God bless the child

Sometimes a song is more than a song:

Them that’s got shall get
Them that’s not shall lose
So the Bible said and it still is news
Mama may have, Papa may have
But God bless the child that’s got his own
That’s got his own

Yes, the strong gets more
While the weak ones fade
Empty pockets don’t ever make the grade
Mama may have, Papa may have
But God bless the child that’s got his own
That’s got his own

Money, you’ve got lots of friends
Crowding round the door
When you’re gone, spending ends
They don’t come no more
Rich relations give
Crust of bread and such
You can help yourself
But don’t take too much
Mama may have, Papa may have
But God bless the child that’s got his own
That’s got his own

Mama may have, Papa may have
But God bless the child that’s got his own
That’s got his own
He just worry ’bout nothin’
Cause he’s got his own

God Bless the Child, Billie Holliday and Arthur Herzog, Jr.

Nothing much has changed, has it? Ross Douthat’s Monday column at the New York Times, “The Great Consolidation,” surveys the events of the past few years and concludes:

This is the perverse logic of meritocracy. Once a system grows sufficiently complex, it doesn’t matter how badly our best and brightest foul things up. Every crisis increases their authority, because they seem to be the only ones who understand the system well enough to fix it.

But their fixes tend to make the system even more complex and centralized, and more vulnerable to the next national-security surprise, the next natural disaster, the next economic crisis. Which is why, despite all the populist backlash and all the promises from Washington, this isn’t the end of the “too big to fail” era. It’s the beginning.

If it doesn’t ring true to you, I’m surprised you’re reading this blog at all.

Is this the result of a conspiracy? Are there some bastards we can shoot to end it? I rather think of it as tragedy, not conspiracy. And, having grown up as I did, I sometimes think of it as misadventure (looks sorta like tragedy, but the reversal of fortune is brought about by an external cause, says Aristotle).

Even in tragedy, there can be comic moments, as when POTUS (President of the United States) rationalizes a Supreme Court Appointment:

In the past week, I’ve read two news stories about Kagan in my local paper that featured absurd language.  The first was an AP story by Ben Feller on May 10.  The second was an AP story by Julie Hirschfeld Davis on May 12.

The second story quotes Harry Reid as saying Kagan “has fresh ideas” because she’s been “out in the real world recently.”  Reid is trying to turn a negative into a positive. Kagan’s lack of judicial experience means she has been doing other things instead of being cloistered among black robes.  But are the other things she’s been doing part of “the real world”?  For the past decade, she has been professor and then dean of Harvard Law School, followed by a year as U.S. solicitor general.  That’s pretty rarefied living.  In the ‘90s, she was a White House counsel and policy advisor.  Is there anything “fresh” about a retread from the corrupt and sleazy Clinton years?

The first story reports, “The president has grown vocal in his concern that the conservative-tilting court is giving too little voice to average people.”  Obama—he of the famed analysis regarding bitterness and clinging—has now condescended to express a tender regard for the vox populi.  In between his policy talks with Bernanke, Geithner, and Blankfein; his strategy sessions with Chicago machine cogs; and his social visits with the Beverly Hills and Martha’s Vineyard set.  Somehow he finds time to worry about the little guys and gals and then express that worry while the press dutifully notes the expression.

We are told that Kagan is a manifestation of Obama’s concern that the common people are not being heard by the Supreme Court.  So he appoints a person who attended an exclusive high school, then Princeton, then Oxford, and then Harvard.  Just the sort of person who is most likely to be in touch with the struggles and aspirations, the stances and aims of We the People.  Ain’t democracy grand?

(Jeff Taylor, Few v. Many: The Topsy-Turvy World of Judicial Demographics, at Front Porch Republic)

Rima Fakih is soooo yesterday. Where’s my bread? Where’s the next circus?

Yes, Jeff: Democracy is grand.

NYT Opinions on Goldman Sachs (and why I won’t boycott Arizona)

David Brooks, the New York Times’ genial sorta-conservative columnist, views the financial reform debate roughly as I do, which makes me tentatively pleased that the GOP turned the lemmings back from the cliff yesterday:

The premise of the current financial regulatory reform is that the establishment missed the last bubble and, therefore, more power should be vested in the establishment to foresee and prevent the next one.

If you take this as your premise, the Democratic bill is fine and reasonable. It would force derivative trading out into the open. It would create a structure so the government could break down failing firms in an orderly manner. But the bill doesn’t solve the basic epistemic problem, which is that members of the establishment herd are always the last to know when something unexpected happens.

Kudos to Brooks for nicely stating what is obvious to me. Cries and lamentations that it is unknown to most of Congress, whose centralizing impulse continues because it so nicely fits a good guy/bad guy mythology. As Brooks says:

If this were a Hollywood movie, the prescient outsiders would be good-looking, just and true, and we could all root for them as they outfoxed the smug establishment. But this is real life, so things are more complicated …

In this drama … the establishment was pleasant, respectable and stupid, while the contrarians were smart but hard to love, and sometimes sleazy.

However, Congress is mostly ignoring the outsiders, vying for the white hat role itself.

Elsewhere on the Grey Lady’s editorial page, Linda Greenhouse, who usually functions as a Supreme Court reporter with supposed neutrality, gives free rein to her fury at Arizona for its new immigration bill:

I’m glad I’ve already seen the Grand Canyon.

Because I’m not going back to Arizona as long as it remains a police state, which is what the appalling anti-immigrant bill that Gov. Jan Brewer signed into law last week has turned it into.

[T]he phrase “lawful contact” makes it appear as if the police are authorized to act only if they observe an undocumented-looking person actually committing a crime, [but] another section strips the statute of even that fig leaf of reassurance. “A person is guilty of trespassing,” the law provides, by being “present on any public or private land in this state” while lacking authorization to be in the United States — a new crime of breathing while undocumented.

I don’t think the “police state” label is a good fit, even if the new law is ugly. Most Arizonans are walking around without fear of police hassles, after all, while everyone cowers in a police state.

I’ll not make it a point of principle to follow Greehouse’s lead (and in fairness, she’s not explicitly calling for a boycott), if only because I want to return to St. Anthony in the Desert Monastery. But if you want to get an eerie police state feeling, drive down to the Monastery from Phoenix to the north. You’ll pass through Florence, whose dominant industry is prisons. Several of them. Public and private prisons (e.g., Corrections Corporation of America), large and forbidding, lining both sides of the road on the drive through town. It’s like stumbling onto something that was deliberately moved out of the way because of its brutal ugliness. One almost wants to divert one’s eyes, the better to say, if challenged for straying onto a scene the public wasn’t meant to see, “I didn’t see nuthin’, and I won’t tell nobody! Please, Officer, let me go!”

It oddly makes the Monastery seem particularly apart from the (seedy) world, coming and going from a day visit or pilgrimage.

Goldman Sachs – “the other side” told persuasively

“Goldman Sachs” is not a term of endearment at my favorite websites, such as Front Porch Republic. And I have reflected my own ill-ease with such too big to fail concerns in recent weeks, as well as passing along some counter-arguments.

Wall Street Journal columnist Gordon Crovitz today defends Goldman Sachs in his own way: short selling a derivative signals the market that a sector may be ready to collapse. I certainly agree with that – just as short selling a stock signals that a particular stock may be ready to tank.

The most telling point for me in Crovitz’s column – apropos of why the SEC may lose its case against Goldman Sachs rather than why derivatives are good – is simply that once you accept the premises that (1) shorting a derivative is beneficial because it signals the market of a possible sector collapse, and (2) long buyers in these specially created securities knew someone else was selling short, it seems to follow that “it would be hard to prove that it mattered who [the short seller] was.” That John Paulson was selling short and that Goldman Sachs bundled the derivative for him seems to be what SEC thinks GS should have disclosed.

All this, of course, ignores John Médaille’s, invocation of Aristotle and Aquina to distinguish natural from unnatural market exchanges, but Distributist economics are, for the time being at least, so far out of the mainstream as to be easily ignored. Considering the repeated failures of mainstream economics, that may be ripe for change.

The Democrats have a bright if peurile idea: “Hey, guys! I’ve got a great idea! Regulation utterly failed to prevent the economic collapse, and voters are mad at Wall Street, so lets grab this chance to make Washington bigger with even more regulation! Whaddya think, guys?!” (I’m not sure the Republicans have a counter-plan. They’re just in denial that a market could fail.)

Pretending to regulate something as complex as derivatives is destined again to fail, so I would be remiss were I to pass up, before Congress passes “the most sweeping overhaul of the financial regulatory system since the aftermath of the Great Depression,” not to sing another rousing chorus of “if they’re too big to fail, bust ’em up!”

Better cabs through innovation

From the Financial Times, an interesting article on the competition between the “Black Cabs” of London (with their legal privileges, tradition, and undeniable Knowledge of their drivers) and an upstart company, Addison Lee, that is challenging the Black Cabs on several fronts. For instance, the story opens with how Russians are working with Addison Lee to collect GPS data, the better to predict trip length, preferred routes, and fleet allocation.

We all no doubt tend to find confirmation of our prejudices wherever we can. Climate scientists claim corroboration in a winter weather pattern that coincides with global warming theory, but then, seemingly inconsistently, deny that a weather pattern to the contrary is evidence of anything. Heads, we win; tails, inconclusive.

So take it with a grain of salt however big you like that I find in this story evidence that if we regulate an industry, we should think very hard before granting it any outright monopoly. The innovation potential of allowing upstarts is especially prominent in this story. What if the regulators had crushed the upstarts, especially since they tended to be a bit shady?

Dare I think of this story even as being evidence of the virtues of policies that promote small-scale innovation so as to prevent even “free market” success from creating excessive concentrations of corporate power? (Most of our megabusinesses like Wal-Mart, ConAgra, Archer Daniels Midland and such, owe a great deal to cozy relationships with legislators and regulators – hardly examples of pure free market success. But that’s a story for another day.)