Obama, The Cold War, Brandenburg Gate

After the American Century

At the end of this month Senator Obama will make a brief trip to Europe. No doubt the purpose of the journey is to bolster his international credentials, by standing in historic places and making historic looking handshakes. During the fall he can casually refer to his "good friends" Gorden and Angela. All outsider candidates do something similar, and apparently it does have some political value to the candidates.

The Germans have become a bit prickly about Obama's giving a speech at the Brandenburg Gate on July 24. Some rather prominent politicians there have said that the young Senator from Illinois did not do anything in particular for Germany during the Cold War. This will likely be true for all future US presidential candidates, however, because time is moving on. A candidate who is 50 in the next election (2012), for example, was born in 1962, and so was under 30 when the Berlin Wall came down. Candidates who were in power during the Cold War are going to disappear. Put another way, the Cold War is fading away, and the Germans might consider how to keep the memory of that confrontation alive. By asking to speak at the Brandenburg Gate, Obama is not only positioning himself in the current campaign, he is also proclaiming a valued historical relationship.

It may be that Angela Merkel's origins in former East Germany are inseparable from her reluctance to see Obama stand where Kennedy and Reagan stood before him. But for Obama, who wants Americans to find ways to reunite, to stop being Red States and Blue States, it is hard to think of a better symbol for transcending differences and for the power of dialogue instead of bullets. Merket might find it "odd", to use her word, that Obama speaks there, but what would be a more appropriate place?

The Cold War ended without a shot being fired as the Wall came down. Quite a contrast with the Bush strategy in Iraq. Senator Obama wants to emphasize that he has a different approach to foreign affairs. The German Government refused to support Bush's invasion of Iraq, as did Senator Obama.

Obama appears to be popular among the German people, moreover, and if this event comes off, it might not just look historic, it might become so.

Republicans Mortgaged the Future

After the American Century

The US housing market continues to falter. When houses are worth less than people paid for them, some owners will conclude that declaring bankruptcy is their best, perhaps their only option. In June, 2008, one out of every 501 homes in the US was foreclosed - a total of 252,000 properties. That was 50% more than June the previous year. If that monthly rate continues for a year, then 3 million homes will have been given up for auction or sale at reduced rates by the repossessing banks. That represents housing for about 10 million people.

December 12 last year I wrote in this space that "Bush Administration policies encouraged housing prices to soar while undermining the strength of the economy as a whole. A correction is unavoidable. One hopes it will not be too severe." In the ensuring 7 months the correction has continued, and now seems to be nearing a crisis. The news today is that many analysts are worried about the financial health of Fannie Mae and Freddie Mac - names which make them sound like two people. But these are billion dollar institutions that back up the mortgage lending of banks. Both are traded on the stock exchange, and in good times they are stable, safe investments. But their stocks have been falling steady for months, and yesterday each dropped by more than 15%. That's one sixth of their value lost in a single day. Government spokesmen are all "walking on eggs" - treading with the utmost caution, trying to put the best face on how the continuing foreclosures are affecting these institutional cornerstones of the economy. On the bright side, the rate of foreclosure in June was lower than the month before, so the worst may have passed. On the dark side, interest rates already are quite low, so there is not much the Federal Reserve can do to stimulate the economy or make home-buying more attractive.

Everyone assumes that the Federal Government will pour additional money into these institutions if they need it. But the US government is already running a large deficit, borrowing money from abroad to pay some of its bills. In 2007 the deficit grew by $162 billion, an impressive figure, but nothing compared to 2008, which may be the worst year of overspending in US history at more than $410 billion. The worst so far was 2004, when Bush spend $413 billion he did not have. Much of that was for the wonderful war in Iraq. It is easy to forget now that this was the war which we would win quickly and that would pay for itself, because all that oil would be sold to pay for redevelopment. Well, this was not what happened, but the oil has certainly increased in value. All oil producers are benefiting, but not US home and car owners.

Probably the economic storm will pass, housing prices will stabilize and prices will climb again. In that case, the dip in the market has been good for people who wanted to get into the market like my niece who just bought her first house. But if the market continues to fall, at some point the dead weight of unpaid mortgages will put tremendous strain on the economy as a whole. How does anyone sell a house, in order to relocate for a new job, for example, if there are several million foreclosed properties on the market? What happens to the older couple who expected to sell their large house to downsize into an apartment, now that the kids have grown up and moved away?

The crisis is hardly over, in other words. The worse it gets, the more Republicans running for re-election will take the blame in November. Because they mortgaged the future.

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The Dollar and Danish-American tourism

After the American Century

The summer sun draws people away from their computers, out into their yards, on to bicycles or off on vacations. This year a record number of Danes will visit the United States, about 300,000 I read in the local press. Given that Denmark only has 5.2 million people, that means almost 6% of the nation's population is flying over the Atlantic and back. At that rate by 2026 every single Dane could make a visit. More personally, many people I know are going to the US, and my students over there are stretching their stay as long as they can. Everyone says what a bargain the US is, with the dollar so weak, and all take an extra, empty suitcase to fill with inexpensive clothes, books, designer goods, and whatnot. To be more precise, back in September, 2000, you needed 8.82 kroner to buy one dollar. Yesterday you only needed 4.76.

Because of that drop in the dollar, fewer Americans are going to Europe this year. Furthermore, airline prices are up due to high oil prices and they have on average less dollars to spend. While July is still the middle of the season, it appears that US tourism is down by about 5%. One suspects that those who come may seek slightly cheaper hotels and restaurants and/or stay for a shorter period. Likewise, the tourists who do come may buy less. Again, more personally, I saw more old friends coming trough in May and June, before the highest airline prices set in, and I sense that there are fewer coming all-in-all.

A report on tourism prepared by Deloitte suggests that Americans are also changing their vacation habits. Time was people took a two week vacation - which sounds short by Danish, French or German standards, where three to five weeks is common. Indeed, all Danes have the legal right to three continuous weeks of vacation once a year, plus 14 more days. But Americans have just two weeks, and it is getting harder to take them all at once. Instead, there are mini-vacations. These short breaks are best enjoyed without too much flying or too much jetlag after arrival, so perhaps given such time constaints, going to Europe is a little less attractive than it used to be. There is much else of interest in this report, which is based on interviews with 2027 people last October, and supposedly has a margin or error of only 2%. For example, the Internet is changing buying habits, reducing loyalty to providers, and increasing the levels of information available to tourists. It is also changing the ways we can all be ripped off! The report is available at http://www.deloitte.com/dtt/article/0,1002,cid%253D184903,00.html

As for me, an American in Europe, I will defy the transatlantic trend and vacation within the EU. I prefer the US during spring and autumn, when airline tickets are cheaper and temperatures lower. And, I would like to be there close to the election. As for the dollar, my sense is that it probably will not rise before November, unless economies elsewhere begin to falter.

Both McCain and Obama Move to the Right

After the American Century

Both Obama and McCain have been shifting their public stands on many issues, staking out the positions they will take during the fall campaign. They are doing so with quite different goals. McCain is moving to the right, Obama toward the center.

McCain's move toward the conservative Republican base is being orchestrated and supervised by a cadre of Karl Rove's apprentices. Their well-known philosophy is that elections are won by energizing core supporters, not by trying to appeal to the center. This strategy has not really been proven a success, in my view, as George Bush did not win a majority of the votes cast in 2000 and only barely was reelected in 2004. In each case, one could argue that he won as much due to the poor campaigns of his opponent as he did because galvanizing the base is a sure winner. Note, too, that the "Rove philosophy" is to attack one's opponent where they appear strongest. The "swift-boating" of John Kerry is the prime example.

Obama's move toward more mainstream positions means that he has embraced more traditional political philosophy, seeking to be the unifying candidate who can appeal to moderates and independents, and reach across party lines. The danger of this approach is that the core supporters become somewhat disillusioned, taking some of the energy out of the campaign, as they realize that Obama is (surprise?) a shrewd politician more than he is ideologically driven. As noted several blogs ago, his stands on Israel, gun control, and other issues have shifted, to appeal to moderates.

The result of these two contrasting campaign models is that both candidates are moving to the right - with Obama seeking the center, while the supposedly "straight-talking" McCain is making himself over to suit the evangelicals. The man who once opposed Guantanamo torture now seems to accept it. The man who once publically worried about global warming is saying little about it. The man who once wanted to give illegal immigrants a "path to citizenship" is now a hard-liner on securing the borders. The man who once called Jerry Falwell an "agent of intolerance" now meets privately with his ilk, seeking support.

Will the selection of vice-presidential candidates reinforce these campaign strategies, or will they be drive by other imperatives, such as geographical appeal? One suspects that Obama will find a VP who is moderate, who holds his new positions, almost certainly a white person (but possibly Hispanic), and one with solid military experience to shore up his candidacy at its weakest point.

The Republican ticket is harder to anticipate. Will McCain choose a "born again" evangelical from the right-wing of the Republican Party, like Mike Huckabee? Might we expect a moderate non-military person under 60 who comes from the Middle West and who can appeal to the swing states? A church-going woman? A clone of Dick Cheney? Or most horrifying of all, the actual Dick Cheney? McCain's choice will signal how thoroughly he is willing to revamp his campaign to resemble Bush's 2004 campaign. Whatever the new Rove-inspired McCain team decides could be a surprise, because he continues to run behind Obama in the polls, and he needs to find a way to regain the initiative.

Baby Boomers in American Academia

After the American Century

Yesterday the New York Times ran a long story about the coming change in American academia, as a large cohort of teachers begins to retire. (See it at http://www.nytimes.com/2008/07/03/arts/03camp.html.) There recently have been similar stories about Norway and Denmark, and indeed for much of the Western world, as the huge number of teachers hired in the 1960s and early 1970s starts to move out of their offices. As one who saw this transformation up-close-and-personal, I want to add a few observations.

It is not exactly the "baby boomers" who are retiring, at least not yet, for they are mostly too young to afford it. The baby boom began in 1946, when one million more children were born than during 1945. This means that all of the boomers are 62 and under. Anyone in this group who is retiring now got a BA, MA, and Ph.D. as quickly as possible, working steadily from kindergarden on up, with no breaks. The first boomers graduated from college in 1968, and the first to get Ph.D.s emerged perhaps as early as 1972 or 1973, but many more starting in 1974. For those who served in Vietnam, were conscientious objectors or worked after college, add several more years. The people who are retiring this year at 62 would be from the very start of that generation, which includes all those between 50 and 62. Any American retiring who is over the age of 62 is not a "boomer" but comes from the smaller cohort of babies conceived during World War II. They were over-represented on faculties, while the huge cohorts born from 1946-1957 ran into the terrible job market of the recession that lasted from c. 1973 until the early 1980s.

Any academic who lived through the 1970s can tell you that this generation had a hard time. Those just before them - who got PhDs between 1965 and 1970, still experienced a booming job market for their services, and they got tenure relatively easily. By the time the boomers were emerging from graduate school, however, the job market was shrinking. I know, because I was one of the job seekers. More than half the PhDs from my particular year never got academic appointments at all, and even those who did get jobs often saw them disappear due to the slumping economy. They were excellent scholars and teachers who deserved better, and the selection process was by no means an illustration of "the survival of the fittest." When reading about all the baby boomers who are retiring, remember, then, that a huge number of PhDs from that generation never got into academia in the first place. This does not mean they did poorly elsewhere. In general, these clever people made more money than those of us lucky enough to get tenure and the low salaries of the university.

So what? Given the actual hiring that went on, the idea that thousands of student radicals moved from protest to paper grading is a bit suspect. Indeed, I knew many who became disillusioned with academia during the turbulent anti-Vietnam years, and never finished at all. Those who stayed in the libraries and kept writing were not the most radical, and even the most radical PhDs were not always hired. Colleges and universities were not seeking to employ fire-breathing Marxist intellectuals calling for revolution. In short, only a few people shifted from the barracades to the faculty club.

However, after a generation passed, faculty who had been around during the turbulent decade were hardly averse to claiming a radical past. I know several people who seldom marched or sat in or attended anti-war rallies back then, who now talk nostalgically about those days of political engagement. When a reporter turns up looking for the last hippies and revolutionaries packing up their offices, many are only too happy to oblige with stories.

Don't be taken in. I "saw the best minds of my generation destroyed" by the contradictions of that time. They were drafted and sent off to Vietnam, went to Canada to avoid the draft, got drawn into fringe movements that took them forever away from the universities, or threw themselves full-time into the anti-war movement. The boomers who will retire from academic during the next 15 years were not the most radical. Rather, they had the perseverance to write their PhDs during that distracting time. They did so even though the job market was terrible, and they often spent years in short-term or part-time positions before landing in a tenured position. The few who succeeded, did so against great odds, through hard work and a bit of luck. Their story is not the one in the New York Times, which wants to paint a picture of retiring fire-breathing radicals being replaced by young moderates.

The new academics emerging now are not moderate compared to those actually hired in 1974. In fact, in many areas they probably have views that are at least as radical. The Times is right that they have not been embroiled in political struggles in the same way, but their dislike of George W. Bush is just as intense as ours was for Richard Nixon c. 1972.

Costly Oil: The Return of Stagflation?

After the American Century

Today the European Bank is widely expected to raise interest rates. The mantra of economists remains that inflation must be controlled through higher rates. In "normal times" this seems to be the case. Raising interest rates makes money a bit more expensive, curbing consumer spending, slowly down the economy. The usual metaphor is that the economy is "overheated," like an engine pushed too hard. But "normal times" are those when the cost of raw materials remain reasonably stable, especially the cost of oil, coal, and other fuels.

Back in the 1970s the American Federal Reserve kept raising interest rates, because of inflation. But the remedy did not cure, because the cause of inflation was higher energy prices. What resulted was absurd. The interest rates went up to almost 20% to combat inflation while the economy stagnated. The pundits called this "stagflation" and we may be about to see the same thing happen again.

As of this morning, the price of oil has reached $145 a barrel. In the United States and in Europe consumers have been protesting, to no effect, because they are complaining to their national governments. But in a globalized economy, no prime minister can control the price, except by lowering gasoline taxes. This would stimulate consumption, however, and be bad for the balance of trade in an oil-importing country. Nor will raising interest rates lower the cost of oil, except marginally, by reducing economic activity.

Wise leaders - unlike George W. Bush - might respond to this new situation in the following way.

(1) Tax vehicles not by weight but according to how much oil they use, i.e. very low taxes for the most efficient vehicles and punitive taxes for those that are not.

(2) Halt road-building and invest the same money in public transit.

(3) Permit some rezoning of cities, so that population density can be increased. Deconcentration of American cities, which began in the 1920s and 1930s, has created a sprawling energy-inefficient economy, making it harder for mass transit. Rezoning might be modeled on the fine exampleof the Dutch.

(4) Give tax-incentives to energy conservation of all types, including building insulation, heat-pumps, and better architectural design.

(5) Restructure utility prices so that there is a financial reward to the companies that reduce consumer demand.

(6) Invest in alternative energy R & D and in its installation.

These are not new ideas. They are the ideas which most governments have ignored, in practice, for the last two decades.

The current high prices signal the need for a new energy regime. This is not just another economic storm that can be survived by raising interest rates.

If you want to know a bit more about the history of US energy consumption, see
David E. Nye, Consuming Power: A Social History of American Energies (MIT Press).

Obama Takes the Center, Perhaps Florida

After the American Century

In the last few weeks Senator Obama has performed the classic manouevre required of successful presidential candidates. He has moved toward the center. During the primaries the voters are all in the same party, but to win the general election, a candidate usually shifts policy positions a bit. In 2000 George Bush managed to convince some Democrats and many Indepndents that he was a "compassionate conservative." In 1992 Bill Clinton likewise danced a bit toward the middle.

When candidates do this, ideologues become upset, because the candidate no longer seems a person of principles, but an opportunist. However, I have become somewhat more tolerant of these policy position changes, which also suggest pragmatism and flexibility. Candidates thereby suggest to the public that they listen to the popular will. Obama has recently endorsed private gun ownership, for example. Personally, I wish he had not taken that position, but if he wants to win in Pennsylvania, Ohio, Michigan, Minnesota, and many western states, this is a good idea. In any case, the president will not likely be able to change the liberal laws on gun ownership., which have just been supported by the Supreme Court. It overturned a Washington DC law to control carrying handguns. There was little point in Obama attacking the Court, and he will focus on the battles he can win.

Obama likewise made clear his support for Israel, which is important to carry certain key states, notably Florida. This support should be balanced, however, by his repeated declaration that he would seek an open dialogue with many groups and governments that the Bush Administration has refused to talk to, including many in the Arab world.

Less predictably, and far more interestingly, Obama has made a sharp break with the hard-liners on Cuba. For fifty years the US has enforced an economic embargo against Castro's regime. Support for that policy is weakening, however, due to several factors. First, Fidel Castro is now too ill to run that country, and his more pragmatic and reform-minded brother has made many small steps in the direction Americans would like to see, giving a modicum of democracy to the country. Second, the hard-liners themselves are dying off, and the second and third generation Cuban-Americans can see the potential economic and personal benefits in re-engaging with Cuba. Third, the EU does not have an embargo against Cuba, and the US is cutting itself out of a market. When Obama spoke to Cuban-Americans in Florida last week, they applauded his call for dialogue and economic engagement. Since the Bush White House apparently has little historical memory, it is worth emphasizing that the Cold War was "won" without a shot being fired, because of constructive engagement.

In short, while Obama is moving to the center, he is not simply repeating old policy positions. His approach to Cuba seems far more sensible than McCain's, who has embraced the old hard-line view. Obama is going after the younger Cuban voters, making himself the candidate of the future and of change. Coupled with his more moderate views on immigration, this should play well with the Hispanic voters generally, who are less prone to be hard-liners on Cuba in any case.

If Obama can successfully hold Jewish voters and pull some of the Cubans away from the Republicans, he will have a much better chance to win Florida, and with it, the White House. He is being adventuresome where it can pay off, but not on gun control, an issue where the Supreme Court has spoken, and one that will drive the white working class into the arms of McCain.

Will it work? During April and May every poll on Florida put McCain ahead, often by as much as 15%. But in the middle of June, even before Obama announced his new Cuban policy and support for Israel, two polls put him ahead of McCain. Even if Obama ultimately loses the state, if he can force McCain to use time and money to defend it, he will have fewer resources to put elsewhere.

Shakespeare, Hemingway, Dylan, and the 2008 Election

After the American Century

Thanks to Rolling Stone, we now know that Barack Obama's literary taste runs to Shakespeare and Hemingway. The big news, of course, is that he admits to reading books, perhaps a dangerous admission in these media-saturated days.

These are pretty safe choices. Shakespeare was the most popular author in the United States during the entire 19th century. People from all walks of life really knew the Bard's works, and could quote large portions from memory. As Lawrence Levine revealed in a classic article, small traveling troupes of actors never had a problem filling the small parts with local thespians. Shakespeare was so well-known that Mark Twain knew his readers of Huckleberry Finn would laugh at the garbled lines delivered by "the King" and "the Duke." Obama's choice is more than mainstream; he's traditional in naming Shakespeare. But compared to the public of Twain's day, the average American almost certainly has a less detailed knowledge of the plays. File away this literary connection for future reference. We may one day have to decide which play most closely resembles Obama's first term as president. Presumably not King Lear or Macbeth, both of which seem more suited to McCain. Perhaps All's Well that Ends Well?

Hemingway gives Obama a bit of a modernist edge, though it depends on which works (and passages) he finds speak most powerfully to him. Given his views on Iraq, one assumes that he likes A Farewell to Arms. In contrast, John McCain is on record as very much liking For Whom the Bell Tolls. Does McCain see Iraq in terms of the Spanish Civil War? Does either candidate like the most uncompromising Hemingway short stories, such as "A Clean Well-Lighted Place"? Or the more experimental work that only came out after he died? I suspect we have pretty mainstream Hemingway, in either case.

Rolling Stone further reports that Obama has an ipod, and that he has a lot of Stevie Wonder and also Bob Dylan songs on it, including most of "Blood on the Tracks." The "Oldies" for him are from the 1970s. In contrast, Senator McCain admitted to a Politco reporter that he loves the movie American Graffiti and that his musical tastes are rooted in the 1950s and 1960s, up to the moment when he was shot down in Vietnam. Despite the generational difference, there is some overlap. I doubt that Senator McCain can listen to Dylan with the same enthusiasm as Obama can, particularly the early songs like "World War III Blues," and "It's a Hard Rain Gonna Fall." And how many Republicans can enjoy the searing irony of "With God on Our Side"?

If I could give the same oral examination to both candidates, we might know what they really think about Hemingway. This being unlikely, at least we know that they are representative of their musical generations.

Will Americans Get an Accidental President?

After the American Century

In 2000 Americans did not elect the president, the Supreme Court did, by a vote of 5-4. For democracy to retain legitimacy, it was crucial that the 2004 election ended with a clear result, which it barely did. However, there were charges that Republicans played games with the balloting in Ohio, and the contest was close. This time around, Americans rather desperately need a clear choice that will give a mandate to the winner.

If the candidates have their way, the election will be decided by clever advertising campaigns and speeches. But accidents and unforeseen events may play a decisive role. For example, if John McCain has health problems between now and November, it would devastate the Republicans. If either of the presidential candidates collapsed from exhaustion on the campaign trail, such a small health failure could undermine them. But let us hope and assume health will not be an issue. In that case, there are four categories of disaster that are beyond the candidate’s control: economic collapse, natural disaster, a terrorist attack, and bizarre events. Let us look at all four, to see who might have an advantage in each case.

The worst disaster for the Republicans would be massive economic failure. The American economy is teetering between recession and recovery, the most dangerous possibility is a stock market collapse, perhaps caused by the persistent housing crisis. Historically, the American market has not been strong in October, and twice it has crashed in that month. In late October, 1929, the market collapsed, devastating the economy for years, and dooming Herbert Hoover to be a one-term president. Likewise, in October 19, 1987 the New York Stock Market lost 23 percent of its value in two days. Nothing quite like that has ever happened in an election year, but McCain would almost certainly lose if it did. Al Gore’s campaign was hurt by the rapid fall in computer technology stocks in March 2000. When the dot.com bubble broke, many realized that the “new economy” was over. Had the market kept surging until after November, Gore presumably would have won more popular votes. If stocks fall in the month before the election, expect Obama to win, assuming he has not made a major mistake.

Natural disasters can also play a role in the campaign. September and October are huricaine season, and anything remotely resembling the Katrina (mismangement) disaster would also hurt the Republicans. However, in general, natural disasters tend to help the party in power, assuming it makes the most of the opportunity to show compassion and leadership. Just as importantly, a disaster can release huge sums of money to help an afflicted region, while the party in power can tour the area to inspect the damage, sweeping opponents off the front pages of the newspapers. The current floods in the Midwest thus favor the Republicans if they respond credibly to the disaster. As fate would have it, at least two swing states are affected by the surging waters, Missouri and Iowa.

The most unpredictable event would be a terrorist attack. Potential terrorists might try shape the outcome of the election, as they did in Spain with the Madrid train bombings. Depending on the target, the timing, and the administration’s response, would an attack strengthen McCain or hurt him? To put this another way, would an attack be more like an earthquake, giving the Republicans a chance to look heroic and sympathetic in the face of adversity, or would it be more like a stock market crash, a sign that the party in power is incompetent and unable to preserve the nation from harm? These are not easy questions to answer, and each party would try to put political spin on any attack. However, assuming that an attack did not reveal an egregious, gaping hole in Homeland Security (in which case Republicans get the blame), any terrorist activity would make national security, not the economy, the main issue. This presumably would favor McCain, because of his military background.

Finally, in America one cannot rule out the bizarre event. Any number of things might take everyone's mind off the election. A major sex scandal; a police case resembling the O.J. Simpson murder, chase, and trial; a major riot in an American city; a high-profile disaster in the space program; some new Brittney Spears antics; the authentic return of Elvis to a major shopping mall; a surreal hostage drama involving Osama bin Laden himself in Pakistan - who knows? A bizarre event that distracts the voters could have unpredictable consequences. One should even include the weather. Generally speaking, bad weather means a lower turnout, which is good for the Republicans, who as a group are wealthier and more able to get to the polls. An early blizzard sweeping through the "blue" states would not be good for the Democrats.

In a close election extra-political factors could be decisive, and the result might be an accidental president. You think this is impossible? Before the 2000 election, who thought the hanging chads in Florida was possible? This time around, what if the new computerized voting machines are erratic? We must hope for a decisive victory, not a roll of the dice. After Bush, Americans need a new president with unquestionable legitimacy.