The Virtues of Debt

            For something that has done so much for so many for so long, debt has certainly been getting a bad name lately.

            In the history of this great nation, debt has funded the Revolutionary War, the Louisiana Purchase, the Civil War, World Wars I and II, and the building of the Interstate Highway System, among other things. Alexander Hamilton, right as usual, wrote that the national debt is part of the nation’s capital.

            If you are a typical American, debt may have enabled you to get a college education, buy a house and own a car. For businesses, debt has provided a means of raising start-up money, financing expansions and getting through a rough spot.

            Yet from Polonius to Ben Franklin to nearly all the present-day commentariat, debt has been described to us as a bad thing. (Franklin’s strictures against debt in Poor Richard’s Almanac take on a level of high irony when you consider that perhaps the greatest service old Ben ever did for his country was sweet-talking France into lending us the money for the War of Independence at a time when that loan looked more like a flutter at the roulette table than a wise investment.)

            Debt, like alcohol, is a problem when people can’t handle it or can’t stop. And it’s more of a problem for people than it is for governments because you and I don’t have the options for dealing with it that a properly run government does.

            The last two times the federal budget deficit got really high were at the end of World War II and at the end of the 1980s. In the first case the federal government kept taxes at a significantly higher rate than today, continued to invest in programs that helped people (the GI Bill, housing programs), and benefited from a sustained period of economic growth with an underlying basis of broad prosperity. In the second case, Bill Clinton got a tax increase through Congress (by one vote in the House), which, coupled with an economic recovery, sharply reduced the deficit within a few years.

            I’m not an economist, so I try to look at what’s worked before and figure that when in doubt, let’s try that again. I can’t come up with an example where cutting taxes and government spending led to a stronger economy. The prosperity of the Reagan years was fueled in part by a government stimulus program that made President Obama’s look like a dime-store plan. The difference is that instead of calling it an “economic stimulus plan,” Reagan called it “defense spending,” so the right didn’t object.

            Another consideration in looking at public debt is that some countries have more options than others. People point to Greece and worry that we’re headed in that direction. Maybe we are, but I have doubts.

            America has enough rich farm land and productive capacity to feed itself and a fair chunk of the rest of the world as well. We have Wall Street, Silicon Valley and Hollywood. All those things generate an enormous amount of money worldwide and provide a vast tax base that can generate revenue to pay down deficits. On top of all that, we have our own currency and can decide how much money to print.

            For years governments and churches tried to ban usury, until it became such a business necessity they had to stop. For years, governments threw people in jail for not paying debts, assuming that they had been profligate, rather than unfortunate. Those attitudes are gone, but we still seem to cling to an idea that public debt is inherently evil. It’s not an evil; it’s a tool, and good policy would recognize that and focus on using it prudently and effectively.

           

           

           

Smaller Televisions and Good Roads

            When we took an extended vacation in England a while back, there were two things about the country that really struck me: the televisions and the roads.

            Everywhere we stayed — probably 8 or 9 places in a little over two weeks — the television sets were noticeably smaller than the ones you got in American hotel and motel rooms at the time.

            The roads, on the other hand, were smooth and well maintained. Where I live in California, the voters had twice rejected modest tax increases to pay for road repairs following a 100-year storm. I was so used to driving on crappy roads at that point that the good ones in England took as much getting used to as the steering wheel on the right side of the car.

            And there is probably a connection between the good roads and small TV sets.

            Not to put too fine a point on it, the English have a different view of government than we do. It’s not a nasty word in most quarters, and there is an expectation of good public services. Republicans in America run against President Obama’s national health care plan; in England, the Tories campaigned, in the most recent election, as the party of the National Health Service.

            Bruce Bartlett, an economic advisor to George W. Bush, recently blogged about tax rates in Britain during the Thatcher administration. For all her pugnacious conservatism and free-market sloganeering, the Iron Lady barely made a dent in them. Throughout her time in office, taxes as a percentage of the country’s GDP ranged in the mid 30s, which is about where they are now.

            Last week’s issue of The Economist carried a graph showing tax rates and federal government spending in the United States as a percentage of GDP. Government spending was at 24 percent and taxes were at 15 percent, less than half what the Brits pay, and the lowest level for this country in years. That certainly explains the deficit, but it doesn’t explain the dogmatic resistance to any tax increases, which paralyzes the American political system right now.

            Going back to the earlier point about televisions and roads, the British pay more taxes than we do and get more in the way of public service. They have health care for everyone; their roads and infrastructure are in better shape than ours, and they aren’t laying off police officers. As a consequence of the higher taxes, there is less discretionary income. Fewer families have two cars, people opt for smaller TV sets and so forth. We skew the other way.

            Here’s the rub. Both countries are stable, prosperous democracies that attract immigrants from all over the world. People want to live in America and England because those countries offer safe, democratic societies and an opportunity to get ahead, to live a better life.

            All of which raises the question of what constitutes a good life. Is it one where you have low taxes, two or three cars, and a plasma-screen TV set in every room? Or is it one where you make do with a little less in the way of personal possessions in exchange for good roads, universal health coverage and top-drawer police services?

            It’s a question of what you value, and everyone has to make a personal decision. Me, I think we have more to learn from Britain than she does from us.

The Prosecutorial Mind at Work

            Early in my newspaper career I learned something about public prosecutors that I’ve never forgotten. The exact details of the case have slipped away with time, but it wasn’t a matter of life and death. The general outline was that a few people who had already embarked on criminal careers had been caught at something more serious than usual and were looking at some state prison time — at least until the judge ruled in favor of a defense motion to suppress evidence, without which the prosecution’s case evaporated.

            When I went to interview the prosecutor, he was outraged in a way that went beyond displeasure with the ruling. It was personal. The defendants were guilty and a menace to society; the ruling was horrible and incomprehensible, and so forth. His hyper-emotional reaction stood in marked contrast to the matter-of-fact way the judge and defense attorney had discussed the case, which focused on what the law was and what the evidence showed. I gave the prosecutor a break and reported only a smidgen of what he had said in the heat of the moment.

            Over the years I’ve known a lot of prosecutors, and have liked most of them. But even the best have been capable of a certain form of self-righteous moral indignation that can, and ought to be, a bit unnerving to the rest of us. They are, after all, in a facts-and-evidence business, and getting too carried away about the moral failings of the defendant can interfere with interpretation of the facts and evidence, sometimes with disastrous results.

            Defense attorneys, in my experience, are less subject to that form of moral indignation. Part of it is probably due to the nature of their business. They have to take the cases that come their way, and in the vast majority of those cases their client is guilty as hell. If they get their client a fair hearing and any kind of a break, they’ve done a good job.

            Or, as a longtime practitioner once told my Rotary Club, “When you’re a defense attorney, a win doesn’t mean getting your client an acquittal. It means getting him life without parole, instead of the death sentence.”

            Prosecutors, on the other hand, start out by seeing themselves as the good guys out to get the bad guys. They don’t have to move forward with a case unless they believe in it, and it can be all too easy to start believing in it too much, ignoring certain inconvenient facts. (I’ve known a number of prosecutors who went on to be defense attorneys and judges, and most lost their high moral dudgeon when they did. That would support the conclusion that the tendency is job-related.)

            Facts are stubborn things, and the absence of facts can be a particularly critical problem when you’re sure you’re right.  When Law and Order was in its heyday, there would often be a scene in which chief prosecutor Jack McCoy (Sam Waterston) presented his case to District Attorney Adam Schiff (Steven Hill). If there was something wrong with it, Schiff would pounce.

            “Hung jury,” he’d growl without missing a beat. “Find a witness who can put him at the scene of the crime or plead it out.”

            Not every prosecutor, unfortunately, has a boss who will point out the problems with a case, and that’s why we have juries. They fail, too, and can be susceptible to prejudices of their own, but they remain the ultimate safeguard in the system. When there’s no case, or a seriously weak one, those twelve ordinary citizens are sometimes the only people capable of sending that message to the powers that be.

           

Where are the Mothers Against Texting?

            In the early 1960s a district attorney in Northern California resigned after losing six consecutive drunk driving jury trials. The accused were all guilty, the evidence was strong, but a form of jury nullification occurred.

            It’s hard to believe today, but back then drunk driving was seen as no big deal. Those were the Mad Men days of endless cocktail parties, and the reaction against Prohibition still lingered in many minds. On any jury there were apt to be at least a couple of people who would look at the wretch in the dock and say, “There, but for the grace of God, go I.” They could often get the other jurors to show “mercy” and acquit or hold out and hang the jury.

            Changing that mindset was one of the great public relations triumphs of the Twentieth Century. Mothers Against Drunk Driving shone the spotlight on their children, spouses and relatives who had been killed or maimed by drunk drivers. In the span of a decade, public perception turned 180 degrees and the law followed shortly thereafter. In terms of social standing today, most people would rather be arrested for robbing a bank than for drunk driving.

            Not long ago I was at a red light with two cars ahead of me. The light turned green, and the first car remained in place for 10-15 seconds before starting out. We came to another red light, and the same thing happened. At the next light the first car went into the left turn lane and I pulled alongside it. The young woman behind the wheel was looking down at a cell phone in her hand and hitting it repeatedly with her thumbs. The light turned green for both of us, and I moved forward. Five seconds later I checked my rear-view mirror and she was still sitting at the green light.

            Society today is facing a problem with cell phones and driving that is much like what it faced with drinking and driving 40 years ago, but with one disturbing difference. The law has recognized the problem and begun to deal with it, but public perception is far behind and civil disobedience is rampant.

            I suspect part of the reason for differing attitudes toward drinking and calling (or texting) while driving has to do with Puritanism, which remains a virulent force in the American public mind. The notion that alcohol is a sinful substance has credence even with many drinkers, and that makes it easier to sell drunk driving as a bad thing.

            Using the telephone, on the other hand, is associated in many minds with work and efficiency, both Puritan virtues. One of the arguments made against the calling-and-driving laws is that they interfere with people who have to use the phone on the road for work purposes, as if that somehow makes the ensuing endangerment all right. And, as with drunk driving, there is a cohort of young people who haven’t figured out the problem yet.

            Nearly a century ago, when Henry Ford realized his mass-produced automobiles were going to be a big hit with the public, he predicted that the automobile would lead to Prohibition. It was inconceivable, he said, that society would allow people to drink and use such a heavy, dangerous machine at the same time. We got Prohibition for other reasons, and it didn’t work, but a change in public attitudes and perceptions has worked on drunk driving to a significant degree. What will it take to get people to see the cell phone as the moral equivalent of the bottle for anyone behind the wheel?

           

Discovering Who You Really Are

            If asked to name the most profound movie ever made in Hollywood, my choice wouldn’t be any of the socially important message movies. It wouldn’t be one of the undisputed dramatic classics, like Citizen Kane or Bonnie and Clyde. It would be a modest comedy from 1941, Sullivan’s Travels, directed by Preston Sturges.

            Sturges is little known to the general public, but he’s an iconic figure to people who know and appreciate the history of the American movie. This is largely owing to his comic genius coupled with an off-center view of life that demolishes all convention. Four of his movies, including Sullivan’s Travels, are on the American Film Institute’s list of the 100 best American comedies.

            The hero of his first film, The Great McGinty, played by Brian Donlevy, is an unemployed and homeless man who finds out that the local political machine is paying people $2 to vote for the mayor. He catches the eye of the local ward boss by voting 33 times, and is brought into politics where he rapidly becomes alderman, mayor and governor. He’s utterly crooked throughout, but even as he takes bribes, he gets things done and provides jobs for working people.

            When he’s elected governor, his wife, a woman he married for political convenience, talks him into going straight. Instead of emerging triumphant, his life is ruined. His former cronies get him arrested for the crimes he committed, and with no hope of beating the rap, he flees the country. At the end of the movie he’s tending bar in a banana republic. The moral, or perhaps immoral, of the story is that he and the people he served were better off when he was dishonest.

            In Sullivan’s Travels, Joel McCrea stars in the title role as a successful Hollywood musical comedy director. Fresh from the success of his most recent picture, Ants in Your Pants of 1939, he yearns to make a serious message movie about real people who have been ground under the heel of the economic system.

            Toward this end, he slips away from his entourage and hits the road as a hobo to see how the other half lives. It doesn’t go well. Knocked unconscious and robbed, he awakens to find himself framed for a crime he didn’t commit. Unable to prove who he is and get help, he’s sentenced to work on a chain gang.

            That’s where he has his epiphany. One night the prisoners are taken to a nearby church to see a movie. There’s a Disney cartoon beforehand, and as it plays out, the church is filled with the laughter of men in a desperate situation with no hope. Sullivan realizes the ability to give that gift of laughter is something special. Eventually he is freed and decides to go back to making musical comedies.

            In six decades of observing this world, I’ve concluded that much of its unhappiness — at least in places where the basic necessities are provided — is caused by people yearning to be something they’re not and failing to appreciate the good they do by being themselves and simply doing what they do well. The happiest people, by contrast, find what they do well and are able to take enough satisfaction from it to become at peace with life. We are all Sullivan, but not all of us are lucky enough to get the revelation he did.

                       

           

           

           

           

Nothing Good Lasts Forever

            Seeing Woody Allen’s Midnight in Paris recently got me to thinking about what it is that makes a place, a time, an organization or an institution special and memorable. I was born too late for Paris in the 1920s — which Hemingway called a moveable feast that stays with you for the rest of your life — but two things in my experience qualify as moveable feasts in their own right.

            One was being at the University of California at Santa Cruz in the early days. The place was a miracle, nothing less. Somehow the regents of the largest public university system in the country got talked into starting an experimental campus based on individual colleges, like Oxford, with an emphasis on a rounded liberal-arts education, undergraduate teaching, and pass-fail grading. When the Santa Cruz campus opened in 1965, it was a soul mate for its time. That probably was its undoing.

            Santa Cruz was many things in those days, and one of them was a place where you could reinvent yourself, or, better yet, be yourself for the first time. It attracted a lot of students who had felt like outcasts before and suddenly found themselves in their element. Dean McHenry, the founding chancellor, recruited an outstanding faculty (Page Smith, Kenneth Thimann, Norman O. Brown, among others) who came there late-career in part to reconnect with students and teaching.

            Those of us who were there at the time were intoxicated with the sense of possibility (and, at times, other substances), and years later, we still reconnect quickly and intuitively. But the taxpayers have little tolerance for experimentation on their dime, and when times changed in the mid 1970s, the Santa Cruz experiment was dismantled. In short order, the colleges were rendered meaningless, graduate and professional schools were emphasized at the expense of undergraduate teaching, and grades were reinstituted. The buildings are still there, and so are the students, but it’s not the place I went to at all. Aside from the redwoods and the ocean view, it’s a public university campus, much like any other.

            After graduating from Santa Cruz by the skin of my teeth, I went to work for the Register-Pajaronian, the daily newspaper in nearby Watsonville. There were some amazing stories (mass murders, farm labor strikes) in those early years, and I learned to cover them from the best in the business.

            Frank F. Orr, the editor, a tall, bespectacled man whose gravelly voice was toasted to perfection by years of chain-smoking unfiltered Pall Malls, had led the paper to a Pulitzer Prize for exposing a corrupt district attorney in 1956. Ward Bushee, the managing editor, was the most demanding boss a young reporter could have. If you turned in a story with one question left unanswered, he was certain to demand the answer. After a while, you learned to stop trying and began asking the questions yourself. Sam Vestal, the chief photographer, knew everybody in town and was a better reporter than most of the reporters. They, along with a few other people (Bud O’Brien, Bill Akers, Bob Levy) were my mentors. All gone now.

            A couple of ownership changes and the internet wiped out the daily newspaper I knew, loved and worked for. It now publishes three times a week, heroically covering the news with a third the staff we had when I left. Special times and places don’t last, but they should be savored while they do and remembered for as long as possible. Rather than bemoaning the losses, I choose to celebrate the memories. Lucky me.

             

           

Making a Fetish of the Constitution

            The next time you hear someone rhapsodizing about the sanctity and brilliance of the U.S. Constitution, you might want to ask a simple question. Would anyone outside a lunatic asylum be saying such a thing if the South had won the Civil War — as it very nearly did?

            Of course not, and to ask that question is to raise a point that ought to be fairly obvious. The Constitution has survived as long as it has and served as well as it has because subsequent generations were able to interpret it in light of their times and change it when necessary.

            The outcome of the Civil War enabled passage of the 13^th, 14^th and 15^th Amendments, which outlawed slavery, established the principle of equal protection under law and forbade racial discrimination in voting. It took another century to make that last one a reality, but let’s not quibble. Would a Constitution without those amendments (or the ones empowering women to vote and popular election of U.S. Senators) carry any moral weight today?

            There really isn’t any other way to say it — the Founders punted the issue of slavery to posterity. Historians of a sharply leftist bent tend to be critical of that decision, but it was probably the best they could have done. Lucky for our country and their reputations that Lincoln came along when he did.

            It is often assumed — wrongly, I believe — that the purpose of the Constitution was to limit what the federal government could do. More accurately, its purpose was to limit the damage that could be done by individuals, factions, and popular sentiment run riot. It was not so much about creating a narrow definition of the government’s role as it was about creating a process, full of checks, balances, and speed bumps, to ensure proper deliberation and a cooling-down period before government acted.

            James Madison, widely regarded as the Father of the Constitution, came to the convention of 1787 determined to get a document that would allow the federal government to override any state law that was deemed inconsistent with the new constitution. He had George Washington on his side, but the states-rights crowd wasn’t having any of it. Madison later flipped on that point when he realized that a strong central government would probably speed the end of slavery. Three decades after his death, slavery ended and the 14^th Amendment pretty much incorporated his original idea.

            A liberal and broad interpretation over the years has also been essential to the continuing utility of the Constitution, and that sort of expansive approach has been aided by the vagueness of the document. Consider the following sentence from Alexander Hamilton’s “Report on Manufactures” to the U.S. Congress December 5, 1791. Arguing that federal support of manufacturers was permissible under the general welfare clause of the Constitution, Hamilton wrote:

            “The terms ‘general welfare’ were doubtless intended to signify more than was expressed or imported in those (powers of Congress) which preceded; otherwise numerous exigencies incident to the affairs of a nation would have been left without a provision.” In other words, Congress can do just about anything it deems necessary or desirable for the common good.

            Interestingly, when the Constitution was being debated, the vagueness of the general welfare clause was one of the things opponents pointed to as giving the new government too much power. They were right about the vagueness, but wrong about the too much; the process has pretty much kept that in check. But the anti-Federalists’ arguments live on today, most prominently vocalized by the contemporary Tea Partiers, who, ironically, profess their undying love for a Constitution that exists mostly in their imaginations.