Previous posts in this discussion:
PostSeven Trump "Accomplishments" (Tor Guimaraes, USA, 05/22/20 11:54 am)
I share with George Aucoin (May 20th) my deep disappointment about the Obama administration's disgraceful handling of the 2008 created by Bush policies. Obama sent no fraudulent bankers to jail and he hired many of the same crooks (or incompetents?) who created the crisis. I also abhor Ms. Clinton selling herself to Wall Street and the military-industrial interests, and believe she is as guilty as many Republicans who have done the same. Even worse, the Obama Administration, including Biden and Ms. Clinton are responsible for setting numerous nations on fire through their interventions in Africa and the Middle East. Thus, I strongly encourage the Trump administration to pursue any investigations into any illegal or unethical behavior from members of any administration.
While we all must endeavor that the truth and justice regarding past events should always prevail, we must also put more emphasis on ensuring that present threats to our beloved nation are promptly addressed before it is too late. Several weeks ago I challenged on this Forum's Trump supporters to provide just one benefit that three and half years of Trump's MAGA program has provided the USA. I was completely overwhelmed by the silence; all I got were obfuscation, distractions, evasions, and deafening silence. I am still waiting, please.
Nevertheless, no one should assume that Trump and his supporters have been idle. They have been extremely busy and below are some of their accomplishments.
1. Obama's economy was less than stellar (we were lucky to survive Bush-Cheney's 2008 calamity) but Trump just kept the Fed printing more money to float the Stock market and fantastic levels of debt by households, companies, and government. The ruse was working until the coronavirus allowed us a peek into the increasingly precarious financial situation we have today.
2. Trumps ability to lead under this pandemic crisis has now been clearly demonstrated so no need to belabor it. As said best by Karen Greenberg, "the president's perception that whatever he says goes, ... from his early assertion that the virus was destined to go from 15 cases to one or disappear in the warmth of April to his fantasy numbers when it came to virus testing or obtaining crucial medical equipment to his recent advocacy of ingesting disinfectants as an antidote for Covid-19, the leader of the United States has come to resemble a run-of-the-mill autocrat spreading disinformation in his own interests."
3. Trump's art of the deal has now turned the USA from a clear position of world leadership into increasingly an isolated nation, antagonizing friends and foes, withdrawing from treaties with no clear benefits, pushing isolated rivals into dangerous strategic partnerships.
4. Trump has already given himself and the wealthy a nice tax break, now he wants a payroll tax holiday but Senate Republicans have dismissed the idea because they understand that with 36 million fewer Americans on the payrolls, a tax holiday to counter the pandemic accomplishes little more than taking money out of Social Security and Medicare coffers.
5. Trump's attacks on Obama's Affordable Care Act threatens its cost-saving benefits, as well as the now beloved Medicare program. He also recently said that cutting Social Security, Medicare, and Medicaid is "actually the easiest of all things," but given the election in November, a project for "toward the end of the year."
6. Almost on a daily basis, Trump and his echo chamber targets political critics, the press, and disloyal government officials with false accusations of incompetence and/or criminality as pretext to remove each of them as obstacles to his own ambitions or unbelievable levels of Narcissism.
7. For some time, the Federal Reserve under Trump has been working very hard to "stabilize" Commercial Mortgage Backed Securities (CBMS). Remember home mortgage-backed securities in 2008? Wall Street needs the commercial economy bailed out again. Very likely Trump's presidency will end with a world "investment" economy deliberately looted and totally destroyed and requiring huge government intervention to avoid collapse.
The list goes on but I am too depressed already.
JE comments: Tor, your assignment: Send us a happy post next time! For now, let us focus on #5: are cuts in the "classic" entitlements (Social Security, Medicare, Medicaid) in the pipeline? What exactly is Trump saying about this?
Reflecting on Trump's Seven "Accomplishments" (from Ric Mauricio)
(John Eipper, USA
05/24/20 4:42 AM)
Ric Mauricio writes:
Tor Guimaraes (May 22nd) puts forth an interesting definition of "accomplishment." When I used to interview accountants, I asked them two questions: the first one was: is accounting an art or a science? Anyone who responded that it is a science were immediately eliminated. The GAAP rules are intentionally vague enough to elicit interpretation, so the field is both an art and a science. The second question was one that challenged most interviewees: what would you say are your best accomplishments in your career? Uh, I balanced the books every month. Oh my goodness, really? OK, using Tor's definition, "my biggest accomplishment is destroying the accounting system." Oh, you're hired.
But yes, I imagine that a negative accomplishment is also an "accomplishment."
But let us take a look at Tor's bullet points on Trump:
#1: I guess one could say that Obama's economy was definitely better than George W. Bush's economy, but not as good as Bill Clinton's. Again, everything is relative. National debt growth must be compared to the inflation rate, which is a benign way of saying that your cash is losing its purchasing power (funny that very few people look at it that way). So during the Clinton era, the National Debt increased 1.2%/year while the inflation rate averaged 2.6%/year, so an inflation-adjusted debt rate reduction of 1.4%/year. During George W. Bush's era, the National Debt increased 3%/year, with an annual inflation average of 2.8%/year, so the National Debt grew an inflation-adjusted .2%/year. The Obama era brought us an increase in the National Debt of 2.5%/year, with an average 1.4%/year inflation rate, thus an increase in the National Debt of 1.1%/year. Trump, in 3 years 5 months in office, has increased the National Debt 6%/year, with the inflation rate at 2.1%/year, thus an inflation -adjusted increase in the National Debt of 3.9% per year or a rate of increase 280% over the Obama era. Debt, if executed prudently, can lead to a greater economy, but at 120% of GDP, it is like owning a house valued at $100,000 with mortgage of $120,000. Not prudent at all.
#2: How many bosses in my consulting career have always asserted they are always right? How many bullies in high school have I challenged?
#3: Tor, have you read Trump's Art of the Deal? I have and this book should be placed in the fiction section. A total waste of time. Trump has always set himself up as a brave and heroic figure capable of leaping over tall buildings. And now he is not only not leaping over them, but bouncing off the first floor. He is truly showing his incompetence.
#4: Just watch as Trump takes credit for saving Medicare and Social Security by showing that fewer Americans are collecting because the recipients are dying off. If that doesn't do it, he can confiscate the government securities held by the second largest holder of treasuries (yes, China; Social Security is the largest holder), which, of course, will send the value of those securities lower (as other holders also sell theirs). Thus the Social Security Trust will have to reduce the payouts to recipients. And since he has antagonized every other country, they will not come to the rescue.
#6: The ones who are screaming "Fake" seem to be the most fake. I recently "unfriended" a fellow churchgoer as he attacked me for not agreeing with Trump, even when I asked him for supporting evidence that what he was saying was true.
#7: One word: Seritage. Good ol' Eddie Lampert took Sears (I loved working for them) and destroyed it and took all its real estate for himself. I'm sure Trump is planning the same thing. Ah, reminds me when I was thrown out of the Trump University presentation.
The silver lining in all this is that we must read the tea leaves and adjust our investments going forward to take advantage of whatever happens.
JE comments: Ric, lots to chew on here (during our times of Coronabloat, it's better to snack on ideas than, well, snacks). In your #1, you say that a 120% debt-to-GDP ratio is like owing $120K on a $100K house. Wouldn't the better analogy be owing $120K with an annual salary of $100K? That scenario doesn't sound as scary. And in your neck of the woods (Foster City, California), shouldn't you multiply your figures by ten or so? And how does your analogy in #7 apply to Trump? Depress the entire nation in order to buy it cheap...?
I miss the Golden Age of Sears, too.
Finally, when time permits, could you retell the story of your showdown at Trump U? I recall posting it on WAIS some time ago, but cannot find it in our archives (the search terms "Trump" and "University" lead to zillions of posts).
Relative Deficits of Republican and Democratic Administrations
(Paul Pitlick, USA
05/25/20 6:37 AM)
The only thing I know about accounting is a blank Excel spreadsheet, so I would like to ask a question about Ric Mauricio's typically excellent post (May 24th).
Numbers are numbers, but I wonder how Ric calculated the numbers for the US federal deficits. Specifically, when the new president is inaugurated, he takes over early in the last fiscal year of his predecessor, but his first real budget doesn't start until the fall. When George W. Bush came into office, the budget had been balanced (finally) under Clinton. The Bush tax cuts then broke the bank, and the economy crashed further at the end of his term, leaving a massive hole for Obama to try to fill.
If you say the Bush years were 2001-2008, he picks up the benefits of the last Clinton budget, and dumps the worst year into Obama's lap. But the actual Bush-budget years were 2002-2009. After 2009, the Republican congress would not approve any tax increases, but the deficit mostly fell under Obama (never actually becoming a surplus). The Republicans have repeated their budget-busting feats again the past three years.
So my question is: which of those transition years was assigned to which president in Ric's calculations (of course, this goes way back, not just the last few presidents)?
Note that the Reagan-Bush years were debt-laden also. Wherever did the idea come from that the Republican Party stood for "fiscal responsibility?"
JE comments: Paul, I'm with you. With spreadsheets, I cannot get past the blank stage. Which one's a column and which one's a row? Ouch...
As for budgets and the economy in general, it certainly takes a year or more for a predecessor's policies to work through the pipeline. For example, Reagan-Bush I apologists claim it was their policies that produced the prosperity of the Clinton era. Unsurprisingly, Trump's "buck stops anywhere but here" philosophy blames our current pain on Obama. Historically, it's probably impossible to say which of the major parties is more (better: less) fiscally responsible. The two World Wars were both fought under Democratic presidents.
Stock Returns under US Presidents; My Showdown at Trump U (from Ric Mauricio)
(John Eipper, USA
05/27/20 3:52 AM)
Ric Mauricio responds to Paul Pitlick (May 25th):
Yes, Paul, we are on the same page regarding when a President's policies begin to kick in and when they end. The same applies to the performance of the stock market. I will get to those stats in a minute.
What especially made this exercise challenging is that in order to apply the thinking that a President's policy affects his second year and carries on beyond the inauguration of his successor, I had to rely on charts and adjust the timeline to start at the beginning of his second year in office and carry on through the first year of his successor. I could not find anyone who publishes that type of information. So while the numbers may be inexact, I believe they are close enough to illustrate the effect of policies (although I believe that it is not wholly the President's policies but rather that of the markets that affect the economy; and oftentimes just the very act of not doing much to upset the apple cart may result in more positive numbers).
If we were to measure a President's performance in stock market terms (again, starting from their second year in office), this is how it would stack up. Clinton's total return (stock appreciation/depreciation plus dividends) averaged 15.48%. That includes the dot com bubble, which eroded his performance towards the end of his term. George W. Bush's total return averaged 4.14% as he couldn't recover from the dot com bust and the 9/11 attack at the beginning of his term, then got hit with the real estate bust in 2008. One couldn't blame the policies of Clinton or Bush for the dot com crash (can one blame the Dutch government for the tulip mania?) or the terrorist attack (although one can say that ignoring the CIA intelligence regarding the attacks may have contributed to the situation). The banking/real estate issues started with Clinton but accelerated with Bush's hands-off treatment of the banks and their zero-down, stated-income and messy appraisal practices. That I do put blame on the Bush administration. Funny I can't find any banker/lender (including my sister-in-law) who would admit to writing those kinds of loans.
Obama's total return averaged 14.30% with no down years. Did Obama do anything? Nope. But that was why it worked. Well-run companies did well. Badly run companies went down. That's the way it should be.
Trump: total return since the beginning of 2017: 8.06%. Pre Covid: 13.56%. So Trump pre-Covid wasn't doing too bad. Likewise, although Clinton and Obama and Trump pre-Covid did well, one cannot jump to an assumption it is because of something they did. I do believe, however, that a presidential policy may lead to a devastating upsetting of the apple cart. Just like the global economic policies before and during the Great Depression, Trump's trade war would have done that, but he is lucky because now he can blame everything on Covid-19 and China.
John, to respond to your query on my response to Tor Guimaraes's point 7, you nailed it. The plan is destroy the company (eg. Sears) and in the meantime, taking the assets and pocketing it, then declaring bankruptcy for that company. In a macroeconomic national sense, print money until the dollar's purchasing power is no longer worth much and pocketing hard assets to compensate for it. This is why I teach my kids and grandkids to purchase good companies, real estate and collectibles (although one has to be careful to not overpay for those either).
John added: "Wouldn't the better analogy [for the US debt-to-GDP ratio] be owing $120K with an annual salary of $100K? That scenario doesn't sound as scary" Had to think about that because that does makes sense. But, unfortunately, it is more complex than that. It is more like you earn a salary of $100k, you spend $110k, thus an annual deficit of $10k, and therefore you need to borrow more money to cover the deficit and the compounded interest on previous borrowings. And compound interest, when it applies to borrowing is just like the Eveready bunny. It just keeps going and going (or growing and growing, yeah, the eighth wonder of the world, compound interest.)
John again: "In your neck of the woods (Foster City, California), shouldn't you multiply your figures by ten or so?" Understandably, real estate values on the SF peninsula are not the norm, and the multiple is 20. When I watch the home improvement shows, it just whets my appetite to be able to purchase homes at $100k or so.
Yes, I did get thrown out of the Trump University presentation. First of all, the presenter told all of us that we are "losers," that Donald Trump is a winner and that we all are Trump wannabes. Really wanted to gag at that point. Then he started his teasers on how to make lots of money. One of the teasers was to buy real estate with your IRA. Oh, my. You are now stepping in it. The question I brought up was if you had $100k in your IRA, you can only buy a piece of property for $100k. Oh, he says, you can put 20% down and finance the remainder. Oh, he stepped in it again. I pointed out that borrowing on real estate in an IRA produces UBTI (unrelated business taxable income) and tax-wise, that may render your IRA invalid. He asked me if I was a tax expert. My response: yes, an Enrolled Agent licensed by the IRS. Then I asked him how he would handle improvement expenses or repairs, since you utilized your entire IRA to purchase the property and you had maxed out your annual contributions. This called for a break and he asked me to leave. Trump University was eventually sued for misrepresentation and is pretty much defunct at this point. It was a scam.
JE comments: Ric, come see me in Adrian! I'd love to show you how far your real-estate $ will stretch. Just don't raid your IRA to get into the action. (Isn't borrowing from your IRA limited to "hardship" events or a first-time home purchase, or else you have to pay the 10% penalty for a distribution? There's nothing like a guaranteed 10% loss on your investment.)
A curiosity: What kinds of collectibles do you recommend? I wish I had picked up a nice used Porsche 911 twenty years ago, before they became ridiculously expensive. Problem is, unlike securities or even cash in the mattress, such tangible treasures have to be maintained, insured, licensed, etc.
Ric Mauricio on Investing in Collectibles
(John Eipper, USA
05/29/20 3:52 AM)
Ric Mauricio follows up on his post of May 27th:
John E's mention of that Porsche 911 reminds me of one of my biggest regrets of my life: selling my 1968 Mustang California Special. My eldest grandson must have been listening to me, because he purchased and restored a 1972 Camaro, which are not yet in the stratospherically priced '60s generation, but are now ramping up in collectibility.
And therein lies the key to investing in collectibles. Study a market that you have passion in and become an expert in it. Become a Wayne Carini. My youngest grandson is looking at a late '60s Impala and is planning to study auto mechanics when he graduates from high school. He doesn't just want to be a mechanic, but aspires to restorations like Ant Anstead. My middle grandson is into "pocket rockets," yeah, collectible Japanese models. He's also now into stock market investing. This does entail studying which automobiles make the most sense taking into account repair, restoration, storage and insurance (thank goodness for Grundy) costs.
By the way, British cars are the worst to restore and maintain. Love the Jaguar XKE, but really expensive to maintain. This is not unlike investing in real estate. One must study the markets, and calculate holding costs. And yes, would love to visit John and perhaps meet Nicole Curtis, a real estate restorer who buys homes in Detroit for $1.
Other collectibles are stamps (philately) and one of my favorite pastimes, collecting currencies (numismatics). When I last visited Beijing, my friend took me to the open markets and wow, did I have a field day. I purchased pre-Communist coinage and if I had the chance, would ramp up my purchases and sales of such coinage. Again, one must study collectibles in order to not overpay (hmm, like the stock market and real estate). But one rule that I especially would adhere to: buy what you would enjoy looking at all the time. There is art that is valuable, but may not appeal to your personal taste. Should you buy it because it appears that it will appreciate? Good way of getting into trouble. It's like buying dot com stocks or tulips because everyone else is buying and it keeps going up in price. Sooner or later, manias will kill you.
John also brought up the rules on borrowing from your IRA. This is allowed for hardship or first home purchases (you must live in the home). Borrowing within your IRA is dangerous and in most cases, not allowed. The example of buying real estate with a mortgage produces a time bomb with UBTI. Writing covered call options is allowed, but buying put or call options is not. Buying stocks on margin in an IRA is not allowed. One caveat is if you were to purchase assets that are not normally held by a brokerage firm, you need to open a self-directed IRA and those usually charge a hefty annual fee. Plus, I've often questioned the safety of those custodians.
As to the question of IRA penalties, it is worst than what John described. The IRS penalty for a distribution to someone under the age of 59 1/2 is 10%. The state penalty is 2 1/2%. But wait, there's more (sounds like a Ginsu knife commercial). There is federal and state income tax on the distribution. So you would pay a 12 1/2% to 40% tax on that distribution. Ouch! I once had a client who took a distribution of $80k from her IRA. She went to the casinos, won $40k, but lost $120k. Her losses that she can take was $40k since it equaled her winnings. So since she was younger than 59 1/2, she still owed penalties and taxes on the $80k, which was all gone. Ouch! I told her to negotiate an installment plan or offer a compromise with the IRS and the state of California. Did not see her the next year, her phone was disconnected and the mail was returned with no forwarding address. Yeah, I suspect she skipped the country. Ouch, now a fugitive.
JE comments: A sad story (about the woman who gambled away her IRA). Clearly she had an addiction. I would be ashamed even to admit such a vice to my tax lady, who in any case is prone to delivering strong lectures on financial responsibility. I love your tough love, Christine Leonard!
Returning to collectibles, Ric Mauricio says it best: if you don't love what you're collecting, then don't. I've been a numismatist since childhood. Never made a dime from the hobby, but I do own a lot of them (dimes).
- What US Administration had *Good* Policies? Question for Tor Guimaraes (Francisco Ramirez, USA 05/24/20 6:04 AM)
A question for Tor Guimaraes: Was there a time and a US administration whose policies you favored over those you see as problematic and leading us down the path to perdition? The first Bush? Reagan? Carter?
If so, what were the policies you admire and how did these differ from those you critique?
JE comments: So when were the halcyon days? Republicans tend to cite Reagan (tax cuts, winning the Cold War, "morning in America") and Democrats point to Clinton (balanced budgets 1998-2001). Tor Guimaraes is legendary among WAISers for his pessimism. I'd be interested to hear Tor's response to Francisco Ramírez's question.
Ranking the Policies of Our Greatest Presidents
(Tor Guimaraes, USA
05/27/20 4:27 AM)
My gratitude goes to Francisco Ramírez (May 24th) for his interesting question: "Was there a time and a US administration whose policies you favored over those you see as problematic and leading us down the path to perdition? ... If so, what were the policies you admire and how did these differ from those you critique?"
My answer to the first question is a very strong yes. However, to answer the second question which is extremely complicated, I need to establish (albeit sketchy) a contextual framework. In case some readers haven't noticed, I believe that what makes any nation great is the quality (health, wealth, education, entrepreneurship, happiness, freedoms) of life for its "average" citizen. So any government policies should be judged based on their contribution to that end on the long term. Thus, everything that I state on this topic should be viewed from that perspective, unless otherwise specified.
Further, I seek the "truth" and have a strong interest in being fair, balanced, and as unbiased as possible based on the evidence available to me. Everything and everyone must be judged based on circumstances. If important evidence changes over time or arrives from different sources, it is my duty to adjust accordingly to remain a fair judge. For example, even though after three and a half years I now think Trump has been a major disaster for our nation, and that he has been his worst enemy, much of the social economic financial landscape has been in place for decades before, since President Johnson borrowed money for the Vietnam war, Nixon who took us off the dollar/gold peg and also induced a deregulation philosophy conducive to the Lewis Powell Memorandum, and all the other Presidents who took advantage of the US dollar being a reserve currency to borrow and print money, which led our nation to the financial predicament of today.
My friend Ric Mauricio just posted something implying that Mr. Clinton had a great economy (which is true, even had the rarest budget surplus), but his Treasury Secretary Rubin and the infamous Alan Greenspan planted the seed (repealing the Glass-Steagall Act after 70 years) for the financial crisis in 2008. Barack Obama was a politically crippled President because he was black in a racist nation, so I must cut him some slack, but he was a terrible President in my opinion because he let the fraudsters behind the 2008 financial crisis get away free. Furthermore, he sent Ms. Clinton to pursue the numerous old and new expensive and disastrous military/political adventures in Eastern Europe, Middle East, and Africa that we are still paying for today. In summary, most Presidents have done good things and bad things, but on balance I do have a five favorite Presidents that I really look up to.
George Washington: What a man, what a character: poise, integrity, grit. He gave our nation its spirit, creativity from scratch, perseverance, courage. For all that, he is my hero and most impressively he is probably the only man who ever turned down a crown on principle.
Abraham Lincoln: A self-educated great man with enormous wisdom. Without his personal sacrifice our beloved USA would have become like the Balkans. He is my hero for the great demonstrated wisdom and love of our nation.
Theodore Roosevelt: Honesty, fairness, law-abiding, personal integrity, courage, grit. I respect his wisdom to cut down the robber barons rather than enriching himself and becoming corrupt.
Franklin D. Roosevelt: Fairness, wisdom, perseverance, courage. The man who made America truly great for almost a century after his presidency, when the opportunity (WWII) arose. He saved capitalism from itself, saved the American people from the Great Depression and toward greatness by raising the American middle class standard of living for the following decades by introducing effective programs, including Social Security, FDIC, and the Glass-Steagall Act. While he was personally motivated to enter WWII, he followed the American people's wishes to stay neutral until attacked. Most impressive to me, this was a wealthy patrician who sacrificed himself for the American people. Most Americans were smart enough to see all that, so he was re-elected 4 times.
John F. Kennedy: When I was a kid in Brazil, despite the propaganda (because of?) I did not like him, he was too debonair and had too much savoir faire to be a great man. After becoming an American, slowly my mind started to change. Even though his dad was a crook, I saw honesty, courage, fairness, great charismatic leadership. He was also naïve to trust the military industrial complex when he was changing his mind about Vietnam. He paid the ultimate price for not being corrupt and caring about advancing our nation to true greatness.
JE comments: "Greatness" measured by the above required "saving" something: the new nation (Washington), the Union (Lincoln), the environment (TR), capitalism and the Western democracies (FDR). Not sure what Kennedy saved (missiles in Cuba?), but I'll leave it at that. None of these Five Greats were especially responsible in fiscal terms. Salvation is expensive.
The two two biggest-spending presidents, at least through 1997, surprised me: Nixon and...Hoover. The most fiscally conservative of our times? Probably Bill Clinton, who ran a small ($63 billion) surplus over the course of his presidency. The last president to accomplish this feat (before Clinton) was Ol' Silent Cal Coolidge. But is fiscally conservative the same thing as "responsible"?
The "Greatness" of National Leaders: A Dangerous Concept
(Cameron Sawyer, Russia
05/28/20 4:17 AM)
"Greatness" (see Tor Guimaraes, May 27th) is a sentimental concept which I believe has little to do with reality. I think the idea of "greatness" of leaders does not actually belong in serious historiography, and does not belong in free societies.
The more you drill down into the complex web of interrelated factors which determine how policies get made and implemented and what long-term results come from those policies, you see that it is impossible to attribute any of those results, good or bad, to any single idea or act or quality of any single person, not even the president.
Some presidents, and their teams, are more effective than others, but effective at what? Effective at pushing through some general policy line and achieving some change, but even that is hardly the effect of just one person or even the president plus his whole team. Those presidents who are associated with big shifts in policy were really, if you look at it soberly, just marching at the heads of parades that were started, not by them, without any exception.
The biggest examples of that are FDR and Ronald Reagan. FDR marched at the head of a parade which transformed our system from a fairly purist market economy into a social market economy with significant welfare state. Those who believe in that policy line are tempted to think of FDR as "great" because of this, but this policy line was not FDR's, and it was Johnson or maybe even Nixon who finished building whatever it is we have for a welfare state. FDR worked on building this policy line, but he had a large number of committed congressmen and senators working alongside him, and a legion of scholars and journalists weaving the idea in the public mind. FDR gave some inspiring speeches, and surely this influenced public opinion to some extent, but these speeches did not determine public opinion, they were just one of a million factors. Nor can you call FDR a devil, just because you don't like the American welfare state. He didn't invent it, and didn't finish it. It was Nixon who took the American welfare state to its high-water mark and its obvious failures, wage and price controls, which ironically were dismantled under Carter.
Likewise with Reagan, who was marching at the head of a parade to restore economic freedom and strengthen market mechanisms. Reagan was arguably "greater" at this than FDR was at creating the welfare state--Reagan was better read than FDR and made more intelligent speeches which were arguably more influential than what FDR did. But again, speeches, the cheerleader function, are the smallest part of making policy in a big country like the US. The idea of a partial restoration of economic freedom in order to solve the stagflation economic malaise of the 1970s had considerable momentum long before Reagan appeared on the scene. In fact, the most important policy reforms implemented in this direction happened under Carter, with the elimination of the Nixon wage and price controls and widespread deregulation. Carter is blamed for stagflation, but in fact it was the Carter administration who laid the foundation for moving beyond stagflation and into a new era of prosperity. It is idiotic to say we had a boom under Reagan and therefore Reagan is great; there was stagflation under Carter and therefore he was a failure. It takes years for the results of policies to work their way through the system; the Reagan boom was substantially built during the Carter years. People say that Clinton was "great" because he presided over a great economy; well Clinton didn't build that economy at all. The economy was great in the '90s as the result of achievements going back to Carter, which were reinforced during the Reagan administration, which were partially walked back during Bush I, but which were still working well enough to propel us forward during the '90s.
"Greatness" is a sentimental concept which flows from the basic human desire to have someone more powerful than us, decide things instead of us, so that we will be taken care of, so that we don't have to think so much ourselves. This tendency is much stronger during national crises; therefore "great leaders" are more often identified during national crises. In my opinion, this tendency is fundamentally harmful in democracies. This is the very same human tendency which is exploited to the maximum by totalitarian dictatorships, and the cult of personality which is so common in them.
We should avoid looking for "greatness" in our leaders, if we want to remain truly free.
JE comments: A convincing appeal from Cameron Sawyer to look for competence and integrity, not "greatness," in our leaders. Google "most competent US president" and the results mostly default to, ouch, "greatness." Given that our greatest of the "great," Washington, Lincoln, FDR, all came at the times of biggest crises, is greatness really something we need?
So let's make our own list: competent US presidents. I'll still advocate for my favorite, Lincoln, who not only saved the Union from disintegration but also deftly maneuvered a nation, a military machine, and a host of fractious political rivals to accomplish a greater good. Any peacetime or "uninteresting" candidates? We could make a strong case for Jefferson, despite his personal "warts": Louisiana Purchase, a reduction in the national debt, and the prohibition of the slave trade.
The "Greatness" of National Leaders: Do Not Estimate Strategic Leadership
(Tor Guimaraes, USA
05/28/20 10:55 AM)
I agree with everything Cameron Sawyer said earlier today (May 28th), except it is great to have a great leader--if you define the concept right. Also I think Cameron is severely underestimating the importance of strategic leadership.
Of course, "it is impossible to attribute any of those results, good or bad, to any single idea or act or quality of any single person." I also agree in general with Cameron's take on FDR and Reagan.
What Cameron is missing is a set of overarching "Always Right" values which a POTUS must follow because that is what our nation states as our guiding principles, goals and objectives. As Cameron said, empty words about restoring freedom and liberty, motherhood and apple pie, the Communist or Capitalist religions are empty. We need to look at what the president did or is planning to do in terms of breaking or enhancing these values. A few weeks ago I repeated once again what these values are, so no need to repeat them here.
My main points here are: First, our POTUS can be rated along his/her performance along these values. That is what I did when selecting my greatest Presidents. Second, the president's strategic leadership is critical and sets the stage for the rest of the nation. John Eipper commented on my 27 May post with "Greatness measured by the above required saving something: the new nation (Washington), the Union (Lincoln), the environment (TR), capitalism and the Western democracies (FDR). Not sure what Kennedy saved (missiles in Cuba?)." No, Kennedy promoted science, followed the Constitution and the rule of law, nurtured democracy, enabled truly free markets, and he made our nation loved and respected all over the world.
JE comments: Perhaps the biggest achievement of Kennedy was the "love and respect" part. A great deal of this "greatness" was superficial, however: a youthful and attractive president, with a very glamorous wife.
Tor Guimaraes's "always right" values are explained in this post of May 9th:
- The "Greatness" of National Leaders: Do Not Estimate Strategic Leadership (Tor Guimaraes, USA 05/28/20 10:55 AM)
- The "Greatness" of National Leaders: A Dangerous Concept (Cameron Sawyer, Russia 05/28/20 4:17 AM)
- What US Administration had *Good* Policies? Question for Tor Guimaraes (Francisco Ramirez, USA 05/24/20 6:04 AM)
- Ric Mauricio on Investing in Collectibles (John Eipper, USA 05/29/20 3:52 AM)
- Stock Returns under US Presidents; My Showdown at Trump U (from Ric Mauricio) (John Eipper, USA 05/27/20 3:52 AM)
- Relative Deficits of Republican and Democratic Administrations (Paul Pitlick, USA 05/25/20 6:37 AM)