo hubcap cover wobbles a bit as the $500,000 car pulls to a stop. There’s more than a bit of spectacle and self-conscious performance from the very start. And that’s the point.
The show is far more honest than pro wrestling will ever be, and takes itself far less seriously, as it manifestly makes cracks at the “yuppified” women the men married, regularly shows the thoroughly generic suburban homes the brothers live in, and even sets one episode around a conflict with the homeowners association of their gated community.
Yet when all the spectacle is said and done, the explosions dissipated and competitions resolved, the family gathers in Phil and Kay Robertson’s still modest backwoods home, around the dinner table, and bow their heads while Phil blesses the food and his family with a prayer. What is seemingly not for show is the family’s tight-knit commitment to each other, and their faith.
There’s a canniness to rural folks that they often don’t get credit for, as they don’t see the need to explode illusions out of some misguided worship at the altar of authenticity. They’re more concerned with what’s real. And for all the staged skits and outlandish facial hair of the Robertson family, all evidence seems to indicate that they’re real.
Over the weekend, a small committee gathered in the small city of Basel, Switzerland, to propose policies governing the largest and most powerful financial institutions in the world, all in the hopes of averting another financial cataclysm like that of 2008. The measures they announced were discouraging.
First some context is in order. In 2010, Basel III, as the latest international agreement is called, proposed for the first time a minimum capital reserve requirement for global systemically important banks, those Too Big to Fail. As Anat Admati and Martin Hellwig explain in remarkable layman’s terms in their 2013 book The Banker’s New Clothes, minimum capital requirements are both the simplest and most effective way of shoring up our financial system by bluntly forcing banks to become more failure-resistant. Admati and Hellwig call for a 10 percent reserve requirement to shore up the biggest banks, but Basel III only set a 3 percent limit.
To use the apt metaphor of The Banker’s New Clothes, this is roughly equivalent to buying a house with 3 percent down, the rest financed by debt, a mortgage in this case. One only has to ask homeowners who weathered (or didn’t) the 2007-2008 real estate crash to realize how little a home’s value has to fall in order to send a property purchased with a mere 3 percent down underwater. Still, it was a start. Unfortunately, the 2010 committee went on to water that 3 percent down further by giving banks a variety of ways to reduce the denominator involved in calculating the amount of which they had to hold some in reserve, for instance by not counting many of the riskiest derivative assets that U.S. banks in particular keep off their books.
In June 2013, the Basel Committee proposed guidelines that kept the paltry 3 percent reserve requirement, but stiffened the drink of that denominator. The committee bravely floated guidelines that would require banks to count their off-sheet assets, such as derivatives, among the liabilities they would hold equity assets against. Then the banks’ lobbying began. Over this past weekend, the final guidelines were released, containing an array of weakening measures, allowing the banks to once again reduce what they would have to count. For those interested in the particulars, I highly recommend Mayra Rodriguez Valladares for the inside baseball, or Matt Yglesias’s fine account for the general reader.
The last point I want to make here is one that Yglesias also harps on, because it is one of the most common and misleading arguments the banks and their media sympathizers use to try and fend off fairly common-sense regulations. Banks will argue that they should not be subject to increased capital requirements, because holding more capital means they will have less to lend, slowing economic growth in a particularly weak economy. This is nothing more than slight of hand. Increased capital requirements merely demand that they finance their liabilities with cash or equity, rather than money they themselves borrowed that exposes them to further risk. For a more extensive and thorough explanation, I cannot recommend Admati and Hellwig’s book The Banker’s New Clothes highly enough. It manages to explain the situation without any more math than looking at a mortgage.
As Yglesias says, the next fight happens in the coming months as our domestic financial regulators decide how to adopt or implement the Basel guidelines. Let’s hope they show more mettle than the Swiss committee.
EDIT: Now that Noah Millman, our resident former Wall Street derivatives man and theatre critic, has weighed in, you should go read him now.