Monday, January 30, 2017

On Governance

[ed. Where is Congress? See also: Why Republicans Are Impressive]

Those who aspire to “right speech” often measure their words with four questions: Is it true? Is it kind? Is it necessary? Is it the right time? Right speech should not escalate conflict, but it doesn’t retreat from necessary truth, and criticisms don’t always seem kind. The question of right speech is the question of how one might best serve others. Criticism with the intent to offend is not constructive, but silence is equally detrimental when it quietly endorses a pattern of offense, or encourages the silence of others.

Those of you who have followed my work over the decades know that I look at the world holistically in terms of the interconnection and responsibility we have toward others, and I’ve never been much for separating “business” from those larger values. After all, most of my income regularly goes to charity, and nearly everything that remains follows our own investment discipline. Whether my comments on matters like peace, civility, economic policy or governance are well-received or not (and I'm grateful that they have been over the years), there are moments when one has the responsibility to speak if one has a voice.

Our country faces many legitimate political disagreements. There are segments of America that view government as too bureaucratic, see foreign trade as a source of job insecurity, value national security as a priority, believe that each country has the right to a national identity, and feel that even a nation of immigrants has limits on the pace at which it can assimilate new citizens. They feel that their interests have been subordinated to an elitist philosophy that presumes that regulation is always beneficial, and that government always knows best. We can engage honestly and in good faith about those concerns, even where we disagree. Political issues like that are best settled not by insulting each other, but by openly expressing and listening to the values and concerns of each, and constructing solutions where each side might concede or trade various lower priorities, so that both can achieve their higher ones.

From my perspective, the problem isn’t politics. A civil society can work out those differences. The immediate problem, and the danger, is the mode of leadership itself. A leader can call forth either the “better angels of our nature” or the worst ones. I am troubled for our nation and for the world because of the example of coarse incivility, mean-spirited treatment of others, disingenuous speech, thin temperament, self-aggrandizing vanity, puerile character, overbearing arrogance, habitual provocation, and broad disrespect toward other nations, races, and religions that is now on display as our country’s model of leadership. I am equally troubled by emerging risk, discussed below, to the Constitutional separation of powers.

My intent is not to insult, but rather to name the elements of this pattern. Even in the face of our differences, it’s important that we refuse to resign ourselves to passively accepting or normalizing this model. A dismissive regard for truth, civility, transparency, ethics, and process is dangerous because it lays groundwork and creates potential for unaccountable, corrupt and arbitrary government. I believe that the people of our nation are both decent and vigilant enough to openly and loudly reject this behavior even where they might agree with various policy directions.

There is no changing the outcome of what was already a dismal choice for many Americans, but we can insist on rejecting a model of uncivil behavior. It is unworthy of emulating for ourselves, much less for our children. To minimize detestable behavior is essentially to condone it. It is the refuge of cowards to defend obvious offenses by deconstructing them (“He wasn’t belittling a disabled person. See? He’s waving his hands while belittling this person too”), or to condone predatory behavior toward women by diffusing responsibility (“Yeah, but that other guy was also a predator”). Our intolerance for such a tireless pattern of offense shouldn’t depend on our race, or gender, or ability, or political views, even among those who view the man as a means to achieve political ends.

With regard to international relations, the intentional provocation of both allies and trading partners is of deep concern. One might allow a generous interpretation that these provocations are intended to create new bargaining chips for use in trade negotiations (e.g. insulting Mexico, taunting China about Taiwan and the South China Sea). Yet even setting offenses aside, the associated protectionism is misguided economics, particularly at this point in the economic cycle. Given U.S. labor demographics, even a 4% unemployment rate in 2024 would bring average annual civilian employment growth to just 0.4% annually in the coming 8 years, while a 6% unemployment rate would place intervening job growth at just 0.2% annually. All other economic growth will rely on productivity growth (output per worker). The primary determinant on that front will be growth in U.S. gross domestic investment (GDI). Because of savings-investment dynamics, steep reductions in the trade deficit have always been associated with a collapse in U.S. GDI growth. Put simply, this new trade strategy courts recession or worse. That’s particularly true given a speculative financial bubble resulting from Federal Reserve’s misguided dogma that zero interest rates would bring prosperity without consequence. We now face the third financial collapse since 2000 (more data on that below).

Meanwhile, we should recognize that foreign provocation has also been used around the world, and throughout history, as a strategy to expand domestic control. This often takes the form of “emergency powers.” Given the man’s clear aspiration to accrue and exercise authority, we shouldn’t naively ignore that potential. Recalling James Madison, “If tyranny and oppression come to this land, it will be under the guise of fighting a foreign enemy. The means of defense against a foreign danger historically have become the instruments of tyranny at home.” We have a leader that talks of the benefits of foreign plunder and the virtues of torture, yet we don’t recognize the seeds of despotism? Oh, that’s right, because we’re talking about the “enemy.”

The enemy. It’s necessary to prosecute those who commit violence, in order to defend the rights of others, but to entertain notions such as torture, plunder, and the violation of human rights is an insult to the virtues our nation has sacrificed so much to achieve. Hatred does not remove hatred. We have to look into causes and conditions. Prejudice against a whole religion will not bring peace, nor will it contribute to an understanding of what motivates extremism. Whether the roots of violence are about foreign influence, territorial control, fear of losing power, protecting an existing way of life, or perceptions of injustice (whether legitimate or imagined), violence is often clothed in religion, both as a mobilization tactic, and so each side can claim that God is on their side. ISIS is no more about Islam than the Troubles in Ireland were about the religious faith of Catholics or Protestants, or the KKK was about Christianity.

We can’t kill and torture our way to peace. We might satisfy pride and the desire for revenge, but the outcome would be a perpetual cycle of hatred, where our children eventually take our place in that cycle. The temptation is for sides both to turn up their high-beams, but as the Reverend Dr. Martin Luther King implored, “Someone must have sense enough to dim the lights.” Again, yes, those who actually commit violence should justly be prosecuted, but it’s madness to make enemies of entire populations. Along with enforcement against violent extremists, it’s essential to seek out and address the legitimate concerns of moderates. The first step toward peace happens when somebody has the courage to look deeply and ask, “How does the person I call my enemy suffer, and what can I do within my power, and consistent with my security, to address that suffering?”

We are asked to rally around our new Administration, in the hope that it will be successful. Yet if, even at the outset, “success” asks us to accept the insult to loyal allies; if it asks us to accept daily incivility toward other citizens of our country; if it asks us to accept a demonstrably ill-conceived economic dogma that will do little but provoke trade frictions, weaken domestic investment, and provide tax benefits to the business sector, while indiscriminately shifting the costs and externalities of harmful action onto the public and the environment; if it asks us to accept blind prejudice toward other nationalities and religions; and if it flirts with even the prospect of foreign plunder and torture, then there is little question that we have already lost.

A final concern relates to the separation of powers and the relationship between the express will of the People and the actions of the Executive. When the founders of this nation established the separation of powers in the U.S. Constitution, they were serious about it. Over time, through lack of vigilance, the public has allowed this separation to be undermined, to the point where people hardly recognize when violations occur. Here is a reminder. Article I Section I places all legislative powers with Congress. Article I Section 7 provides that all bills for raising revenue originate in the House of Representatives, which are then amended by the Senate. Article I Section 8 provides that only Congress has the power to declare war. Article I Section 9 provides that no money may be spent that is not pursuant to a law enacted by Congress.

The Executive branch has the obligation under Article II Section III to “take Care that the Laws be faithfully executed”, and under the Constitution, only after a war is declared by Congress, or the military is called forth by Congress, does the President have the authority to direct military actions. In order to carry out the obligation of Article II Section III, the President may very well issue executive orders, but those orders are not laws in themselves. They are directives that apply only to members of the executive branch, for the purpose of upholding and faithfully executing existing laws previously passed by Congress. If an existing law infringes on the rights of the people, or overreaches the powers enumerated in the Constitution, the role of the Supreme Court is to adjudicate those disputes. If an executive order or an agency’s interpretation of an existing law is challenged, the Court has previously articulated a two-part test: if the intent of Congress is clear, the Court should “give effect to the unambiguously expressed intent of Congress.” If the intent of the law is ambiguous, the Court should examine whether the interpretation is a permissible construction.

What I find alarming is that recent executive orders have been announced as new proclamations, instead of faithfully executing the provisions of existing laws duly enacted and funded by Congress under Article I of the Constitution. While the formal language of the orders themselves might reference existing laws, or give lip-service with the phrase “to the extent permitted by law,” the orders then self-contradict by directing the circumvention of those laws (for example, “to the extent permitted by law,” agencies are directed to “waive, grant exceptions from, or delay” the execution of the law, or to identify sources of funding for a project that is nowhere specified in the law).

To ask "Where was this criticism during the past 8 years?" is to ignore the distinction between the faithful execution of laws one may dislike, and the invention of provisions that do not exist under prevailing law, which is what we now observe. The worst offender in prior years was not our former administration. It was the Federal Reserve, as Ben Bernanke created off-balance sheet "Maiden Lane" shell companies to purchase assets prohibited by law, in violation of Sections 13 and 14 of the Federal Reserve Act, making what he called "a money-financed gift to the private sector." Nobody recalls my silence. Congress later rewrote those sections to spell them out like a children's book.

Even the media fail to discuss the fact that the Executive is both obligated to, and constrained by, the express will of the People, not the other way around. Only when Congress passes a law does it become the law of the land, provided it is otherwise Constitutional. To allow a weakening of these separate and enumerated powers is to invite the arbitrary exercise of authority, and even the risk of tyranny, rather than limited, representative government of the people that honors the Bill of Rights, equal protection, and the rule-of-law.

I understand that facts are facts, and that this is the election result that our system produced. So what is the point, or the desired outcome, of protest? The fundamental outcome is to raise our vigilance; to preserve our character; to defend the rule of law and the separation of powers; to refuse to normalize or quietly endorse incivility; to promote diplomacy even as we pursue security; to demand more than the example set before us; to call us again and again to the better angels of our nature.

We should voice our full expectation that Congress defend those enumerated powers, unmoved by speeches that assert the right of the executive to bind our nation to some “new decree” (who uses the word “decree” in an inauguration speech?) We should also ask that regardless of party, our representatives exercise those powers with dignity that befits our nation. As for individual issues, remember that the laws of our country are not established by tweets in the middle of the night. They are established by Congress. Citizens lose their voice when they fail to use it. All of us, left, right, or moderate, should protect that freedom. The U.S. Senate switchboard is (202) 224-3121. The U.S. House switchboard is (202) 225-3121. An actual person will answer, and can direct you to your state representative. Feel free, also, to forward or reprint these comments as you wish.

by John Hussman Ph.D., Hussman Funds |  Read more: