Dana Blankenhorn

This Hamiltonian World

Think of this as Volume 18, Number 13 of the newsletter I have written weekly since March, 1997. Enjoy.

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History doesn't repeat, but it often rhymes.

In the case of America, which has been a united nation for most of 225 years now, it can rhyme multiple times.

The Crisis of 1896, which resulted in the Progressive Era, rhymed in many ways with the first political crisis in our history, the dispute between Alexander Hamilton and Thomas Jefferson resulting in the 1800 Jeffersonian Democratic-Republican victory over Hamilton's Federalists. 

The dispute in both cases was one of basic finance. Hamilton wanted a strong central government, and a national bank, in order to grow manufacturing and assure that the new United States could defend itself. Jefferson sought a “republican” government, a full democracy in which all men could be treated equally because they were equal.

Equally poor.

Reading Jefferson's own words from the 1790s, it's clear that what he objected to in Hamilton was less the means to his end than the end itself. That end was prosperity. Hamilton wanted America to become rich, and worked to create institutions aimed at doing that. Jefferson cared less about money than about rights. He believed money corrupted, that it was responsible for the injustices he'd seen in France.

Jefferson feared Hamilton was aping Great Britain, whose great banks had created a rich empire, mostly benefitting its great men. In this he was right.

The 1938 Game

Think of this as Volume 18, Number 11 of the newsletter I have written weekly since March, 1997. Enjoy.

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What fascinates me about historical cycles is how you don't always go back to the last one.

When I first began studying America's political cycles in 2006, I posted lots of articles about “the 1966 game.” For years I mainly compared what was happening in American politics to a bizarro version of the Nixon cycle.

More recently, I've been looking at the present crisis through the eyes of 1996. (Blame Doris Kearns Goodwin.) What most historians have been unable to explain is why people like J.P. Morgan essentially surrendered on issues like miners' wages, or why John D. Rockefeller calmly accepted the break-up of Standard Oil.

Goodwin never answers that one in “The Bully Pulpit,” but I have my own theory.

Business isn't always conservative. The word “progressive” includes the word progress, and business is inherently progressive, always pushing change with the aim of profit. Mass manufacturing, the growth of GM and Ford, would have been impossible without sure prices for inputs like electricity and for rail transport costs. What regulation did, in the end, was create that certainty. It enabled business progress.

Then, in recent weeks, we suddenly began playing The 1938 Game.

Two Enemies

Think of this as Volume 18, Number 9 of the newsletter I have written weekly since March, 1997. Enjoy.

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Each generational crisis contains elements of those that came before.

As in 1968, we see a nation divided by war and growing debt. As in 1860, this is mainly a regional split, north vs. south. As in 1896, it's all about money, with a small Gilded Age crowd of oligarchs seeming to hold all the cards.

But there's also a great commonality with the crisis that consumed Franklin Roosevelt after 1932. Democracy is at stake, with the greatest risks to it being false choices and apathy.

The New Deal was created to address the key problem of the economy, but that program did not define the existential crisis of the Greatest Generation. That was a more basic question: could democracy survive? Could freedom live in a highly scaled industrial era, against the false choices of communism and fascism?

The Value of Emotional Intelligence

Think of this as Volume 18, Number 6 of the newsletter I have written weekly since March, 1997. Enjoy.

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The industrial era was marked by shortages, and the need for technical expertise to overcome those shortages.

That expertise came in many forms. There was political and economic expertise, there was engineering and scientific expertise. A host of new professions grew up around this expertise. The world that these people built was defined by this kind of knowledge, turned to science, then through engineering transformed into technology.

The Internet Era has flipped all this on its head. You don't necessarily need to know stuff when you can Google it. The job of building knowledge, which was once about brute force, is now more about building connections, both among facts and among the people with access to those facts.

This is why the center of economic life has shifted in the 21^st century. Power that resided in factories early in the 20^th century, then moved to offices later in the century, now resides on university campuses.

The Fall of Faith-Based Economics

Think of this as Volume 18, Number 3 of the newsletter I have written weekly since March, 1997. Enjoy.

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I recently did a piece for TheStreet.com on Austrian economics and, out of modesty, I didn't offer my full view of the matter, because I'm a tech writer.

My view is that Austrian economics, like Karl Marx' communism, is faith-based economics. It ignores economic evidence, its acolytes spending all their time rejecting contrary facts.

They explicitly reject the notion that government can weigh evidence of economic strength or weakness and do anything about it. Thus Austrian economics can never fail. It can only be failed by those too weak to apply it rigorously enough.

Austrian economics stands alongside climate denialism and religious millenialism as one of three pillars of the modern conservative movement. This is what makes conservatism a clear and present danger to democracy in our time. It's at the heart of our present crisis.

2014: Forgetting And Beginning Again

Think of this as Volume 17, Number 52 of the newsletter I have written weekly since March, 1997. Enjoy.

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While in New York recently I got a powerful insight into what the next year will bring.

I decided to visit the site of the World Trade Center, “Ground Zero,” or “The Pit,” as it's been variously called.

Construction is transforming it. The new One World Trade Center, with its huge antenna, has been topped out. A shorter building, called Four World Trade Center, is going up nearby. The buildings that survived 9-11 are being redone under the name Brookfield Place .

Right now, a visit remains like going to a grave site. There are tickets, and tours, of the site where the Towers once stood, now transformed into a memorial. But there is also scaffolding everywhere, and it obscures the view of what's actually happening, the beautiful process of rebuilding.

Next year, that scaffolding comes down. Next year, New York can begin the important process of forgetting.

We all talk about remembering the past, of memorializing it, but it's also important to forget it and move on. You can't mourn forever.

Some time next year, New York will finally start to move on, and so will the rest of us. Instead of the empty, elevated courtyard of the old site, the new site is at street level. The new World Trade Center isn't separated from the rest of the city, as the old one was, but is integrated into it.

2013: The Shifting of the Political Wind

Think of this as Volume 17, Number 51 of the newsletter I have written weekly since March, 1997. Enjoy.

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It is the job of any crisis leader to deal with a fundamental shifting of political winds.

It happens just once in each generation. An existential crisis causes a rising generation to adopt new values, and causes some in the older generation to shift theirs. The result is to turn the old majority into a new minority, and vice versa. Until next time.

This has happened 5 times in modern American history. The Civil War. The Progressive Era. The Great Depression. The 1960s. Now, the Great Recession.

Presidents elected at a time of crisis have a unique opportunity. Success puts them at the forefront of great American Presidents. Failure doesn't change the history, it doesn't prevent the turn, but it passes that opportunity on to a successor.

Who are generally acknowledged to be our greatest Presidents?

Impeaching Your Own President

Think of this as Volume 17, Number 46 of the newsletter I have written weekly since March, 1997. Enjoy.

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During America's last political crisis, which began with Richard Nixon's election and ended with the validation of his political coalition through Ronald Reagan, a huge strategic mistake was made.

Watergate delayed the conservative movement's march to power by nearly a decade. They'd had a 60-40 win over McGovern, they were well on their way to taking over the South, but because Nixon over-reached, because he was inherently distrustful of democracy – as other conservatives remain – we had six years of what was, in hindsight, an apotheosis of liberalism.

Democrats are, en masse, threatening to make the same mistake, turning away from Barack Obama.

Populism Costs Republicans the Future

Think of this as Volume 17, Number 44 of the newsletter I have written weekly since March, 1997. Enjoy.

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Political analysts of the left, right and center all misunderstand the nature of the Tea Party.

They're not “conservatives,” as we usually define the term. They're populists.

Populism is as old as the Republic. Thomas Jefferson ran as a populist in 1800, but eventually accepted renewal of the U.S. Bank. Andrew Jackson was our most successful populist, and he killed the bank.

The Panic of 1837, which followed soon after, killed populism as a governing principle. It only ended after American imperialism seized the southwest from Mexico, and we found gold in California.

Populism then merged with anti-immigrant Know Nothingism. It infected the Democratic Party through non-slaveowners supporting the Ku Klux Klan. It only became associated with liberalism thanks to William Jennings Bryan's “Cross of Gold” speech.

But populism was never about economic theory. It was and is about relative advantage, about people losing their edge -- or assuming they're losing it -- against newcomers rising up around them.

Populism, at its heart, is about a fear of change, the assumption that everything is a zero-sum game. And it's the nature of America that it's not a zero-sum game, that history sides with the newcomers. 

Populism also doesn't have to be internally consistent. It isn't. 

The Obama Consensus

Think of this as Volume 17, Number 42 of the newsletter I have written weekly since March, 1997. Enjoy.

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In the days after the government shutdown everyone on the TV was asking, “Was it worth it?”

My answer? Hell, yes. It was worth it.

Despite the estimated $40 billion in economic activity that didn't occur?

Despite 74% of people saying they want the whole Congress gone, and the President's popularity falling to an all-time low? Despite the fact that this was “only” a three-month respite in the Congressional war?

Yes. And it was damned cheap at that.