Wednesday, April 09, 2008

Good leaders build things

Marmoream relinquo, quam latericiam accepi (I found Rome a city of bricks and left it a city of marble.) - Augustus Caesar

As the election of 2008 nears I can't muster much enthusiasm for any of the remaining candidate's platforms. Their issue statements are, alternatively, polemic or apologetic, but there seems to me to be no vision for the future. Our leaders are more like caretaker CEOs, enjoying the fruits of prior labor. To the extent one can infer that these candidates collectively speak for a broad swath of at least corporate America, these United States seem like a heavily armed battleship drifting nowhere.

Consider the debates over the Wars in Iraq and Afghanistan. The focus is on whether we can win or if we should be over there, in the abstract. Reminiscent of the Vietnam War, there seems to be no plan for victory, no desired end. Instead, we seem to be fighting to stop others from taking the prize. This lack of vision in all three wars explains, in part, our failure to attract and maintain local support.

It almost seems as if the purpose of these wars is war itself- as a display of strength, a warning, and a punishment- with the added kicker of great profits to the military industrial complex of which Eisenhower warned.

In short, it seems we are fighting to maintain our place in the world, not make that world a better place. Our aggression is defensive.

Foreign policy may not be the only example of such defensiveness.

For many years now we have embraced speculation as an economic driving force, forgetting that speculation per se has no aim. Making money these days is more important than doing something with it. Wealth, like war, has become an end, not a means to an end.

Capital flows are directed to maintain financial intermediaries who have financed precious few constructive endeavors of late. Besides fast computers, connectivity and Viagra what will these ailing financial intermediaries leave to posterity? A few grand mansions in Greenwich Ct. and thousands of foreclosed mcmansions?

Increasingly I find Bernanke's "global savings glut" argument of a few years back a useful heuristic. As Warren Buffet is well aware, there's a lot of money to invest but few compelling investments, in part, I suspect, because, on balance, rent seeking is preferable to risk these days. Heck, even the supposed supreme risk takers on Wall St. have quickly morphed into rent seekers feeding at the public trough under the banner of "too big to fail." But rent seeking carries its own risks. We are the King Midas of paper about to choke on our $s.

Ominously, while we are engaged in defensive foreign and economic policies, impotently trying to hold back the march of time, that which we are defending seems to be falling down around our ears. As my friend James Howard Kunstler will tell you, our 50 year experiment in suburbia is a bust- built on a vision of cheap petroleum in perpetuity.

Our leaders over the past few decades seem to have forgotten that good leaders build things- they leave the world, to the extent one favors civilization, a better place than they found it (admittedly not without breaking a few eggs in the process).

Alexander the Great didn't make his mark in history solely due to his military conquests. He was no Atilla or Genghis Khan. Alexander left the world with many new cities- Alexandria, a center of commerce and education, first and foremost.

The great Emperors of Rome didn't just conquer territory, they improved it. They rebuilt what was decaying, as Augustus did Rome, while living in a fairly modest home himself. Nero, by contrast, took advantage of the Great Fire of Rome to build himself a grand palace, and has been derided by history. His error was corrected by the Flavian Emperors, notably Vespasian and Titus.

Charles Martel hammered the invading Muslims at Tours (rightfully earning the nickname "The Hammer" in contrast to our current Treasury Secretary) and unified the Franks but his grandson, Charlemagne, is rightly, in my view, known as the Father of Europe. His belief in the virtues of scholarship engendered the Carolingian Renaissance, reversing a centuries long trend towards ever greater illiteracy.

The Medici of Florence, inter alios of the time, were certainly power hungry and greedy, but with a purpose. They supported men like: Leonardo da Vinci, Brunelleschi, whose architectural genius- notably, the dome of Santa Maria del Fiore- finally delivered Europeans from the shadows of antiquity, Michelangelo, Botticelli and Raphael, to name a few. They invested in education, assisted by the diaspora following the loss of Constantinople, building the Laurentian Library and supporting scientists like Galileo. As this wonderful documentary puts it, the Medici were the Godfathers of the Renaissance.

More recently, and closer to home, American entrepreneurs, mirroring the success of their European counterparts, with and without the help of the state, dug canals, built railroads and carved millions of miles of roads out of the wilderness. While they lined their pockets as avariciously as many of today's CEOs, at least they gave something in return.

Incomes during the Gilded Age were as polarized as today, but the accomplishments of men like Alexander Graham Bell, Thomas Edison, George Westinghouse and John Rockefeller, to name a few, are, in my view, far more visionary than today's CEOs. They, and those of the preceding generation, found America a nation of farms and made it a nation of industry- a vision men like Jarred Diamond might decry but at least it was a vision.

Within the past century, Presidents like Herbert Hoover championed the construction of the Hoover Dam (at the time the largest electricity generating plant and concrete structure) and Franklin Roosevelt surpassed him with the Grand Coulee Dam (still the largest electricity generating plant and concrete structure in the US). While many, including myself, wish he had chosen different means to achieve his ends, his shift left was much less pronounced than that seen in most of Europe at the time. FDR's Rural Electrification Act brought the technological benefits of electricity and phones from the cities into the country. Modern Internet connectivity hangs, in a sense, from the poles FDR put up.

Eisenhower, impressed by Germany's Autobahn, championed the Interstate Highway System and Nixon (who had more than his share of faults) signed the Trans-Alaskan Pipeline Authorization Act and opened diplomatic relations with China.

Since then, although the trends had begun earlier, we have, it seems to me, been treading water. We seem more like squatters than owners.

The birth of the Nuclear Age, which, recalling President Eisenhower's Atoms for Peace speech of 1953, seemed so promising, was aborted in the US when a partial core meltdown occurred at Three Mile Island in 1979. While French Nuclear Power Plants generate 78% of their total production (89% of consumption as they export electricity), US Nuclear Plants produce only 20% of our electricity production (fossil fuels generate 71%).

To be fair to the current President, Mr. Bush has spoken of the need to expand our nuclear power generating capacity and invest in alternatives, but seems less inclined to spend political capital in pursuit of those goals. Instead, he spent his capital on the War in Iraq and on resistance to Nuclear Power in Iran.

The oil shock of 1973, which inspired Japan and especially (as noted above) France to invest heavily in Nuclear Power, also drove a world-wide shift towards greater automobile efficiency (the hatchback) and raised interest in other alternatives. While this inspiration lost some of its effect everywhere as real oil prices fell from their peaks during the 80s and 90s, the US took the lead in jumping back into the "cheap energy pool." Millions of SUVs in suburban garages offer testimony of our desire to retain the status quo.

But time, as they say, stands still for no man, or nation.

We are, it seems to me, in dire need of a new vision for the future.

And I'm all ears.

One good thing about the onrushing economic crisis, rent seeking will no longer be as profitable as entrepreneurism.