Thursday, March 17, 2011

Robert Reich's Developing Plan to Co-Opt the Tea Party

I am on the West Coast, in the San Francisco area. Whenever I am out here, I try to get a sense for what is going on at the epicenter of the Regressive Movement. Such an opportunity was provided to me late yesterday afternoon when former Labor Secretary Robert Reich delivered, at the University of Califonia-Berkeley, the Barbara Weinstock Memorial Lecture on the Morals of Trade.

He started his lecture by telling us that "morals of trade" in the late 19th century, included economics, so that he was justified in giving a speech on economics and then he proceeded to deliver a mostly political speech.

He's no Bob Murphy, but Reich could have a second career as a stand-up comic. He's comfortable speaking in front of a crowd and his timing is good when he delivers jokes.

He told us that once when he was debating an issue on television, that during a commercial break, the producer said into his ear plug that he needed to get angrier in the debate. He replied to the producer that he thought the debate was going just fine, but the producer reiterated that he needed to become angrier because people flipping channels will stop when they hear an angry debate. This he said got his temperature boiling.

In watching him speak, I got the sense that he is a surface guy.  He seemed to be aware of all the topics of the day, but there really wasn't any depth to his knowledge. He seemed to keep up on events, but that was about it.

I once knew a "high class" stripper that reminded me of Reich. She didn't seem to have a particular interest in world affairs, but would force herself to watch at least an hour of news everyday. I got the sense that she did this so that during breaks between lap dances at work, she would have a working knowledge about what men were talking to her about. She might for example recognize the name Hosni Mubarek, but most certainly would not know that the Shah of Iran was a dictator  propped up by the U.S. and that he was replaced during the revolution by Ayatollah Khomeini.

This was the sense I got about Reich. Now, I can't imagine the man providing a lap dance, but he rattled off knowledge the way my friend could rattle off knowledge about headlines, and given that Reich gives a lot of speeches, if he wasn't an in depth thinker, this surface "lap knowledge" in economics would serve him well.

Getting this sense, and given that he writes a lot of books about economics, I decided to have a little fun with Reich during Q&A. I asked him about excess reserves and the fact that there were a trillion dollars sitting there because Bernanke had started to pay interest on them and  I asked him if this was a mistake.

He clearly didn't have a clue about excess reserves and started to rattle off about risk that execs didn't want to take. I stopped him and  replied that this wasn't about risk but the fact that Bernanke was paying, risk free to banks, an interest rate that was 3 to 4 times the comparable T-bill rates. He went on to make a total fabricated point as if at the recent FOMC meeting there was some big discussion about excess reserves.  It was obvious at this point that he was just going to continue to make inane comments, so I stopped pushing the question.

But the point is clear, he's a real surface guy when it comes to economics, despite all the books he has written on the topic. I have had discussions about the Fed with another member of  Bill Clinton's cabinet, where we have debated and discussed many Fed-related topics, including excess reserves. This cabinet member's knowledge of economics is deep and there appears to be a real search for knowledge. In comparison, Reich is running a carnival act.

But, I digress.

In his lecture, Reich was all over the place when it came to economic analysis. He spent a considerable amount of time stating the Keynesian notion that the problem with the economy was a lack of aggregate demand, but at one point he decided to reach into the Austrian school of business cycle theory and managed to say that business cycles are always brought about by Fed policy.

He confessed to us that he certainly had no clue a housing bubble was about to occur, by telling us that he bought a house in Berkeley at the very peak of the market in April 2006.

Somehow ignoring his earlier statement that the business cycle is always the result of Federal Reserve monetary policy, he called for more deficit spending and said we should only worry about debt problems "3 to 5 years down the road."

He did bring up that he is now chairman of  Soros-funded Common Cause, and as if to make clear there is now a battle between oligarchs, he specifically mentioned the Koch brothers and the fact that they were buying and influencing politicians across the country.

Most intriguing, he told us that he recently had a discussion with a senior Tea Party official. He noted that the Tea Party was formed because of a revulsion over Wall Street bailouts and there was an "overlap between the views of  regressives progressives and the Tea Party." He sensed, and I think accurately so, that many Tea Party members are more against the way government is run than necessarily against big government, itself. Of course, this isn't the belief of the Ron Paul wing of the Tea Party. They understand that creating power centers will always lead to attempts to influence those power centers, and further, even assuming the power centers were run by the incorruptible, the lack of market signals, when things are run by government dictates, is another major problem that would cause the Ron Paul wing to object to big government.

Reich's comment, though, shows the danger in compromising with those who simply want to change things and are not hardcore and principled about liberty. Cozying up to the Scott Walkers of the world isn't going to do it. It's only the principled stands of those like Ron Paul, Lew Rockwell and the Mises Institute that have no chance of being co-opted by Reich and his crew.

To waste time supporting the Scott Walkers of the world, when the Robert Reich's of the world are plotting to co-opt them, is a terrible waste of time. Libertarians need to talk about liberty, not the taking away of union cards. Reich is not there, yet. But he is plotting and probing on the best way to do a little dance, and tease out the interventionist instincts of those Tea Party members who don't yet understand that it is only liberty that will set us free. It is not about taking away union cards and "improving" the public school education system. It is about ending the public school education system. It is not about fixing medicare and medicaid, it is about getting government completely out of the healthcare and charity industries.

It's not about a nip and a tuck here or there. It's about ending government involvement. For those who think a nip and tuck is the answer, Robert Reich is busy thinking of how he can come up with the nip and tuck that he can present to Tea Party members who don't understand the liberty versus intervention difference.

In other words, Reich wants to pull right out from under the Koch brothers all those compromisers the brothers are supporting. The Soros-Koch cage match is on.


  1. "Of course, this isn't the belief of the Ron Paul wing of the Tea Party." Not sure if I agree or disagree on this one. I think it is intellectually dangerous to associate with any type of political party. Even Lew has voiced objection to the tea party, not to mention countless other Austrian School authors criticizing the movement. Although I give you credit for carving out a small niche of the party. But even that wing of the party still believes in limited government. On March 15, Rand Paul stated on Kudlow that he supported government spending to the extent of revenue. What kind of libertarian is that?

  2. "Libertarians need to talk about liberty, not the taking away of union cards." What libertarians are talking about taking away union cards? No, they are talking about ending the rules that force workers to join and pay money to unions as a condition of employment. This is a pro-liberty position.

    Mark H
    Seattle, WA

  3. Just as the progressives have slowly advanced more and more government onto us, the opposite will likely also have to be the case. It is not my position that liberty minded individuals should give up the fight for minimal government, so much as do to them what they have done to us. Take every opportunity to limit government, co-opt them. If they give an inch, take it, then ask for two more.

  4. what i don't understand is how can you be a libertarian and want any form of government at all?

  5. He knows enough to know being an enthusiastic Keynsian makes you an "expert" giving lectures, and being an Austrian makes you a shmoe with a blog attending his lecture...

  6. Constitutionalist libertarians are not anarchists but minimalists. They believe that government should be as small as possible and that one way to achieve this is to reduce government down to the size imposed upon it by the U.S. Constitution.

    There is no personal liberty where there is no economic liberty. Both must be in place or neither one has an opportunity to flourish.

    Libertarians generally support the option for workers to bargain collectively. But libertarians also support the right of business owners to keep their enterprises functioning efficiently and profitably. There is however, an indisputable conflict of interest as it applies to workers who are employed by government or more accurately, by the good graces and hard earned incomes of the taxpayer.

    Whether or not one admires the economic and political principles of Ayn Rand, nevertheless it is worth considering what would happen if some of the most brilliant inventors, scientists, physicians and entrepreneurs became so frustrated with government intervention that they stopped producing.

    In terms of the Tea Party movement, principled libertarians have already witnessed the clandestine efforts to diminish their voices of reason, as the calculated influences of the Religious Right and neoconservative camps, continue to erode the core beliefs or personal freedom and individual liberty.

  7. @Jeffersonianideal inconsistent. "Government is essentially the negation of liberty."

  8. " he called for more deficit spending and said we should only worry about debt problems 3 to 5 years down the road."


    This says it all, that Robert Reich is a lunatic.

  9. "Ending government involvement" is only possible if you have the sovereign power to do so-- and Ron Paul makes the mistake of conceding the federal claim of sovereign authority over the indivdual states. He even says that there was a "civil war" in 1861, which is complete surrender of national authority of the federal government-- but instead, he just critiques its discretionary economic decisions.
    This won't work, due to the corrupt conflict-of-interest in politics; and the Founders knew it, which is WHY the states kept their national sovereignty. Hence, Ron Paul and all others are wasting their time critiquing the fed and all economic policy, since it won't make a dent, save to say "I told you so" when the inevitable "TSHTF" happens... BFD.

  10. "He did bring up that he is now chairman of Soros-funded Common Cause, and as if to make clear there is now a battle between oligarchs, he specifically mentioned the Koch brothers and the fact that they were buying and influencing politicians across the country."

    George Soros versus the Koch brothers? I hope they all lose!