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While on vacation this summer, my son wanted to go to the local bookstore to get some beach reading. As he scoured the bookstore, my eye fell on a book I’d never heard of before, “A Conflict of Visions” by Thomas Sowell. The book claimed to address why “the same people line up on opposite sides of different issues”. I’ve often wondered why this is the case, so I picked it up. After reading just a few chapters I realized that this was a very special book, and IMHO it succeeded brilliantly at creating a framework for understanding the rift between ideologies.

The issues themselves may have no intrinsic connection with each other. They may range from military spending to drug laws to monetary policy to education. Yet the same familiar faces can be found glaring at each other from opposite sides of the political fence, again and again. It happens too often to be a coincidence and it is too uncontrolled to be a plot. A closer look at the arguments on both sides often shows that they are reasoning from fundamentally different premises. These different premises – often implicit – are what provide the consistency behind the repeated opposition of individuals and groups on numerous, unrelated issues. They have different visions of how the world works.

Pacifists and hawks, collectivists and individualists, left-wingers and right-wingers are all placed into a model that while not perfect, sure seems better than anything I’ve seen before. As far as I can tell, it appears to be very even-handed toward both sides. One reader I know who leans democrat in his voting felt the same about the book.

I unabashedly admit I fall wholeheartedly into what he calls the “Constrained” category. Simply put, he nailed the political me. My impression is that he has also perfectly described many (all, actually) on the left who I spar with. It’s up to them to see if they concur. I can’t imagine how (if they’re honest) that they wouldn’t.

I was pleasantly surprised when I discover that A fan of Sowells work is Steven Pinker, Harvard Psychologist and “idol” of my political sparring partner Steve Roth. Not only has Pinker referred to the book in his best-selling The Blank Slate, but he has placed A Conflict of Visions on his required reading list for his courses, and put the book in his “five favorite books of all time” list.

Pinker ultimately uses slightly different terminology than the ones used in Sowell’s book, and refers to the two main categories of thought as “Utopian” and “Tragic” which I agree resonate better than “Constrained” and “Unconstrained”.

This from a UPI interview of Pinker (emphasis mine):

They are the different visions of human nature that underlie left-wing and right-wing ideologies. The distinction comes from the economist Thomas Sowell in his wonderful book “A Conflict of Visions.” According to the Tragic Vision, humans are inherently limited in virtue, wisdom, and knowledge, and social arrangements must acknowledge those limits. According to the Utopian vision, these limits are products of our social arrangements, and we should strive to overcome them in a better society of the future. Out of this distinction come many right-left contrasts that would otherwise have no common denominator.

Sowell is an economist with some impressive credentials. He graduated magna cum laude with a Bachelor of Arts degree in Economics from Harvard, he received his Masters in Economics from Columbia and finally a Doctor of Philosophy in Economics from the University of Chicago. He is a Senior Fellow of the Hoover Institution at Stanford. He’s also taught at UCLA, Brandeis, and Cornell.

He leans strongly toward market solutions over government ones, so I assume many enlightened (and oh, so, so smart) non-students of economics will assume he must have been dropped on his head as a child, or may just be evil. Pinker sure disagrees. FWIW If they read his book, I think both sides will understand why neither side is evil.

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I’m enjoying “The Economic Crisis and How to Deal with it” — a riveting debate videoed in 2009 with some very heavy hitters in the world of finance and Economics. Participants include Paul Krugman, Nouriel Roubini, Robin Wells, George Soros, Senator Bill Bradley, and one of my favorites – Niall Ferguson.

Lots of insights to blog about in this 90-minute conversation, but this is the one that has jumped out at me as the one to post first.

One of the key distinctions between most Economists (generally “constrained” thinkers) and what Thomas Sowell calls those with an “unconstrained” worldview, is that the latter sees “problems” that need “solving.” The former generally see only tradeoffs. I (largely with a constrained worldview) often enter into discussions with my enthusiastic “problem-solving” friends who hold the unconstrained view. This can lead to frustration on all sides if the worldviews aren’t taken into consideration and fully understood. To many, the notion that you’re not champing at the bit to create volumes of new rules and agencies to monitor and further restrict the activities of market players must make you either a toady of Wall Street or some kind of dope.

To many, problem = markets gone wild and bad actors.
Solution = (lots) more regulations, and regulators.

Disagree with that idea, and people may start comparing you to Sean Hannity…

That’s why I enjoyed the following assertions made by Soros, the darling of many of my unconstrained friends. He puts forth some statements that echo exactly what I have been saying since this crisis started:

* Bubbles are inherent to markets and they can’t be stopped. If someone could predict bubbles, they’d use that skill to become a billionaire. They wouldn’t take a government job. Forget the idea of creating a government agency ran by braniacs that “stop” bubbles.

* For sure tighten up on leverage restrictions, eventually the money/credit supply and make more information available (derivatives transparency etc.) but don’t go nuts with new agencies and rules, as they will impose new and unknown distortions and costs. Do a better job of enforcing the rules we already have.

Here’s what Soros says (emphasis mine:) “We should try not to go overboard towards regulation because while markets are imperfect, regulators are even more imperfect. Because not only are they human, but they are also bureaucratic and also subject to political influences. So we want to keep regulation to a minimum. It has to recognize that markets are inherently unstable.”

See Soros here (go to the 2:12 mark):

My response to the most recent “blame Reagan” post from my friend Steve (collect the entire set!) One that borrows more than a few keystrokes from him…

The Entitlement Strategy is a brilliantly effective (and profoundly irresponsible) political framework. It goes like this:

Borrow money from our children and from abroad, and use the money to buy votes here with the world’s oldest political pander: “We’ll give you stuff.” The bonus is that it also strongly appeals to those who are obsessed with inequality aversion, guilt, or both.

Just tell the people they don’t have to pay for the government they insist on receiving. Borrow to pay for it instead. It gets you elected, right? Deficits be damned. Plus, do it right and the big bills will kick in long after you’ve left office, and with any luck at all, you’ll likely have an army of bloggers who will blame it on the ideologically incompatible leaders who come after you.

The CBO recently updated their June 90-page report titled “The Long-Term Budget Outlook” and it there aren’t any surprises there for those firmly rooted in reality. As expected, it focuses on our unsustainable budget:

This Congressional Budget Office (CBO) report examines the pressures on the federal budget by presenting the agency’s projections of federal spending and revenues over the coming decades.

Many will find it surprising that a CBO document focusing on our deficit doesn’t dedicate a chapter exclusively to Ronald Reagan or his policies. Oddly, he’s never mentioned. In fact, “cold war” or even “military” are never featured. Reagan’s tax cuts? Nope. Iraq? Nothing. Afghanistan? Zip. Defense? YES – but just twice in 90 pages.

What is mentioned frequently? Exactly what one whose looked at the issue objectively would expect: ENTITLEMENTS. Over 400 mentions.

Social Security = 125
medicare = 179
Medicaid = 112
Entitlements = 5

Okay, I know what you’re saying. That’s cute Steve. But can we please just look at the actual fiscal analysis? What do the numbers say? You guessed it. Essentially the same thing. Check out the CBO spending forecast:

Hmmm. Where’s defense? Isn’t that a huge slice? “Reckless” wars and “wasteful” military build up? Where are they? Turns out defense is such a small slice compared to the creations of FDR and LBJ the CBO doesn’t feel it merits being called out. Kind of sad really. Those items fall are within the top (and ever-dwindling) slice titled “other.”

I had an idea. What if we took those few programs that can almost exclusively be attributed to FDR and LBJ and put them all together? Combine them into one big, blue tsunami. Here we go:

Wait, what are those little red blips? Squint and you’ll see these are the areas that indicate the difference between tax revenues and expenditures (the awful, irresponsible deficits) that occurred during the Reagan and Bush years.

Kind of puts things into perspective doesn’t it?

Even Google understands what the problem is. And it isn’t tax cuts. Tax increases/cuts come and go with the seasons. Entitlements do not. In closing, I’ll refer to what what millions of searchers and the worlds most valuable algorithm have come up with.

Barry Ritholtz asserts that the essential political shift that’s occurring is that the conflict between right and left has shifted to become the people vs the corporate interests. He provides several specific examples of how those worlds collide, but left a couple out that are near and dear to my heart. Both fall under the heading of land use:

One is the power of corporations to take your property with the enthusiastic assistance of the government in order to pursue their commercial interests, thanks to the Kelo v. City of New London decision by the supreme court.

The other is exemplified by the post I took live earlier today regarding the ability of developers to run roughshod over zoning and land-use regulations in order to overwhelm municipal infrastructure. In this local case, it was not just regulatory negligence, but by all appearances active and aggressive collaboration by regulators to work against the best interests of the citizens.

That being said, I believe the right vs left battle is alive and well and if anything re-energized of late. Anti corporate populism has existed for generations and has been based on real and large-scale conflicts.

Thanks to Steve Roth for sending me the Ritholtz link…

Another example of how industry has apparently co-opted the regulators who are supposed to enforce the so called “Growth Management” Act of 1991 which was designed to prevent exactly what just happened to the Lake Washington School District.

It seems that they’ve piled so many condos and homes into Redmond that the local schools are “overflowing” according to KIRO TV.

Some background. Evidence and court rulings strongly suggest that regulators (King County) and developers colluded to circumvent regulation in order to build the gargantuan Redmond Ridge development (which is no doubt the catalyst for this school problem.) It seems clear that King County was motivated to accommodate the developers that they fabricated roads and traffic stats in order to bypass GMA restrictions. A gazillion homes got built, Avondale Road became gridlocked, and so many people moved in that all the majority of the local voters know is that compared to Los Angeles, Mountain View and Mumbai, the schools and roads they now crawl along in are positively roomy. A nice trick.

Some relevant quotes from a related 2005 P.I. article include references to how county officials actively worked to prevent suspicious King County employees from learning or propagating the truth about this blatant overdevelopment.

“…the five whistle-blowers have maintained that their data had been manipulated wrongly and could put the county at risk legally if not corrected. Their pleas were dismissed by their supervisors, according to Mickey Gendler, the attorney for two whistle-blowers…five King County traffic experts who said their jobs were threatened because they tried to blow the whistle on faulty traffic data.”

I take very small comfort in that Redmond High (a school we love) will be in our rearview mirror by the time the bulge in this monstrous python hits campus.

Hey, when we finally have to ration sewer access, the developers will have a trifecta!

At least some corporate and state agencies made a lot of sales (and tax revenues…)

The Gallup Presidential Job Approval Center has an interactive dashboard that lets you compare the the approval ratings of post-WWII presidents at any comparable point in their presidencies. I’ve been tracking Obama’s approval against other presidents that were seriously “troubled” at this stage: Reagan, Carter, and Clinton. As those who were around at that time, things looked bad for all three of them at this stage (613 days in) and all considered their re-election to be in jeopardy unless things greatly approved. In the case of Carter, they didn’t.

At this point, Obama is just squeaking past Reagan (44% to 42%) and is tied with Clinton. With Carter, the “streams have crossed” and Obama is behind by 4%. It seems obvious that as far as poll numbers go, the Obama camp hopes for change.

The Gallup Presidential Job Approval Center

The “Crossed Streams.”