Thursday, January 5, 2012

The Occupiers' Gift

What do Occupy Wall Street, Ron Paul, David Cameron, Peter Ackerman, Xue Jinbo, Jeff Bezos, and Publius have in common?

They are all harbingers of the emerging international political economy.

The Recovering Bureaucrat is aghast at the insipidness of most 2011 year end summaries he has read so far.  With the exception of the wariness with which most of them assess the fragile Eurozone (“Europe is in a tailspin, and it's not at all clear that the rescue efforts will succeed,” writes Instapundit’s Glenn Reynolds, one of the savvier observers around. “If they fail, and the Eurozone breaks up, we're likely to see major disruption—people are even talking about reinstating currency controls—and a major down-drag on the American economy, along with the rest of the world”) almost none sees the meta-pattern of the dramatic transformation of humanity’s self-organization.

Thus, as he has been noting all year, our political establishment across the globe—with a very few notable exceptions—continue to behave as if the now three-year old international financial convulsion is just an extended blip in an otherwise unchanging universe. 

Here in California, for instance, the commentariat are obsessed with the lackluster performance of Governor Jerry Brown, whose conventional approach to our current situation is somewhat obscured by his obsession with pursuit of the “green” unicorn.  His solution to the state’s structural deficits—half by cuts, half by higher taxes—is utterly unimaginative and ultimately self-defeating, for it does nothing to address the actual cause of the government’s deficits.

But Governor Brown is practically Lincolnian in comparison to the state legislature, a bought-and-paid-for subsidiary of public employee unions, with a Republican minority unwilling to defend the principles of free enterprise.  A review of the new laws about to go into effect should bring tears to the eyes of any thinking citizen, who will scrutinize the list in vain for any evidence that the legislature has the slightest idea about the ever-increasing drag that government imposes of economic growth. 

In September, in the midst of this muddled establishmentarian myopia stepped a ragtag bunch of lefties, anarchists, students, and other usual suspects to set up camp in Zucotti Park in Manhattan and proclaim to “occupy Wall Street.”  Within weeks this latest version of the evergreen utopian protest against reality caught the fancy of the mainstream media and spiritual gurus, who universally proclaimed it the harbinger of political shifts to come.

Other less delirious observers dryly predicted that, with the coming of the wintry blasts out of the north, most Occupy encampments would fade away without a trace.  And these guesses were the more accurate.


A New Year’s Day account in the Economic Times out of Bombay, India, does a good job of assessing the current state of the Occupiers:
Occupy Wall Street has gone from a social media circus to a spotty global movement, still largely driven by—and on—the internet. By one account, there are now more than 2,500 Occupy sites worldwide in physical terms, but nowhere is there a crowd comparable in energy and passion to the one in Tahrir Square, or in a soccer stadium, or in the desperate and unseen hinterlands of India and China which are seeing bigger movements. OWS' biggest achievement, it appears, is in riding the social media to generate a public discourse about its objectives, which appear unclear. In part, this is because of the movement's all-encompassing nature that is not tightly focused.
It is vivid, virtuous, and occasionally volatile, but because of its large umbrella that has taken in everyone from the merely disenchanted and the dispirited, to the seriously dispossessed and desperate, all adding up to what the movement's loose leadership call the "99%", its message is construed as being vague. A vast majority of the disaffected are still not actively involved.
Although the MSM, including the Economic Times, insist that the Occupiers have somehow “brought the issue of economic injustice and disparity out in the open,” the RB has no idea what those words actual mean in any practical sense, or that they represent anything particularly new.


The Old Order Breaks Down

President Barack Obama’s speech in Osawatomie, Kansas, in early December, reinforced the national Democratic Party’s perennial commitment to the wealth redistributionist role it won for the federal government back in the days of the New Deal.  Both his and the Occupiers’ versions of class warfare are part of a tradition that even predates Karl Marx, with a long and storied history in the industrial sector, going in America all the way back to Andrew Jackson’s assault on the Second Bank of the United States.

But there’s the rub: it is a feature of the structure and dynamics of the Industrial Age, which we have been leaving behind at an accelerating pace since the 1970s.  To speak of plutocrats and rich, soulless international corporations as monopolizers of wealth and therefore spoilers of democracy is an anachronistic indulgence.  Of course those tendencies exist, and of course plutocrats and international corporations will behave as they generally do.

But the world that gave rise to the possibility of class warfare no longer exists, and the politics of the class warriors is an irresponsible exercise in nostalgia.  The new economy no longer depends upon the huge agglomerations of capital that were the financial efficiencies of the Industrial Age.  The networked global economy is increasingly decentralized and open to everyone; the price of entry into international markets has fallen so low that anyone with a cell phone in the dustiest corners of the Third World is a potential player.

No, the gift of the Occupiers does not lie in their politics; it lies in their awareness that the establishment political structures no longer serve as instruments for the application of the popular will.  (Occupiers are even willing to attack Obama, who as recently as three years ago was the great shining hope of the Left; now with his signature of the National Defense Authorization Act his betrayal of his promises to reverse Bush-era policies on Guantanamo Bay and the detention, interrogation and prosecution of suspected terrorists is complete.  The true believers have finally had their illusions shattered; Obama is just another establishment politician, ensconced safely in the big government Left.  When you’ve lost Cenk Uygar, you’ve lost them all.)

And similarly, the appeal of Congressman Ron Paul in the Republican presidential race, along with the Tea Party activists that propelled the GOP to control of the House of Representatives a year ago arises from a similar assessment from the Right, that our governing institutions no longer work as an expression of the popular will.

Far below the radar of the MSM and outside the arena of conventional two party politics, millionaire Peter Ackerman’s “Americans Elect” group is establishing its presence in presidential politics.  It has so far secured ballot access in thirteen states, including California, and is aiming for the remaining 37 and the District of Columbia by next November.  Americans Elect plan an internet primary in June; its nominee will be selected by every American registered voter who chooses to sign up on its web site.

“American voters are tired of politics as usual,” says its website.  “They want leaders that will put their country before their party, and American interests before special interests.  Leaders who will work together to develop fresh solutions to the serious challenges facing our country.  We believe a secure, online nominating process will prove that America is ready for a competitive, nonpartisan ticket.”

Americans Elect not only reflects the expanding disaffection among middle class Americans with our governing institutions, by attempting to establish an internet-based national presidential primary, it is also an expression of the new economy. 

This willingness to begin to bypass the establishment’s incompetence is not merely an American phenomenon.  The United Kingdom’s Prime Minister David Cameron recently refused to tie his country to the precarious Eurozone by rejecting the deal brokered by Angela Merkel and Nicolas Sarkozy to prop up the Euro by getting European nations to cede sovereignty to Brussels.  This, in the final analysis, was a vote of no confidence in the unification dream of the Berlin-Paris axis.

Last September in China—almost at the exact same time that the Occupy Wall Street activities got underway—the citizens of Wukan, a small village in Guangdong Province, revolted against local Communist Party officials who condoned illegal land seizures on behalf of non-native land developers.  The villagers took to the streets and, after Xue Jinbo, one of their leaders, died in police custody under suspicious circumstances, they forced all Party officials to flee Wukan.  Although a face-saving has been reached with provincial officials, the Wukan crisis signals cracks in the Chinese pretense that economic freedom can thrive in a one-party state.

These incidents are political harbingers of a governance structure cracking under the stress of the emergence of the new global economy.  The Recovering Bureaucrat has written often about the contours and imperatives of this new economy, admittedly following in the footsteps of other better and smarter writers such as Peter Drucker and Matt Ridley, who have offered more thorough and compelling analyses.

What we can say is that the development and application of ever more powerful and inexpensive computational and communications technologies are blasting away at the old industrial order, making it possible, as Drucker foresaw almost twenty years ago, for everyone to be a business owner.  With the development of cloud computing, of which Jeff Bezos’ Amazon Cloud Services is a leader, computation itself is being revolutionized, a mere thirty years after the introduction of the personal computer, and less than twenty years after the commercialization of the Internet.

Most governments are perplexed by the new economy that such inventions are enabling and encouraging.  The pace of new applications, with their attendant and continuous rearranging of commerce and knowledge distribution, have left most governing institutions, from Asia to Europe, flatfooted.  The current global financial crisis is caused at least in part by the markets’ inability to appropriately value the assets of this rapidly evolving economy.  When the best advice that Kevin Kelly, one of the gurus of the new economy, can offer is to “buy no new technology until five minutes before you need it,” it is no wonder that financial markets find themselves adrift in a sea of confusion and ambivalence.

Similarly, California, the place most responsible for the demise of the Industrial Age and the flowering of the Information Age, finds itself at the doorstep of serious economic decline.  In the past two decades, it has allowed its business climate to stultify, its educational institutions to deteriorate, and its government to grow fat and irresponsible.  Its leadership seems as clueless as the Eurocrats about how this happened and what to do about it.  The reform organizations that get the most press focus on the mechanism of government without reference to its purpose or to the transforming world it has to serve.


Tinkering Will Not Suffice

It’s as if the task is so daunting that the safest bet is to tinker at the edges and call it enough.  The years of budget flimflammery have left their mark; it is sadly fitting that the state, weary of the burden, brought Jerry Brown back to the governorship, where he has to deal with the legacy of his first administration.  It was his budgetary gamesmanship in the wake of passage of Proposition 13 that created one of the key structural imbalances that persist to this day.

This signaled a long and slow turn toward governmental adventurism that began to clog the once mighty state economy.  With the shining exception of Silicon Valley and the bio tech clusters in San Diego, the state has little steam left in what was once an innovation monster.

The Recovering Bureaucrat is angry but optimistic.  The various forerunners of the emerging global economy, which will generate wealth on a scale yet unimaginable, are joined daily by new players.  The list of innovators that he focuses on in this blog post includes Publius, the only one from an earlier era.

Alert readers know that Publius is the pseudonym used by John Jay, James Madison, and Alexander Hamilton in their arguments in support of the adoption of the Philadelphia constitution in 1787, later collected in The Federalist Papers.  It is only by returning to our founding principles, based on the commitment to limited government guarding our God-given rights to life, liberty, and the pursuit of happiness, that a new birth of prosperity will come about. 

America’s revolution remains the signal event of the past three centuries.  The principles set forth are universal in their application; they were largely responsible for the prosperity generated by the Industrial Age, for they encouraged and facilitated massive investment in creativity and productivity. 

Since the Constitution’s ratification in 1788, Americans have struggled heroically to create “a more perfect union.”  The task before us remains the same: to perfect the application of our universal governing principles once again to meet today’s challenge in such a way that the ability for our citizens to prosper and pursue happiness is increased.  We never professed to guarantee outcomes; seeking to use government to do so is the error of the Left.  We committed to guarantee maximum liberty so that citizens, free to pursue of self-interest as we each defined it, would engage in the boisterous and chaotic activity of wealth generation.

As the villagers of Wukan are demonstrating, the Chinese experiment with one party capitalism will ultimately fail.  As David Cameron is making plain, the European experiment with undermining national sovereignty to prop up the euro cannot be sustained.  As the Tea Party and the Occupiers are asserting, a bloated, bankrupt government increasingly dependent on the crony capitalism of rent seekers and speculators is a formula for disaster.

The Recovering Bureaucrat has been as critical of the Occupiers as anyone, but he acknowledges the gift they have offered to our national consciousness.  When significant elements of both the Left and the Right agree that our governing institutions are failing, something momentous is in the offing.

Our challenge is to rediscover the power and the applicability of the founding principles that made America the world leader in generating wealth, freedom, and productivity.  We have what we need; it is now up to us to reclaim our heritage and create, as Lincoln did, a new birth of freedom.

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