A specter is haunting America — the specter of freedom. Even as President Obama proceeds with his efforts to impoverish the country, the productive classes of society are waking from their dogmatic slumbers and banding together.
A few days ago, Arthur Brooks, the new head of the American Enterprise Institute, published a thoughtful article in The Wall Street Journal called “The Real Culture War Is Over Capitalism.” Here is an excerpt:
There is a major cultural schism developing in America. But it’s not over abortion, same-sex marriage or home schooling, as important as these issues are. The new divide centers on free enterprise — the principle at the core of American culture.
Despite President Barack Obama’s early personal popularity, we can see the beginnings of this schism in the “tea parties” that have sprung up around the country. In these grass-roots protests, hundreds of thousands of ordinary Americans have joined together to make public their opposition to government deficits, unaccountable bureaucratic power, and a sense that the government is too willing to prop up those who engaged in corporate malfeasance and mortgage fraud.
The data support the protesters’ concerns. In a publication with the ironic title, “A New Era of Responsibility,” the president’s budget office reveals average deficits of 4.7% in the five years after this recession is over. The Congressional Budget Office predicts $9.3 trillion in new debt over the coming decade.
And what investments justify our leaving this gargantuan bill for our children and grandchildren to pay? Absurdities, in the view of many — from bailing out General Motors and the United Auto Workers to building an environmentally friendly Frisbee golf course in Austin, Texas. On behalf of corporate welfare, political largess and powerful special interests, government spending will grow continuously in the coming years as a percentage of the economy — as will tax collections.
So what should we do about it? The first thing we need to recognize is that we are not dealing with an economic but rather with a cultural, even — if it is not to off-putting a word — a philosophical issue. It is an issue, that is to say, about some basic principles about how we should live our lives. Mr. Brooks notes the irony of titling Obama’s monument of irresponsibility “A New Era of Responsibility.” “Words must mean something,” Obama said recently. But it seems pretty clear that he wants to reserve to himself the prerogatives of definition. Mr. Brooks is right that the battle we face is a battle of ideas. “Social Democrats,” he writes,
are working to create a society where the majority are net recipients of the “sharing economy.” They are fighting a culture war of attrition with economic tools. Defenders of capitalism risk getting caught flat-footed with increasingly antiquated arguments that free enterprise is a Main Street pocketbook issue. Progressives are working relentlessly to see that it is not.
Advocates of free enterprise must learn from the growing grass-roots protests, and make the moral case for freedom and entrepreneurship. They have to declare that it is a moral issue to confiscate more income from the minority simply because the government can. It’s also a moral issue to lower the rewards for entrepreneurial success, and to spend what we don’t have without regard for our children’s future.
Enterprise defenders also have to define “fairness” as protecting merit and freedom. This is more intuitively appealing to Americans than anything involving forced redistribution. Take public attitudes toward the estate tax, which only a few (who leave estates in the millions of dollars) will ever pay, but which two-thirds of Americans believe is “not fair at all,” according to a 2009 Harris poll. Millions of ordinary citizens believe it is unfair for the government to be predatory — even if the prey are wealthy.
I believe Mr. Brooks is also right that the socialist onslaught that is Barack Obama confronts us not only with challenges but also with opportunities. Battle lines, philosophical difference, moral alternatives are being drawn more sharply now than in decades. As Mr. Brooks concludes, “This is an exhilarating time for proponents of freedom and individual opportunity.”
The last several years have brought malaise, in which the “conservative” politicians in power paid little more than lip service to free enterprise. Today, as in the late 1970s, we have an administration, Congress and media-academic complex openly working to change American culture in ways that most mainstream Americans will not like. Like the Carter era, this adversity offers the first opportunity in years for true cultural renewal.
If this seems abstract to you, consider this letter, titled “Unafraid In Greenwich Connecticut,” which was sent to me by a friend and is making the cyber-space rounds. It’s by Clifford S. Asness, Managing and Founding Principal of a fund called AQR Capital Management, LLC, in Greenwich, Conneticut. “The President,” writes Mr. Asness, “has just harshly castigated hedge fund managers for being unwilling to take his administration’s bid for their Chrysler bonds.”
He called them “speculators” who were “refusing to sacrifice like everyone else” and who wanted “to hold out for the prospect of an unjustified taxpayer-funded bailout.”
The responses of hedge fund managers have been, appropriately, outrage, but generally have been anonymous for fear of going on the record against a powerful President (an exception, though still in the form of a “group letter”, was the superb note from “The Committee of Chrysler Non-TARP Lenders” some of the points of which I echo here, and a relatively few firms, like Oppenheimer, that have publicly defended themselves). Furthermore, one by one the managers and banks are said to be caving to the President’s wishes out of justifiable fear.
I run an approximately twenty billion dollar money management firm that offers hedge funds as well as public mutual funds and unhedged traditional investments. My company is not involved in the Chrysler situation, but I am still aghast at the President’s comments (of course these are my own views not those of my company). Furthermore, for some reason I was not born with the common sense to keep it to myself, though my title should more accurately be called “Not Afraid Enough” as I am indeed fearful writing this. . . . It’s really a bad idea to speak out. Angering the President is a mistake and, my views will annoy half my clients. I hope my clients will understand that I’m entitled to my voice and to speak it loudly, just as they are in this great country. I hope they will also like that I do not think I have the right to intentionally “sacrifice” their money without their permission.
Good stuff, is it not? And Mr. Asness provides some illuminating context:
The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to “sacrifice” some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.
Let’s also mention only in passing the irony of this same President begging hedge funds to borrow more to purchase other troubled securities. That he expects them to do so when he has already shown what happens if they ask for their money to be repaid fairly would be amusing if not so dangerous. That hedge funds might not participate in these programs because of fear of getting sucked into some toxic demagoguery that ends in arbitrary punishment for trying to work with the Treasury is distressing. Some useful programs, like those designed to help finance consumer loans, won’t work because of this irresponsible hectoring.
Last but not least, the President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying. The TARP recipients had no choice but to go along. The hedge funds were singled out only because they are unpopular, not because they behaved any differently from any other ethical manager of other people’s money. The President’s comments here are backwards and libelous. Yet, somehow I don’t think the hedge funds will be following ACORN’s lead and trucking in a bunch of paid professional protestors soon. Hedge funds really need a community organizer.
This is America. We have a free enterprise system that has worked spectacularly for us for two hundred plus years. When it fails it fixes itself. Most importantly, it is not an owned lackey of the oval office to be scolded for disobedience by the President.
I am ready for my “personalized” tax rate now.
Are you ready for yours?
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