Poorly done history, the Obama echo chamber, and lessons from Japan
I am a firm believer that there is nothing new under the sun. Humans are what they are, and though circumstances and terminologies change, people, fundamentally, do not. Therefore, a clear understanding of history is crucial to a clear understanding of the present. Unfortunately, there are myriad poor historians as well as poor historical theories. By way of example, I would point to Karl Popper’s spot-on critiques of Hegelianism, historicism, and their transition into Marxism, as well as his critiques of economic determinism and other such nonsense.
The two theories above, that history is crucial and that history is often poorly done, are disastrous when applied together. The Cato Institute blog has a quick article today about this exact phenomenon, called The Tea Party Continues to Freak Out Intellectuals. In the article, David Boaz shows what happens when the acknowledgment of the importance of history is coupled to reliance on bad historians.
It seems that President Obama had invited a group of presidential scholars to dinner at the White House, ostensibly to suss out the foundations of the Tea Party and how to counter it. The historians apparently pointed to the Know-Nothings of the 1850s, the Populists of the 1890s, and Father Charles Coughlin’s followers in the 1930s.
That’s the best they could come up with!? Boaz says it best:
[These intellectuals] just can’t imagine that real middle-class Americans could honestly oppose President Obama’s tax-and-spend agenda and march in the streets against it — just like, you know, they did against the war and stuff. It’s got to be racism, billionaires, extreme libertarianism, extreme authoritarianism, the John Birch Society, something. And so they tell the president that the Tea Party is reminiscent of “the Know-Nothings and Father Coughlin.” Why oh why can’t we have better historians?
Why indeed? My thought is that Obama hand-picked his historians in order to hear whatever he pre-decided that he wanted to be told. Of course, the echo chamber does not good policy make.
Along these same lines, the common narrative of the Great Depression, i.e. that monetary policy was insufficiently loosened and for an insufficient amount of time, is finally being challenged by the institutional elite. Stephen Roach, chairman of Morgan Stanley Asia, has presented a speech in Seoul, now transcribed here – called The Japan Syndrome Goes Global. According to Roach:
The recent crisis is a painfully visible manifestation of the greatest failure of central banking since the 1930s. Out of basis points, relying on dubious quantitative easing strategies, and still agnostic when it comes to coping with asset and credit bubbles, monetary policy has become the weak link in the daisy chain. Yet in the rush to re-regulate, central banks have largely been let off the hook. Nor are ever-profligate fiscal authorities exactly a beacon of hope in this crisis battered world.
Out of the darkness of the 1930s, a new approach to fiscal and monetary policy was borne. That renaissance is now over. The Great Crisis of 2008-09 demands a rethinking of the strategy and tactics of orthodox stabilization policies. Glaring shortcomings in our policy architecture must be addressed if the world is ever to learn the most important Lessons of Japan. As day follows night, a failure to learn these lessons almost guarantees another crisis in the not-so-distant future.
How is that we have not learned our lesson from Japan? When massive “stimulus” has failed to bring Japan back from its “lost decade,” which incidentally is now nearing two and a half decades, and at the same time has driven Japan’s deficit to roughly 200% of GDP, how is it that Ben Bernanke believes that opening the spigots wider is the solution? Is he really that ignorant of history?
Of course, the problem runs deeper that that – despite Stephen Roach’s assertion that such policies were borne of the 1930s, they really go back to John Law in the late 1600s. Ultimately, the establishment of a de facto central bank (Banque Generale), followed almost immediately by an immense financial collapse (The Mississippi Bubble), set the paradigm for what was to come – sadly, for the next 300+ years.
Clearly, our historians could be doing a better job.