Archive for July, 2010

Going From a Black President to Racial Discord

Sunday, July 25th, 2010

It was perhaps too much to hope for. With the election of the first American black president who began his term with a near 70% approval rating, it could be argued that Americans had largely overcome their original sin of racism. No one would ever argue that racism has disappeared, but we could hope that we would only have to suffer under residual remnants in isolated pockets.However, 18 months into the Obama presidency, it appears that race has once again bedeviled us. There have always been voices like Janeane Garofalo who seems to believe that any opposition to President Barack Obama must be rooted in latent racism, as if no legitimate criticism is possible. This argument can be easily refuted by considering a thought experiment. If President Barack Obama were white and the current political and economic conditions were identical would the opposition be as great?

It would probaby be more intense, not restrained by fear of charges of racism. Indeed, one could argue that with Obama’s approval at about 50%,  with a 9-plus percent unemployment rate extending over many months, and with severe public anxiety about record deficits, Obama enjoys unprecedented goodwill. By contrast, President Ronald Reagan’s approval rating during the recession of his first two years fell to the mid-40’s.

It was perhaps too much to hope for. With the election of the first American black president who began his term with a near 70% approval rating, it could be argued that Americans had largely overcome their original sin of racism. No one would ever argue that racism has disappeared, but we could hope that we would only have to suffer under residual remnants in isolated pockets.

However, 18 months into the Obama presidency, it appears that race has once again bedeviled us. There have always been voices like Janeane Garofalo who seems to believe that any opposition to President Barack Obama must be rooted in latent racism, as if no legitimate criticism is possible. This argument can be easily refuted by considering a thought experiment. If President Barack Obama were white and the current political and economic conditions were identical would the opposition be as great? It would probaby be more intense, not restrained by fear of charges of racism. Indeed, one could argue that with Obama’s approval at about 50%,  with a 9-plus percent unemployment rate extending over many months, and with severe public anxiety about record deficits, Obama enjoys unprecedented goodwill. By contrast, President Ronald Reagan’s approval rating during the recession of his first two years fell to the mid-40’s.

Race as a policitcal argument in the recent context has largely been introduced by the Left. Congressional black leaders claim derogatory racial references were made as they walked by Tea Party activists to cast a health care vote. Despite the presence of press cameras, ubiquitous cell phones, and a reward for a video or other recording demonstrating such language, no evidence has surfaced.In response to charges of racism, Tea Party activist Andrew Breitbart dug up a video of Obama Agricultural Department employee, Shirley Sherrod. She  suggested in a portion of the the video that she she treated a white farmer differently than black farmers. The complete story revealed by the entire recording was that Sherrod had overcome this feeling decades ago. While Sherrod was treated unfairly when the Obama Administration initially fired Sherrod, the NAACP audience in the video seemed amused by the thought of a white farmer being treated dismissively. While such comeupance might be understandable given centuries of similar treatment at the hands of whites, it is surely not the act of well-meaning  people ostensibly devoted with racial reconciliation.

This issue could spiral out of control and make the legacy of Obama with regard to race divisive. Obama needs to exercise leadership that only he can. He needs to calm the roughned waters of racial feelings before they grow to destructive waves of anger. Obama needs to restrain his supporters from using racial allegations. If he shows such leadership, any racial divisiveness by those who oppose him will be more conspicuous and more easily dismissed.

Voter Intimidation in Philadelphia

Sunday, July 11th, 2010

On November 4, 2008, Barack Obama became the first black American to be elected President of the United States. Obama carried the election with nearly 53% of the vote. A large fraction of the remainder might have been disappointed from a political standpoint, but could not help feeling a sense of pride that to a large measure the racial bigotry that had been America’s original sin had been cleansed from our collective souls.

On the same day, New Black Panther Party member, King Samir Shabazz, stood in front of a Philadelphia poll brandishing a bludgeon and intimidating poll workers and voters. Christopher Hill, a poll watcher, was called a “cracker” by Shabazz. Bartle Bull claims it was the worst case of voter intimidation that he had ever witnessed. Bull’s claim carries significant weight since he served as a civil rights lawyer in the South in the 1960’s.

Though eyewitness claims are important, this incident might have devolved into a clash of testimonies had there not been video showing Shabazz in paramilitary gear strutting at the entrance of a Philadelphia polling place. Further, Shabazz made himself a less sympathetic character when claiming on another video at a different time that if “if you want freedom you’re going to have to kill some crackers, you’re going to have to kill some of their babies.”

The Chair of US Civil Rights Commission reported the facts of the case as:

“On November 4th, 2008, two members of the New Black Panther Party appeared at a polling station in Philadelphia. Video evidence and eyewitness testimony show that these two members standing athwart the entrance of the polling place dressed in paramilitary uniforms with black combat boots. One of them brandished a nightstick. They hurled racial epithets at whites and blacks alike, taunting poll watchers and poll observers, who were there to aid voters and, according to evidence adduced during our hearing last month, caused some voters who sought to cast their votes that day to turn and leave the polling place, rather than have to contend with them.”

Shabazz advocates a very radical ideology and no one claims that he represents any more than a tiny, tiny fraction of the population. Nonetheless, his intimidating actions in front of the polling area clearly deserved prosecution to maintain the integrity of the voting process. Under the Bush Administration, the prosecution began and a default judgment won that would have kept Shabazz away from polling places indefinitely. This was to be followed by further prosecutions of the New Black Panther Party for voting rights violations.

The Obama Administration had an easy decision to make. Simply maintain the prosecution and demonstrate that racial politics will not be tolerated on the part of anyone. Obama was supposed to represent a transition to a post-racial society. What better way to demonstrate that the Obama Department of Justice (DOJ) would not permit racial politics?

Unfortunately, the Obama Justice Department stood down the prosecution against the leaders of the New Black Panther Party and accepted a decreased the judgment against Shabazz prohibiting from polling places in Philadelphia only until 2012.  J. Christian Adams an attorney at the DOJ resigned after being instructed by apolitical appointee not to pursue the case. Christopher Coastes also stepped down as Chief of the Voting Rights Division, when his recommendation to pursue the case was denied.

The Civil Rights Commission is now investigating the entire case and the DOJ’s response to it. The Obama Administration is likely to be further embarrassed. All presidential administrations commit unforced errors and the decision to back off this prosecution is one such misstep. The disappointment is that this error undermines the hope that the Obama Administration could further racial reconciliation. There is no doubt that Obama himself seeks such reconciliation. He should insure that all his subordinates do as well.

A Unique Economic Situation

Sunday, July 4th, 2010

Economic analysis is complicated by the fact that controlled experiments are generally not possible. One cannot test different policy prescriptions on exact same economy and evaluate the different results. Arguments are made by analogy to previous circumstances. For this reason, it is difficult to conjure up a consensus among economists as to the best way to help the American economy recover from its current high unemployment and sluggishness.

There are two basic schools of thought: one that emphasizes monetary policy and one fiscal policy. Is the economy more or less responsive to controlling the money supply or federal taxation and spending, or some combination.

Milton Friedman won the Nobel prize in economics in 1976, for his explication of monetary policy and in part on his analysis of monetary policy during the Great Depression. Friedman argued that that collapse of the economy in the 1930s after its initial signs of trouble was caused the exact wrong policy followed by the central bank. The central back tightened rather than loosenes the money supply cause radical deflation and a lack of money available for investment.

The economist John Maynard Keynes is the champion of fiscal policy. Keynes has argued that federal deficits make up for demand in the private sector during recessions and provide a means for recovery. It should be noted deficits can be increased either by increased spending on reducing taxes

Since the banking crisis in 2008, the Federal Reserve has loosened the money supply about as much as it could. Perhap by this more than any other policy, the Federal Research helped avert a 1930s-like collapse in economic activity. At this point, however, the Federal Research has exhausted much of its ammunition. Interests rates are at historic lows. Monetary policy has helped, but all the Federal Reserve can do now is maintain a loose monetary policy until a strong recovery commenses.

In February 2009, after the immediate banking crisis had abated, the Obama Administration passed its stimulus package with nearly a trillion dollars of deficit spending. Results have been at best mixed. Growth remains anemic and unemployment and under employment remain much higher than the Obama Administration promised. Nobel-prize winning economist and NY Times columnist, Paul Krugman, recently argued that given the lack of economic response, we need to re-double fiscal stimulus. We note in passing that Krugman always argues from more governement spending and not reduced taxes. Either would increase the fiscal stimulus.

We submit the thesis here, that additional fiscal stimulus now would be ineffective because of collective physcology. Given the massive deficits we have already incurred, people will become more apprehensive about the future and hoard cash if the deficit increases much more. The problem was that the Obama stimulus was accompanied with health care changes and progressive agenda that promised not a one-time fiscal punch, but a fiscal trajectory that would incur even greater deficits or significant tax increases. In the face of this uncertainity, people are saving more. in anticipation of future bad times. Ironically, this fear is suppressing consumer demand. Business, also faced with uncertainty, sits greater than average cash reserves.

By creating what seemed to be a permanent and expontenially expanding deficit, rather than a short-term stimulus, the Obama Administration undermined the effectiveness of its signature economic policy. At this point, the best that can done is to reduce uncertainity by maintaining the current tax code and creating an economic plan that restrains federal spending. In any case, it will take a long time to dig out of the current situation, but if certainty returns, businesses will be more willing to invest their acccumulations of cash and consumers wil be more willing to spend some of their savings.