Attorney General Barr’s News Conference

I, and everyone I know, want to know the facts of any collusion between Trump and his associates and Russia. I am confident that the Mueller investigation provides them as well as we could expect. Attorney General Barr’s news conference this morning summarizing that report was clear and transparent. He did an exemplary and impressive job. The complaints from some Democrats on the Hill that Barr should not have held this press conference until after they had read Mueller’s report were unfounded and frankly embarrassing. Please let’s move on.

My assessment of Trump’s administration today, which is what we should be debating, is very mixed. Adjusting and lightening the regulatory burdens that have been holding our economy back is largely good in my view (though each must be judged individually) as are the tax reforms making the system simpler and fairer. While the tax reforms did not go far enough, they were a big improvement over the existing tax law.

Trump’s attitude toward trade and the protection of inefficient American firms is ill informed and damaging to American’s economy as a whole (as opposed to coal and steel producers). His bullying and unilateral approach is clumsy, amateurish, and counterproductive. The EU, Canada, Japan and others would be happy to join us in confronting China’s bad trade behavior, if Trump were willing to work together and not busy attacking them as well.

I supported Trump’s campaign promises of restraint in deploying American troops around the world, but he has not delivered. His message to the Senate accompanying his veto of the bill passed by both houses of Congress (54-46 in the Senate and 247-175 in the House) a few weeks ago invoking the War Powers Resolution to end U.S. support of Saudi Arabia’s war in Yemen reflects a truly shocking affront to our Constitution: “This resolution is an unnecessary, dangerous attempt to weaken my constitutional authorities, endangering the lives of American citizens and brave service members, both today and in the future.”  The truth is just the opposite. The constitution gives the power to declare war to Congress and the almost blank check congress gave Presidents following 9/11 cannot meaningfully be stretched to include what we are doing in Yemen.

Trump continues to undercut and weaken American leadership in the international organizations and agreements that have contributed so much to post WWII peace and prosperity. This will be increasingly harmful to our and the world’s legitimate interests.

In his spare time, the President thoughtfully advised the French on fighting the fire in Notre Dame. What an embarrassment and fire experts say that his advice was wrong.

Please, let’s fight the real battles and stop wasting time on the phony ones.

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Returning to Currencies with Hard Anchors

Why did the gold standard ultimately fail? What system would overcome those weaknesses? See my: Adam Smith Institute Blog 

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Modern Monetary Theory—A Critique

So called Modern Monetary Theory (MMT) has become popular with Green New Dealers because it claims to remove or at least loosen traditional constraints on government spending.  MMT offers unconventional ideas about the origins of money, how money is created today, and the role of fiscal policy in the creation of money. It argues that government can spend more freely by borrowing or printing money than is claimed by conventional monetary theory. “The most provocative claim of the theory is that government deficits don’t matter in themselves for countries—such as the U.S.—that borrow in their own currencies….  The core tenets of MMT, and the closest it gets to a theory, are that the economy and inflation should be managed through fiscal policy, not monetary policy, and that government should put the unemployed to work.” James Mackintosh,  “What  Modern Monetary Theory Gets Right and Wrong’  WSJ April 2, 2019.

In fact, despite its efforts to change how we conceive and view monetary and fiscal policies, MMT abandons market based countercyclical monetary and fiscal policies for targeted central control over the allocation of resources. It would rely on specific interventions to address “road blocks” upon the foundation of a government guaranteed employment program.

MMT is an unsuccessful attempt to convince us that we can finance the Green New Deal and a federal job guarantee painlessly by printing money. But it remains true that shifting our limited resources from the private to the public sector should be judged by whether society is made better off by such shifts.  Printing money does not produce free lunches.

Where does money come from?

It has been almost 50 years since the U.S. dollar (or any other currency for that matter) has been redeemable for gold or any other commodity whose market value thus determined the value of money. It remains true, however, that money’s value depends on its supply given its demand. The supply of money these days reflects the decisions of the Federal Reserve and other central banks.

The traditional story for the fractional reserve banking world we live in is that a central bank issues base or high-powered money (its currency and reserve deposits of banks with the central bank) that is generally given the status of “legal tender.”  You must pay your taxes with this money.  We deposit some of that currency in a bank, which provides the bank with money it can lend. When the bank lends it, it deposits the loan in the borrower’s deposit account with her bank, thus creating more money for the bank to lend.  This famous money multiplier has resulted in a money supply much larger than the base money issued by the central bank. In July 2008, base money (M0) in the United States was $847 billion dollars while the currency component of that plus the public’s demand deposits in banks (M1) was almost twice that — $1,442 billion dollars. Including the public’s time and savings deposits and checkable money market mutual funds (M2) the amount was $7,730 billion.  [I am reporting data from just before the financial crisis in 2008 because after that the Federal Reserve began to pay interest on bank reserve deposits at the Fed in order to encourage them to keep the funds at the Fed rather than lending them and thus multiplying deposits. This greatly increased and distorted the ratio of base money to total money, i.e. reduced the multiplier. In October 2015 at the peak of base money M0 = $4,060 billion, of which only $1,322 billion was currency in circulation.]

The neo Chartalists, now known as MMTists, want us to look at this process differently.  In their view banks create deposits by lending rather than having to receive deposits before they can lend.  While a bank loan (an asset of the bank) is extended by crediting the borrower’s deposit account with the bank (a liability of the bank), the newly created deposit will almost immediately be withdrawn to pay for whatever it was borrowed for.  Thus, the willingness of banks to lend must depend on their expectations of being able to finance their loans from existing or new deposits, by borrowing in the interbank or money markets, or by the repayment of previous loans at an interest rate less than the rate on its loans.

The money multiplier version of this story assumes a reserve constraint, i.e., it assumes that the central bank fixes the supply of base money and bank lending and deposit creation adjust to that.  The MMT version reflects the fact that monetary policy these days targets interest rates leaving base money to be determined by the market.  Traditionally the Fed set a target for the over-night interbank lending rate—the so-called Fed Funds rate.  In order to maintain its target interest rate, the central bank lends or otherwise supplies to the market whatever amount of base money is needed to cover private bank funding needs at that rate.  The market determination of the money supply at a given central bank interest rate is, in fact, similar to the way in which the market determines the money supply under currency board rules under which the central bank passively supplies whatever amount of money the market wants at the fixed official price (exchange rate) of the currency.  With the Federal Reserve’s introduction of interest on bank reserve deposits at Federal Reserve Banks, including excess reserves (the so-called Interest On Excess Reserves – IOER), banks’ management of their funding needs for a given policy rate now involve drawing down or increasing their excess reserves.

According to MMT proponents, loans create deposits and repayment of loans destroys deposits.  This is a different description of the same process described by the money multiplier story, which focuses on the central bank’s control of reserves and base money rather than interest rates. It is wrong to insist that deposits are only created by bank lending and equally wrong to insist that banks can only lend after they receive deposits.

How is Base Money Produced?

MMT applies the same approach to the creation of base or high-powered money (HPM) by the government as it does to the creation of bank deposits by the private sector:

“It also has to be true that the State must spend or lend its HPM into existence before banks, firms, or households can get hold of coins, paper notes, or bank reserves…. The issuer of the currency must supply it first before the users of the currency (banks for clearing, households and firms for purchases and tax payments) have it. That makes it clear that government cannot sit and wait for tax receipts before it can spend—no more than the issuers of bank deposits (banks) can sit and wait for deposits before they lend.”[1]

This unnecessarily provocative way of presenting the fact that government spending injects its money into the economy and tax payments and t-bond sales withdraws it does not offer the free lunch for government spending that MMT wants us to believe is there. Central banks can finance government spending by purchasing government debt, but this does not give the Treasury carte blanche to spend without concern about taxes and deficit finance.  This is the core of MMT that we must examine carefully.

MMT claims that:

“(i) the government is not constrained in its spending by its ability to acquire HPM since the spending creates HPM….  Spending does not require previous tax revenues and indeed it is previous spending or loans to the private sector that provide the funds to pay taxes or purchase bonds….

“(iii) the government deficit did not crowd out the private sector’s financial resources but instead raised its net financial wealth.

“Regarding (iii), the private sector’s net financial wealth has been increased by the amount of the deficit. That is, the different sequencing of the Treasury’s debt operations does not change the fact that deficits add net financial assets rather than “crowding out” private sector financial resources.”[2]

MMT is correct that federal government spending does creates money. But what if the resulting increase in money exceeds the public’s demand (thus reducing interest rates), or the destruction of money resulting from tax payments or public purchases of government debt reduces money below the public’s demand (thus increasing interest rates)?  MMT claims to be aware of the risk of inflation and committed to stable prices (an inflation target) but ignore it most of the time.

If the central bank sets its policy interest rate below the market equilibrium rate, it will supply base money at a rate that stimulates aggregate demand. If it persists in holding short term interest rates below the equilibrium rate it will eventually fuel inflation, which will put upward pressure on nominal interest rates requiring ever increasing injections of base money until the value of money collapses (hyperinflation). If instead the central bank money’s price is fixed to a quantity of something (as it was under the gold standard, or better still a basket of commodities) and is issued according to currency board rules (the central bank will issue or redeem any amount demanded by the market at the fix price), arbitrage will adjust the supply so as to keep the market price and the official price approximately the same (for a detailed explanation see my: “Real SDR Currency Board”).  Unlike an interest rate target, a quantity price target is stable.

Does the Story Matter?

But does the MMT story of how money is created open the door for government to spend more freely and without taxation, either by borrowing in the market or directly from the central bank?  According to MMT, “One of the main contributions of Modern Money Theory (MMT) has been to explain why monetarily sovereign governments have a very flexible policy space that is unencumbered by hard financial constraints.  Not only can they issue their own currency to meet commitments denominated in their own unit of account, but also any self-imposed constraint on their budgetary operations can be by-passed by changing rules.”[3]

MMT maintains that: “Politicians need to reject the urge to ask ‘How are we going to pay for it?’…   We must give up our obsession with trying to ‘pay for’ everything with new revenue or spending cuts….  Once we understand that money is a legal and social tool, no longer beholden to the false scarcity of the gold standard, we can focus on what matters most: the best use of natural and human resources to meet current social needs and to sustainably increase our productive capacity to improve living standards for future generations.”[4]

MMT proclaims that a government that can borrow in its own currency “has an unlimited capacity to pay for the things it wishes to purchase and to fulfill promised future payments, and has an unlimited ability to provide funds to the other sectors. Thus, insolvency and bankruptcy of this government is not possible. It can always pay….  All these institutional and theoretical elements are summarized by saying that monetarily sovereign governments are always solvent, and can afford to buy anything for sale in their domestic unit of account even though they may face inflationary and political constraints.”[5] But inflating away the real value of obligations (government debt) is economically a default.  Moreover, debt cannot grow without limit without debt service costs absorbing the government’s entire budget and even the inflation tax has its hyperinflation limit (abandonment of a worthless currency).

MMT advocates do acknowledge that at some point idle resources will be used up and that this process would then become inflationary, but this caveat is generally ignored.  But if MMT is serious about an inflation constraint, we must wonder about their criticism of asking how government spending will be paid for.  In this regard MMT is a throwback to the old Keynesianism, which implicitly assumed a world of perpetual unemployment.

Is There a Free Lunch?

MMT states that when the government spends more than its income (and thus must borrow or print money) private sector wealth is increased “because spending to the private sector is greater than taxes drawn from the private sector, the private sector’s net financial wealth has increased.”  As explained below this deficit spending increases the private sector’s holdings of government securities, but not necessarily its net financial wealth.

Whether we take account of the future tax liabilities created by this debt in the public’s assessment of its net wealth (Ricardian equivalence) or not, we must ask where the public found the resources with which it bought the debt. Did it substitute T-bonds for corporate bonds, i.e. did the government’s debt (or monetary) financing of government spending crowd out private investment thus leaving private sector wealth unchanged, or did it come from reduced private consumption, i.e. increased private saving. Any impact on private consumption will depend on what government spent its money on.  MMT claims that “the government deficit did not crowd out the private sector’s financial resources but instead raised its net financial wealth,” is simply asserted and is unsupported.  Whether the shift in resources from the private sector to the public sector is beneficial depends on whether the value of the government’s resulting output is greater than is the reduced private sector output that financed it.

One way or another, government spending means that the government is commanding resources that were previously commanded by or could be commanded by the private sector.  If the government takes resources by spending newly created money that the central bank does not take back, prices will rise to lower its real value back to what the public wants to hold. This is the economic equivalent of the government defaulting on its debt, contrary to MMT’s claim that default is impossible.  This inflation tax is generally considered the worst of all taxes because it falls disproportionately on the poor.  In fact, MMT proponents rarely mention or acknowledge the distinction between real and nominal values that are, or should be, central to discussions of monetary policy. The exception to the inflationary impact of monetary finance is if the resources taken by the government were idle, i.e. unemployed, which, obviously, is the world MMT thinks it is in.

MMT claims to have exposed greater fiscal space than is suggested by conventional analysis. They claim that government can more freely spend to fight global warming or to fund guaranteed jobs or other such projects by printing (electronic) money. However, the market mechanism they offer for preventing such money from being inflationary (market response to an interest rate target that replaces unwanted money with government debt), implies that such spending must be paid for with tax revenue or borrowing from the public.  Both, in fact all three financing options (taxation, borrowing, and printing money), shift real resources from the private sector to the public sector and only make society better off if the value of the resulting output is greater than that of the reduced private sector output. There is nothing new here.

Fiscal Policy as Monetary Policy

Government spending increases M and the payment of taxes reduces it.  MMT wants to use taxation to manage the money supply rather than for government financing purposes.  MMT wants to shift the management of monetary policy from the central bank to the finance ministry (Treasury).  The relevant question is whether this way of thinking about and characterizing monetary and fiscal policy produces a more insightful and useful approach to formulating fiscal policy.  Does it justify shifting the responsibly for monetary policy from the central bank to the Finance Ministry?  Should taxes be levied so as to regulate the money supply rather than finance the government (though it would do that as well)?

In advocating this change, MMT ignores the traditional arguments that have favored the use of central bank monetary policy over fiscal policy (beyond automatic stabilizers) for stabilization purposes.  None of the challenges of the use of fiscal policy as a countercyclical tool (timing, what the money is spent for, etc.) established with traditional analysis have been neutralized by the MMT vision and claim of extra fiscal space.  In fact, as we will see below, despite their advocacy of fiscal over monetary policy for maintaining price stability, MMT supporters have little interest in and no clear approach to doing so as they prefer to centrally manage wages and prices in conjunction with a guaranteed employment program.

But the arguments against MMT are stronger than that. The existing arrangements around the globe (central banks that independently execute price stability mandates and governments that determine the nature and level of government spending and its financing) are designed to protect monetary stability from the inflation bias of politicians with shorter policy horizons (the time inconsistence problem). The universal separation of responsibilities for monetary policy and for fiscal policy to a central bank and a finance ministry are meant to align decision making with the authority responsible for the results of its decisions (price stability for monetary policy and welfare enhancing levels and distribution of government spending and its financing).  It is the sad historical experience of excessive reliance on monetary finance and the costly undermining of the value of currencies that resulted that have led to the world-wide movement to central bank independence.  MMT is silent on this history and its lessons.  As pointed out by Larry Summers in an oped highly critical of MMT, the world’s experience with monetary finance has not been good. Modern Monetary Theory-a-foolish-pursuit-for-democrats

The establishment of central bank operational independence in recent decades is rightly considered a major accomplishment.  MMT advocates bring great enthusiasm for more government spending—especially on their guaranteed employment and green projects, which will need to be justified on their own merits.  MMT’s way of viewing money and monetary policy adds nothing to the arguments for or against these policies.

The Bottom Line

To a large extent, most of the above arguments by MMT are a waste of our time as MMT advocates actually reject the macro fine tuning of traditional Keynesian analysis. “This approach of government intervention aims at avoiding direct intervention to achieve the goal (e.g. hiring to achieve full employment, or price controls to achieve low inflation), but rather using indirect “tools” while letting market participants push the economy toward desired goals by tweaking their incentives.  MMT does not agree with this approach. The government should be directly involved continuously over the cycle, by putting in place structural macroeconomic programs that directly manage the labor force, pricing mechanisms, and investment projects, and constantly monitoring financial developments….  But MMT goes beyond full employment policy as it also promotes capital controls for open economies, credit controls, and socialization of investment. Wage rates and interest rate management are also important.”[6]  No wonder Congresswomen Alexandria Ocasio-Cortez is excited by MMT.

MMT attempts, unsuccessfully in my opinion, to repackage and resurrect the empirically and theoretically discredited Keynesian policies of the 1960s and 70s.  A 2019 survey of leading economists showed a unanimous rejection of modern monetary theory’s assertions that “Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt” and “Countries that borrow in their own currency can finance as much real government spending as they want by creating money.” http://www.igmchicago.org/surveys/modern-monetary-theory  Both the excitement and motivation for MMT seem to reflect the desire to promote a political agenda, without the hard analysis of its pros and cons—its costs and benefits.

****************************

[1] Fullwiler, Scott, Stephanie Kelton & L. Randall Wray (2012), ‘Modern Money Theory: A Response to Critics’, in Modern Monetary Theory: A Debate,  Modern Monetary Theory: A Debate, http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_251-300/WP279.pdf,  2012, page 19

[2] Ibid. page 22-23.

[3] Tymoigne and Wray, 2013 http://www.levyinstitute.org/publications/modern-money-theory-101

[4] Stephanie Kelton, Andres Bernal, and Greg Carlock, “We Can Pay For A Green New Deal” https://www.huffpost.com/entry/opinion-green-new-deal cost_n_5c0042b2e4b027f1097bda5b  11/30/2018

[5] Tymoigne and Wray, op cit. p. 5

[6] Ibid. pp. 44-45.

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Central Banking award

The Central Banking Journal annually awards central bankers (best governor, best central bank, and providers of services to central banks) for their performance.  This year’s ceremony was held in London on March 13 and I was awarded Outstanding Contribution for Capacity Building. Here is a video of my acceptance speech.

 

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The College Admissions Scandals

A few weeks ago, Ito and I went to “Admissions,” the very well performed and thought provoking play by Joshua Harmon about affirmative action, at Studio Theater. Several friends had independently attended the play and suggested that we get together for one of Ito’s superb dinners and discuss it.  So we enjoyed an evening discussing the pros and cons of “affirmative action,” the “temporary” suspension of nondiscrimination legislation meant to repair and make up for discrimination against blacks that made them less prepared for college. It is a complex issue without obvious solutions. The play did an excellent job of fairly presenting all perspectives on this issue.

My opinion is that suspending, even temporarily, equal treatment (merit-based college admissions) of applicants to universities and colleges, as is done with affirmative action, is not the best approach to achieving equal treatment of all. It attempts to treat the symptoms of racial discrimination rather than the disease. First of all, private universities (unlike state schools using tax payers’ money) should be free to establish whatever admission policy they want.  Any school I would want to attend will want to include an element of diversity in its student body as an important element of the education they offer and will build that into its admission policy in whatever way it considered sensible.

And now we are confronted with the revelation that some of the rich and famous paid bribes to get their underperforming children into top schools. As stated in the Washington Post: “the scope and sheer shamelessness of an elaborate scheme in which some of the country’s richest people allegedly paid bribes to get their children into top U.S. universities is truly mind-boggling.” https://www.washingtonpost.com/opinions/the-college-admissions-scandal-should-prompt-broader-soul-searching/2019/03/13/f67aa986-45b5-11e9-aaf8-4512a6fe3439_story.html

This is shocking and unacceptable for the same reason I oppose affirmative action. It violates the principle and standard of merit in hiring people or admitting them to college. Our country is one of the wealthiest and most respected in the world because firms and organizations allocate jobs, positions, and resources in general on their merits (i.e. qualifications for the job, etc.). In short, people and other resources are put to their most productive use.  Obviously, this is not always the case. But firms that fall short of this standard suffer lower profits than if they had adhered to it. In short, in the private sector there is an economic incentive to employ the resources (including people) that best fit the needs being filled. Companies that employ their under-qualified relatives suffer lower profits as a result. Hiring or admitting people on the basis of merit is also our standard of fairness that is widely admired throughout the world.

Affirmative action is a deliberate departure from this standard as are the recently revealed bribes and test score cheating for college admission. In the first case it is an effort to overcome the damage of earlier discrimination against a once enslaved people. In the second case it is an effort to overcome the deficiencies of intelligence or character in our own children. A world in which we acquiesce to standards other than merit will always favor the already well off. We will never fully achieve the high standards of merit based appointments we have set, but we should never stop trying. A powerful strength of the private sector in a competitive free market economy is that the economic incentives are in the right direction.

American universities may never achieve a perfect admissions system completely based on merit and devoid of personal bias, but we should encourage them aim for it. The world outside of the academic environment is unfair enough when it comes to race, gender, sexual orientation and religion to name a few. Let us try to instill in the younger generation the understanding that hard work and smarts are what gets you ahead– not money, influence and certainly not the color one’s skin. And let’s promote attitudes and policies that encourage and reward such a reality.

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Is Rep Ilhan Omar anti-Semitic?

U.S. Congresswoman Ilhan Omar, a Muslim Somalian immigrant, has been insisting that we need to publicly condemn Israel’s mistreatment of Palestinians in the West Bank and Gaza as well as in Israel itself. This mistreatment includes illegally occupying Palestinian land on which Jewish Israeli’s build so called “settlements,” excessive use of force against Palestinians protesting their treatment (since 2000 Israeli soldiers have killed 9 Palestinian, including women and children, for every Israeli killed by a Palestinian), and legally restricting the citizen rights of Israeli Arabs (i.e. imposing apartheid on Palestinians living in Israel) in an effort to keep Israel both democratic and Jewish with a “one state solution” that would make Jews a minority). All of my Jewish friends, including some Israeli Jews, also condemn these horrible acts. The issue is well summarized by Andrew Sullivan: http://nymag.com/intelligencer/2019/03/how-should-we-talk-about-the-israel-lobbys-power.html?utm_source=fb&fbclid=IwAR1B12R8xQ0PTQhRO3u2f0nPO2ssSPmdZCEbbYbnvWNByClY2zuNgXaV9TE

So why is Ms. Omar being condemned as an anti-Semite by some (those who, in my opinion, are simply diverting the conversation away from Israel’s bad behavior)? It seems to arise from her complaints that “‘I am told everyday that I am anti-American if I am not pro-Israel,’ Omar tweeted March 3 in response to critics. ‘I find that to be problematic and I am not alone.’” Washington Post 3/11/2019 https://wapo.st/2TEMzt9. More specifically, and this is where critics have focused, she has complained that the so-called Israel Lobby has blinded American’s to Israel’s bad behavior. “On Feb. 27, Omar told an audience at a town hall event in Washington, D.C., that accusations of anti-Semitism were meant to silence her criticism of Israel and the American Israel Public Affairs Committee.”  Ibid. In my opinion the charges of anti-Semitism reported in the above Post article, prove her point.

Some people were particularly offended by her reference to the “Dual loyalty” of many Americans (Jewish and non-Jewish) to both our own country and to Israel.  I do not respect anyone who uncritically agrees with anything and everything their hero says or does whether it is Trump, Putin, or Bibi (I like some of Trump’s policies and dislike others, but disrespect the man). The same goes for governments. Given the strong reaction (claims of anti-Semitism) of any criticism of Israel in earlier years in the U.S. (we now see a regression to those days) I was pleasantly surprised on my many visits to Israel that a critical public discussion of Israeli policies and behavior was far more open and honest there. We should not be surprised or concerned that organizations such as American Israel Public Affairs Committee champion a particular point of view. That is what they exist for (just as the Log Cabin Republican’s and other policy oriented groups exist to propagate a point of view). What is unusual is the amazing influence that AIPAC has had on American foreign policy, often against America’s best interest. If you are not aware of this read John Mearsheimer and Stephen Walt’s “The Israel Lobby and U.S. Foreign Policy.”

It is natural and usual for any of us with origins in another country (that would be most of us) to retain sympathies for the fatherland even when condemning bad things it might do. My Russian American friends, for example, can’t help smarting a bit at criticisms of Putin even when they fully agree with them. The country that gave us some of the world’s greatest literature and music has also given us the gulag, etc. But no one, at least no one I know, would dream of calling me anti-Russian when I condemn Putin.

I have not read every word from Rep Omar, but I have not read anything that suggests she is anti-Semitic. She has raised important points about the policies and behavior of the Israeli government.  President Trump’s, and for that matter his predecessors for many years, uncritical acceptance of Israel’s outrageous treatment of the Palestinians in their charge, should be challenged. Those diverting the discussion by labeling those of us who condemn Israel’s behavior as anti-Semitic are exploiting America’s very understandable sympathies for the horrors of the holocaust and a long history of anti-Semitism. But such charges and diversion are dishonest and a disservice to the best interests of the United States (and I would say of Israel as well).

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Should Virginia Governor Northam Resign?

After first apologizing for his college yearbook picture in blackface (next to someone in a KKK costume), then denying that it was him in the picture, why hasn’t Governor Ralph Northam resigned? I think that it is because he knows in his heart that he is not a racist. No one can read the Washington Post account of his childhood and college years and think that he is. https://wapo.st/2MW4ndp

The unfolding story raises a number of important points or lessons, if you will (I am always an optimist).  Should adults be held accountable for views or behavior in their youth—i.e., are we able to grow in our understanding and change our views?  Should the prevailing understanding and attitudes of earlier times influence how we “judge” earlier behavior, i.e., does context matter? George Washington and Thomas Jefferson where slave owners, after all. These questions are relevant more generally (think of the confirmation hearings of Presidential nominees for the Supreme Court and other important positions).

Northam’s now famous yearbook picture immediately raised several questions in my mind.  Before making judgements about Northam’s attitudes on race I wanted to know, among many other questions, what was in his mind when that picture was taken (or if not him, put on his yearbook page).  What message did he think he was sending? My first reaction, clearly not the reaction of many others, was that he was making fun of the KKK.  I have the same question about blackface more generally and those fun musicals and minstrels with black-faced white singers and dancers. When did black face become an affront to blacks or should I say African Americans?  This question is thoughtfully explored by John McWhorter in a must read piece in the February Atlantic Monthly https://www.theatlantic.com/ideas/archive/2019/02/mark-herring-and-grey-zones-blackface/582355/. According to Wikipedia: “In the United States, blackface had largely fallen out of favor by the turn of the 21st century, and is now generally considered offensive and disrespectful.”

As I grew up in California, “Negro” was the polite term for “African American.” It sharply contrasted with the derogatory term “Nigger,” the very sight of which outrages me.  But fashion evolved. As an undergraduate at the U.C. Berkeley in the 1960s we switch from Negro to Black, to keep up with evolving fashion.  One of my favorite columnists in the 1980s and 90s, William Raspberry, an African American opinion writer in the Washington Post, wrote a column I liked a lot bemoaning the ever-changing fashion in referring to Negros, Blacks, People of Color, African Americans, etc.  He said that changing the name is less important than changing the reality of the status and treatment of minorities in America.

Prejudice reflects ignorance.  It is best overcome with knowledge. Familiarity is an important source of knowledge. Large numbers of people cluster with their own ethnic or religious group and thus have little direct knowledge of “others”. Those who thought badly of “niggers” or “faggots” generally didn’t know any. They feared what they did not know. Black-faced performers began to introduce blacks to many whites. Though they were often buffoonishly stereotyped, they were non-threatening and were thus likeable. People often fear what they do not know.

In a step up from blackface Amos and Andy in the sitcom of the 1950s were played by real African Americans.  They were heavily stereotyped but lovable. No one could fear them. In the 1970s we progressed to the Jeffersons and in the 1980s to the Bill Cosby Show. With familiarity, baseless fear dissipated.  TV encounters were increasingly complimented with real live encounters.

Something similar happened with gays. TV first introduced homosexuals as silly but harmless hairdressers or fashion designers. For many of us looking back the stereotypes are borderline offensive (no offense to effeminate hairdressers). But gays gradually became more present in television and in our surroundings and less threatening. Then we were introduced to the comedy show Will and Grace who progressed gay images toward the idea of successful and diverse people living in New York. They were funny and approachable people we would be comfortable to hang out with. People began to discover that their uncle George or Aunt May were gay and were OK with that. Will and Grace performed a similar service for gay acceptance by a wider public as had Cosby for African Americans.

Context matters and people learn and evolve. My own opinion of Governor Northam has evolved from thinking that, of course, he should resign to thinking that he shouldn’t. https://wapo.st/2SBEyoy

 

 

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