PO Box 351
Encinitas, CA 92024
December 25, 1989
President George Bush
The White House
1600 Pennsylvania Ave.
Washington, DC 20500
The Honorable Mikhail Gorbachev
General Secretary of the Communist Party
Moscow, The Soviet Union
Members of Congress
Greetings to all!
"The Cold War is Over and the Winner is...Sweden"
So writes Walter Russell Mead in his review of Michael Harrington's book, “Socialism, Present & Future,” in the LA Times on August 6, 1989. Harrington began the book on the day he found out he had terminal cancer and died the week before the book was reviewed. This letter is dedicated to his memory.
Of course the Cold War would still be silently raging if it were not for the efforts of one man—Mikhail Gorbachev. He has done more for the cause of peace and world progress than anyone in about 2000 years—since the Prince of Peace walked the earth. Has anyone noticed the sea change in the emotional climate in five short years? In 1984 when Reagan was at the height of his “evil empire” rhetoric, nuclear catastrophe seemed imminent. The hands of the nuclear clock were advancing closer to midnight. Politicians argued over whether the nuclear arms race could be controlled. The actual reversal of it seemed unthinkable.
Now cold war psychology has totally changed, and the world is getting back to some semblance of sanity—dealing with actual problems and coming up with actual solutions instead of a preoccupation with psychosis on a global scale. Referring to the opening of the Berlin wall, Margaret Thatcher said: “The fact is that none of this would have happened without the vision and the courage of Mr. Gorbachev.” In his interview with Ted Turner on CNN Jimmy Carter said: “One of the most dramatic events in recent history is what [Gorbachev] has done” and “We should do what we can to help Gorbachev.” And finally in his pre-Thanksgiving address to the nation none other than President Bush himself declared that “there is no greater advocate of perestroika than the President of the US.” Wow! Suddenly the world is alive with possibilities for cooperation, peace and social progress that would have been dismissed as utopian five years ago.
Gorbachev has broken through the impasse that has stymied the world for the last 50 years. When you consider the fact that, in order to do this, he had to win over the most significant cold warrior of all time (President Reagan) it is a remarkable accomplishment indeed. For all he has done, Mikhail Gorbachev deserves the Nobel peace prize. This is not the first time I have called for this in these letters. But now, more than ever, based on the events of 1989 alone, if the Nobel Prize has any meaning whatsoever, it should go to him. But more than that, he deserves our help as Jimmy Carter said in ameliorating and alleviating the frustrating and tenacious economic problems he faces.
Come say Gdansk
President Bush this year journeyed to Poland to see Lech Walesa and Lech Walesa journeyed to the US to see President Bush. Walesa, understandably enough, seeks to convert the soft currency of applause and encouragement into the hard currency of economic aid for Poland. President Bush initially offered $100 million, a figure matched by one private American citizen, Barbara Johnson, just one point of light. 999 more points of light and Walesa might have some serious money.
The following is a completely fabricated conversation that I imagine might have taken place between Bush and Walesa. I reiterate that in fact it did not:
Bush: Well, Lech, you're on your way. You're on the right path now, the free enterprise path, and more power to you.
Walesa: But Mr. President, as much as I appreciate your words of encouragement, we really need more material assistance.
Bush: Well, yes, Lech, I understand that, but what you have to understand is that the difference between capitalism and socialism is that in socialism the government gives you a handout and in capitalism it's the free enterprise of the people and 1000 points of light that fills the bill.
Walesa: Yes, Mr. President but you encouraged us to jump and we jumped and now you're not there to catch us.
Bush: Well, we're here to teach and point the way etc. We just don't have a lot of extra money these days what with our budget deficit and our trade deficit. In fact, Lech, I'll teach you the first rule of capitalism
Walesa: The first rule of capitalism?
Bush: Yes, the first rule of capitalism is "Always get it in writing."
Walesa: You mean you're not going to help us because we didn't get it in writing first?
Bush: I didn't say that. But we're here to teach and point the way as you start out on that journey, that wonderful journey down the road of capitalism and democracy. Because, as you realize, communism is bankrupt.
Walesa: It sounds to me like your capitalistic system is bankrupt too what with a $150 billion budget deficit, a $120 billion trade deficit, $150 billion to bail out sick savings and loans, several billion dollars worth of fraud and waste at HUD, $100 billion to clean up nuclear waste...
Bush: Well now, you understand why we can't give you much money.
Walesa: Yes, Mr. President, but isn't American capitalism bankrupt too?
Bush: Well, no, Lech, and now I will teach you the second rule of capitalism and that is that you're never bankrupt as long as someone is still willing to lend you money.
Walesa: Yes, Mr. President, I see. You had an inflow of $120 billion in foreign capital last year which helps to cover your deficits, but isn't there a price to pay for this?
Bush: I don't know what that is, Lech. You see America is such a wonderful place to invest that people are just drawn to put their money here.
Walesa: Mr. President let me be blunt. The communists believe that the government should own the means of production. The western social democrats believe that the government should own the "commanding heights" of the economy, the basic energy, transportation and communications infrastructure, but in your country you seem to believe that the commanding heights should be owned by foreigners.
Bush: Yes, Lech, we believe in free trade.
Walesa: Free trade? You have only one token, Zenith, left in your electronics industry. With the sale of Uniroyal to Michelin and Firestone to Bridgestone, you only have one token, B. F. Goodrich left in the rubber industry. Now Columbia Pictures and Rockefeller Center have been purchased by the Japanese.
Bush: Lech, I can see that you just don't understand free enterprise.
The Planned Obsolescence Economy
I recently attended my 25th class reunion at Georgia Tech, and there I ran into one of my old classmates who I hadn't seen in all that time. We'll just call him CM. In getting reacquainted we had the following conversation:
JL: What did you finally get your degree in?
CM: Well I graduated with a BPOE.
JL: You mean Brotherly and Protective Order of Elks.
CM: No, a Bachelor's in Planned Obsolescence Engineering. You know like in Vance Packard’s book, “The Wastemakers.”
JL: Oh right.
CM: Yeah, he gave Planned Obsolescence a bad name. Of course, it was necessary for the economy to function properly.
JL: Well, what did you do after that?
CM: Oh for a while I worked for a company that manufactured household appliances: refrigerators, washing machines, stuff like that.
JL: What did you do there?
CM: Oh, I tried to minimize the MTFAWE: the Mean Time to Failure After Warranty Expires. We got it down to a science. We could make those puppies fail less than 30 days after the warranty was up. This maximized the turnover and helped the company move product out the door.
JL: An important economic function. What did you do after that?
CM: Well, the company decided to get out of the commercial marketplace altogether because it became more profitable to become a defense contractor so I went on to design $600. toilet seats for the Navy.
JL: I guess a lot of companies found it more profitable to abandon the commercial marketplace because of the lower risks and higher profits to be made feeding at the government trough
CM: Why do you think we're taking such a shellacking on the trade deficit? The government created a disincentive for companies to compete in the arena of such mundane things as household appliances, electronics etc. by making it attractive to become defense contractors. Companies such as GE and Westinghouse that you used to associate with TV sets, light bulbs, refrigerators etc. became prime defense contractors leaving the commercial marketplace to the Japanese, the Germans etc. who put all their energy into producing for consumer consumption and none of it into producing military equipment.
JL: But if those countries would only open their markets to fair competition, we could correct the trade deficit.
CM: Are you kidding? Even if they put the American products on the same shelf as the Japanese products, which product do you think the Japanese would buy based on quality and price? Which product, given a choice, do the Americans buy?
JL: Yeah, I guess, the trade deficit problem wouldn't even exist if American consumers, given a free choice, preferred American products to Japanese products.
CM: Remember USA, Japan.
CM: After the war, the Japanese changed the name of one of their manufacturing centers to USA so they could stamp “Made in USA” on their products. Well, they recently changed the name back to Japan, and now they're stamping "Made in Japan, Japan" instead. They even say it twice.
JL: I guess the planned obsolescence chickens are finally coming home to roost.
The Junk Bond Financing of the US Government
Let's just settle all this silly debate between the tax, tax spend, spend democrats and the “no new Taxes” Republicans. My campaign promise: “No Taxes Ever.” I propose the complete privatization of financing of the US Government by the issuance of junk bonds in combination with a national lottery and voluntary donations from the 1000 points of light. Let's just do away with all this silly taxation nonsense. Who needs it anyway? Government has always been funded in part by the issuance of bonds. Remember War Bonds? After we have settled this, perhaps we can get on with the real debate between Republicans and Democrats on the real issues like a national health insurance plan. About 40 million Americans have no health insurance coverage. Which brings us back to our opening statement about Sweden winning the Cold War. Contrary to what the media would have us believe, the world is not converging towards the US free enterprise model but towards the Swedish welfare democracy model which is really a unique blend of capitalism and socialism. The economic wealth of the country is almost completely privately owned, but there is an economic redistribution of income in such a way as to provide social protection and insurance. It combines the best of private initiative and social protection—the engine of capitalism driving the economy and the safety net of socialism—universal health care, education and social security. The highs are clipped so that the lows may be also. Interestingly enough, with less than 2% unemployment, the Swedish system provides a higher per capita income than the US. In other words not only is the average Swede wealthier than the average American, but there is more equality of living standards and a broad safety net. A better lifestyle and more security? Is this possible?
Society Needs to Provide Incentives in East and West
Governments in both the East and West need to provide incentives for their young people primarily—that will make it attractive for them to do productive work. All too often incentives are thought to be something outside of the government's purview, something that just exists in a state of nature. Capitalism, especially, is propelled by growth industries such as the railroad industry of the late nineteenth century, the TV industry of the forties, the computer industry of the late seventies and early eighties. While these industries, arguably, were just “out there” in a state of nature and did not require government intervention in order to bear fruit, not all private economic incentives are of such a benign nature.
The growth industry of the eighties is the drug industry. Let me just say that I am anti-drugs. I do not think drugs should be legalized; I think they should be rooted out completely. However, the drug industry represents the same economic opportunities for the poor to rise out of poverty as any of the other growth industries in any other historical epoch. Government steps in with the stick to fight a War on Drugs as well it should. It should make the stick even more effective. But this in itself is acknowledgment that government has to intervene from time to time in the free enterprise system when the activities of that system left to their own devices endanger the health and welfare of the populace. Then why can't government intervene to provide the carrot as well? To provide the incentives that will give poor youth the hope that they can transcend the ghetto and provide society with socially useful productivity such as the construction of housing for the homeless and the repair of the infrastructure—jobs which private enterprise finds unprofitable. Whatever happened to the idea of the National Service Organization? Again socialism could step in where private enterprise leaves off. In the USSR people need socially provided incentives, ladders provided by society that they, by virtue of individual initiative can climb. The alternative to central planning is not necessarily hands off laissez-faire. People have to get used to the fact that government isn't going to take care of them if they are able to provide for themselves, and government has to get used to the fact that people will not produce selflessly, that they need an individual incentive if they are to make an individual effort.
The problem with American capitalism is not that there is too much socialism but that there is too much socialism for the rich and not enough socialism for the poor—socialism for the rich, social Darwinism for the poor. Government subsidies meant for the poor are put into the hands of the rich in order to provide the necessities of life for the poor. Instead, the middlemen siphon off most of the money for themselves leaving little or nothing for the poor. What happened at HUD is a prime example of this. IMF and World Bank aid to developing countries is another example. In both cases the poor were ill-served. A few people got rich. The poor remained poor. The problem is that in the US, government handouts in one form or another go to people in proportion to their political power and not according to need. Since the rich have political power in proportion to their wealth, they get the benefit of government money. Case in point: Charles H. Keating Jr. who, by virtue of his political contributions, had four US Senators working on his behalf to intervene in the regulatory process on behalf of Lincoln Savings and Loan. The latest scam for using the government to benefit the powerful at the expense of the average taxpayer involves using Federal insurance guarantees and then transferring the loan losses (as in the S&L case) onto the taxpaying public. This is not the only example of this. Another involves the raiding of your pension funds in such a way that the Federal Pension Guaranty Corp. will have to step in to fill the gap—paid for, ultimately, by the taxpayers.
The money needs to be injected at the roots—not at the leaves. Projects such as Habitat for Humanity where the poor put in “sweat equity” and, with a little capital, create the means (with the help of others) for their own survival should be emulated by the government. This is watering the roots instead of the leaves. A National Service Organization in which young people could earn credits toward a college education or a down payment on a house is another good example.
The Redefinition of Socialism
So there is a redefinition of what socialism really is taking place in the world today. What is really crucial and what is superfluous? Not only that, but a recognition that any system contains some elements of capitalism and some of socialism. No system is really purely one way or the other. Even in the US there are some institutions (namely the public school system) that are completely socialistic if we mean by socialistic an institution that is universally available to all without regard to ability to pay and that costs are borne proportionally greater by those who are better off financially. Public libraries are another example. I submit that the essence of socialism is the protection of the weakest and most vulnerable members of society universally i.e. no cracks for people to slip through, no holes in the safety net. This, of course, is precisely what Jesus Christ advocated in the passage "inasmuch as you have done it unto [taken care of] the least of these my brethren, it is as if you had done it unto me." And here is precisely the point where capitalism can meet socialism in a healthy alliance: let individual initiative propel the economy and people be individually responsible for their own welfare to the greatest extent possible. But let those who lose their footing and cannot take care of their own needs (hopefully temporarily, but, if need be, permanently) be provided for universally by society. I am for President Bush's 1000 points of light. Let voluntarism and individual effort do the job to the extent that it can. But what if it can't do the whole job? What if 1000 points of light can only take us a certain part of the way? Are we then to let the remaining children starve, the remaining homeless go unsheltered, the remaining uninsured accident victims be dumped from hospital emergency rooms? Let societal collective responsibility in accordance with Christian charity step in at precisely this point to close the gap. Socialism should not mean that the government should provide for people who can make it based on their own individual initiative, but it should mean that society should collectively provide for those who might need a temporary boost or assist and for those who are permanently disabled. What history has shown is that socialization of the means of production does not in and of itself lead to socialism. Socialism should be firmly rooted in ethical and moral principles and not in such concepts as historical determinism. This was Marx's big mistake: after a brilliant criticism of capitalism based on at least an implied ethical standard, he declined to associate socialism with the highest ethical tradition of the West and instead chose to ground it in some groundless, arcane philosophical concept. Scientific socialism is not scientific, and utopian socialism need not be utopian.
The political and economic integration that is occurring in the world community is the subject of my book: "East West Synthesis," published in 1989 by Clearview Press. Copies can be ordered from the above address for $14.95 (plus $2.00 shipping and handling).
May the peace and ethical concern for his fellow man of Jesus guide each of us individually and collectively as we face the coming years.
1. Every day 40,000 children die of preventable causes.
2. Every year the world spends 1 trillion dollars on arms.
Sources: CBS 60 Minutes, Nov. 26 1989