The ferocious criticism of the now notorious bow with which Barack Obama greeted his counterpart Wen Jiabao during Obama’s recent Asia trip is a further demonstration (as if we really needed one) of how some on the Right will do or say almost anything, no matter how silly, to try to discredit the President. Unfortunately the episode also demonstrates how both the President’s critics and supporters, as well as our terminally dumbed-down national media, are missing the real issue.
Many politicians on the Right were quick to denounce the bow – one of several Obama made on his Asia trip - as an unprecedented sign of “weakness” by an American President. Their cronies at Fox News, who apparently would view anything even approaching journalistic integrity and objectivity as similarly unprecedented signs of weakness, rolled out the usual array of pundits to analyze the bows – even attempting to calculate, with the aid of multiple slow-motion replays, its exact angle. Across the great media divide, MSNBC predictably scoured its film vault for footage of former Republican Presidents bowing to foreign heads of state and gloatingly aired the images as yet another example of right wing political hypocrisy.
Poor Obama. The Asia trip in general, and his time in China in particular, seem to have been an unmitigated public relations debacle that has done nothing to reverse the slow but steady erosion in his job approval ratings. Even the New York Times editorial pages uncharacteristically chided him – for allowing the Chinese to manage his schedule, and for his failure to speak out as strongly as George W. Bush on issues like human rights, the undervalued renminbi, the Iranian and North Korean nuclear programs, etc. But all of the overblown commentary on the bow begs more serious questions about the economic relationship between China and the United States.
Both political parties need to acknowledge that the United States has made itself beholden to China – not just as our principal source of cheap clothing, shoes and the endless array of electronics and consumer goods that Americans seem unable to do without, but as the principal source of financing for the Federal government. The Chinese now own roughly $800 billion in U.S. government securities, and the American economy is increasingly dependent on the Biejing’s willingness to roll this debt over month after month, year after year.
How did we find ourselves in this situation? It’s not complicated. It was in large measure the Chinese who financed George Bush’s reckless military adventures in Iraq and Afghanistan, his irresponsible tax cut for the rich, the “no strings attached” Wall Street bailout and eight straight years of budget deficits. It was the Chinese in large measure who helped Bush and his economic team – probably the most inept in modern American history - maintain an illusion of domestic prosperity while turning Bill Clinton's budget surplus into the deficit of over $600 billion that was dumped on Obama’s doorstep.
Given all of this, one can only wonder why Republicans strategists think it’s smart politics to portray Barack Obama as looking “weak” in his dealings with the Chinese. Like it or not, the position of the U.S. China has weakened over the last decade, and the irresponsible “borrow and spend” policies of the Bush era are the principal cause.
Statistics about the Federal deficit and public debt lend themselves to manipulation, so it’s important to understand what we’re talking about here. The U.S. public debt is currently a whopping $12 trillion. Some argue that even though the total debt may be a problem, the fact that we owe the Chinese “only” $800 billion, less than 7 percent of the total, isn’t such a big deal. They’re dead wrong, and the reason lies in what the public debt represents. It is made up of a number of separate components, the largest (roughly 50 percent) being the surpluses in governmental trust funds (such as the Social Security Trust Fund), which are required by law to be invested in Treasury Securities. More on the trust funds in a future commentary. Suffice it to say that to the extent the trust funds are in surplus, the government has to borrow less money on the open market to finance its operations than the size of the public debt and annual budget deficit would imply. That might seem like good news, but it really isn’t, at least in the long term, because as the trust fund surpluses diminish, the securities held in the trust fund have to be sold, thereby increasing the public borrowing requirement beyond the amounts that the annual budget would indnicate.
The Federal Reserve also buys and sells government securities in the market to regulate supply and demand and control interest rates. In addition, many securities are owned by domestic entities The balance, roughly $3.5 trillion (as of September 30, 2009) is held by foreign governments and institutions And that is what we need to focus on.
Of the $3.5 trillion in foreign-held government securities, China’s share accounts for roughly 23 percent. Japan, the second biggest holder, owns roughly $750 billion, or 21 percent. But of equal or greater concern is the trend that has emerged over the last decade. When George W. Bush took the oath of office for the first time, the portion of the public debt in foreign hands was, in round numbers, $1 trillion. Of that amount, China held only 6 percent, or $60 billion. Under Bush, the total foreign-held debt increased by over 200 percent, but Chinese holdings rose over the same period by over 1,000 percent. Though the President will fault the economic policies of his predecessor, the trend has continued unabated under Obama and China continues to absorb a disproportionate amount of the net increase in foreign-held U.S. public debt.
The ballooning public debt is bad in and of itself. We should recall that the Soviet empire was brought down not by force of arms, but by the collapse of its domestic economy. Fans of Ronald Reagan credit his policies for reducing the USSR to economic ruin. Unfortunately it’s little exaggeration to say that the policies of his ideological successor, George W. Bush, have done much the same for the United States. Economic power ultimately begets political power, and the continued concentration of the U.S. public debt in the hands of China has implications for China’s pretensions as a world super-power.
A May, 2009 report by the Congressional Research Office (CRO) downplays the risks of financial dependence on China. If China were to reduce its dollar holdings significantly over a short period of time, the report acknowledges, interest rates would rise, also significantly, domestic investment would decline and growth rates would fall, triggering potential recession. However, the report argues, China is unlikely to take such action because it would hurt itself in the process. The value of its remaining dollar-denominated assets would decline and its trade relationship with the U.S. would be placed in jeopardy, in part because of reduced U.S. demand in general, and in part because any precipitous action by China would likely lead to a "protectionist backlash" against Chinese products. On the other hand, a gradual reduction in China’s Dollar holdings could actually have a net beneficial effect on the U.S. economy, because the reduction in the trade deficit that would accompany a depreciation of the dollar could offset the adverse economic effects of higher interest rates.
I think this is muddled, complacent and dangerous thinking.
First, the report fails to recognize that the issue is not simply whether and how China would reduce its portfolio of Treasury securities; if China simply were to stop increasing its holdings to match the growth in the public debt, interest rates are likely to rise and this could adversely affect whatever fragile recovery may be beginning. But I don’t rule out a move by the Chinese to start making net reductions in their Dollar exposure, at least until they have a higher level of confidence in the U.S. government’s willingness and ability to manage the economy. I also don’t buy the CRO’s conclusion that the resulting interest rate increase would be accompanied by a decrease in the value of the Dollar, thereby improving the trade deficit. That’s the muddled thinking. It’s also at odds with a study by the same CRO only 5 years ago that reached exactly the opposite, and generally accepted view: that a rise in interest rates tends to make Dollar-denominated assets more attractive, thereby increasing the value of the Dollar, which negatively impacts the balance of payments (except in the worst case scenario where huge numbers of Dollars are dumped on the market within a short period of time).
According to the Treasury, China is restructuring its portfolio of Dollar holdings and moving toward shorter-term maturities. The CRO believes this is simply because shorter-term securities are viewed as “safer”. That's the complacent thinking. One can equally speculate that the move towards shorter maturities is designed to enable China to reduce its portfolio more rapidly, less disruptively and with less risk to the value of its remaining holdings. Only time will tell.
The dangerous thinking is to assume that China is so afraid to jeopardize its trade relationship with the United States that it will dutifully keep piling up IOUs as long as Uncle Sam can keep printing them. China has responded to the global recession by stimulating national demand and recent events must have demonstrated to China’s leaders the danger of over-dependence on export markets, especially in the developed world. Over time, and perhaps not too much time, the U.S. market will become less critical for Chinese manufacturers. And you can be sure the Chinese won’t be scared by the prospect of a hypothetical “protectionist backlash”. At the end of the day, U.S. consumers vote with their pocketbooks and everyone, with the possible exception of the CRO, knows it. The likes of Walmart, who these days seem to stock their shelves almost entirely with Chinese products, certainly do.
The Chinese have repeatedly and publicly made clear their concerns about the long-term stability and value of the Dollar. According to recent press reports, Chinese Treasury officials have been consulting at length with their U.S. counterparts about the long-term budgetary implications of health reform, stimulus spending and other “big ticket” government programs. The United States is starting to take on the appearance of a free-spending but impecunious rake, repeatedly begging a stingy rich uncle for money with the promise that “things will be different this time”. It’s little surprise that the Chinese have questioned the continued reliance on the Dollar as a reserve currency and the fact is that we are likely to see a gradual (or perhaps not so gradual) movement toward use of currency “baskets” such as the SDR in international commerce. This will also have serious implications for U.S. fiscal policy, but in the interim, given China’s continued importance as a purchaser of U.S. government securities, this is hardly the most appropriate time for Obama to publicly bash the Chinese on exchange rate policy. It is in part Chinese purchase of Dollar-denominated securities that prevents slows growth in the value of the remninbi; in addition, the exchange rate is a concern not just for the U.S. but for the West in general and is best addressed on a multinational level. I think Obama understands this, and on his recent trip he set precisely the right public tone.
Back at home, the President’s critics, and the American public, need to understand that the best way to restore strength to the U.S. relationship with China is not through public posturing on contentious issues, but by getting control of the Federal budget deficit. Both Democrats and Republicans need to play a constructive role in that process. The Democrats need to freeze further wasteful “stimulus” spending that is not targeted specifically at investments in productive capacity and infrastructure. Republicans must play their part by accepting health care reform proposals that lower the deficit, by agreeing to roll back George Bush’s tax handout for the wealthy and by supporting responsible efforts to curb the ruinously expensive military operations in Afghanistan. That will require from our politicians a lot more intellectual effort and political courage than making silly cheap shots about Obama’s “bow” to the Chinese – but if they don’t they will only have themselves to blame if future American Presidents have to bow even lower, and with cap firmly in hand, to their bankers in Beijing.
Saturday, November 28, 2009
Monday, November 16, 2009
In Praise of Dennis Kucinich
Thank God for Democratic Congressman Dennis Kucinich.
The plain speaking former Presidential candidate from Cleveland was the only proponent of health care reform to vote against Nancy Pelosi's Heath Industry Profit Assurance Act (or as it is officially but misleadingly named, the "Affordable Health Care for America Act"). Amid the orgy of Democratic self-congratulation that followed the passage of this bill, which squeaked by with a majority of only five votes, Kucinich issued a statement explaining why he had voted against it. Other Democrats, especially those who profess to belong to the “liberal” or “progressive” wing of the party, would do well to read it. So too would Barack Obama, whose abject failure to provide leadership on health care reform, and whose willingness to cut back-room deals with health industry lobbyists, in large measure explain why the House bill falls so far short of the expectations the President himself created by his overblown campaign rhetoric
Many voters, who haven't had the time or inclination to wade through the bill's 1,990 pages, could be forgiven for assuming that this much-heralded public option is the "Medicare for All" solution that many reform proponents have been advocating. Unfortunately it's nothing of the kind. Anyone eligible for employer-provided insurance would be ineligible to participate and employees won't have the right to "trade in" their employee coverage for the public plan. Health care providers participating in the public option would be paid negotiated rates, rather than the prevailing Medicare tariff, meaning that the cost of the public option - and therefore premiums - will be higher than under a "Medicare for All" approach. To its credit, the Pelosi bill would permit the government to negotiate lower prices for drugs. However, this runs counter to the deal Obama cut with the drug companies in return for their promise of support, and Big Pharma is already promising to throw all of its considerable weight against the bill if the House doesn't join the Senate Finance Committee in following the White House marching orders. The Senate version is likely to prevail in the final bill, further increasing the cost of the public option.
The Congressional Budget Office estimates that Pelosi's public option will in effect become a residual plan for the highest risk individuals, with the consequence that the premiums it charges will actually be higher than the private-sector health insurance companies, even though its administrative costs will be much lower.
Clearly the insurance companies would prefer not to have a public option, but with or without it they stand to make out through the millions of additional policies they will write. Most employers will be required by law to provide insurance, and all individuals who don't receive employer-provided benefits and don't qualify for Medicare/Medicaid will be required to buy it for themselves. If they don't, the Obama Adminisration will fine them. The Congressional Budget Office estimates that the proposed insurance exchange will attract 30 million customers, with only 6 million enrolling in the public option; that's 24 million new customers for the insurance companies.
There are other problems. According to the CBO the bill would reduce the Federal deficit. However opponents, including many state governors, point out that the expansion of Medicaid, which is funded partly by the states and partly by the Federal government, will impose an additional financial burden on states already struggling to balance their budgets. Unfunded mandates are a convenient way for Congress, which for years has lacked the collective backbone to raise enough in taxes to pay for the services the Federal government provides, to pass the buck on healthcare costs. State governors are right to be unhappy. If Congress believes that the Federal government has an obligation to provide universal health care, it should pick up the tab.
And it gets worse. Only after the House bill was passed did it become widely known that one of the prices Pelosi had paid to buy the votes of conservative "Democrats" was the so-called "Stupak amendment". This provision, included at the behest of the U.S. Conference of Catholic Bishops and its Congressional mouthpiece, Rep Bart Stupak, would effectively prohibit any insurance plan that participates in the insurance exchange from offering abortion services. This restriction goes far beyond existing law, which already prohibits direct Federal funding of abortion services, because it would apply to private insurance plans in which the individual policyholder pays all of the premium. This amendment, arguably the most significant abridgment of women's reproductive rights in recent years, may well prove the downfall of the bill. Womens's groups will certainly mobilize against it, while the bishops have threatened to do all in their power to block health care reform if the Stupak amendment does not survive - an extraordinarily arrogant affront to the separation of church and state and and an acknowledgment that the Church's support for the "right to life" does not extend to the estimated 46,000 Americans who die each year because they lack adequate health insurance.
The Stupak Amendment aside, the fundamental problem is that the House bill, together with its equally unsatisfactory Senate counterpart, will preserve and indeed strengthen the very worst aspect of the current system, creating a Gordian knot of mandates and tax subsidies binding together employment and health care insurance. It will also increase reliance on a for-profit system in which the primary obligation of those who provide and fund health care is to their shareholders, not their patients. To quote Congressman Kucinich:
“We have been led to believe that we must make our health care choices only within the current structure of a predatory, for-profit insurance system which makes money not providing health care. We cannot fault the insurance companies for being what they are. But we can fault legislation in which the government incentivizes the perpetuation, indeed the strengthening, of the for-profit health insurance industry, the very source of the problem."
The fact that health industry lobbyists have even had a seat at the table reflects a belief by many of those we elect to represent us - including Barack Obama - that they an equal or greater obligation to the health insurance industry. As previously predicted in these pages, Obama's much vaunted skills of persuasion will be dedicated not to "knocking heads together" on Capitol Hill in order to get a better bill (as Rep. John Conyers recently urged) but to convincing the American public that the existing bill is something it is not - genuine health care reform. I think this time he's underestimating the intelligence of the electorate and exhausting the patience of many of those who supported him.
So what is a good Congressional Democrat to do when the final bill comes up for a vote? Vote yes, on the basis that something is better than nothing, or vote no and hold out for real reform. After reading the House bill, I am coming to the conclusion that the latter may be the better option. Accepting this bill will likely kill any chance of real reform for a generation. If it passes, Barack Obama, Harry Reid and Nancy Pelosi will cynically declare victory and move on to other less challenging issues. But the Democrats' willingness to accept a deal dictated in good measure by health industry lobbyists (and, if the Stupak amendment prevails, by the Conference of Catholic Bishops) will disenchant the progressive base that turned out in large numbers in the 2008 election, thereby virtually assuring a low Democratic voter turnout, and big Republican gains, in next year's mid-term elections.
If Democrats do vote for a watered-down reform bill, they should visibly hold their collective noses while they do so. They should make clear that, to paraphrase Winston Churchill, this vote is not the end of the end in the battle for health care reform, or even the beginning of the end, but merely the end of the beginning. Regardless whether the bill becomes law, Democrats must contest the next election on a platform of a single payer or "Medicare For All" solution. The so-called "bluedogs" in the party, many of whom have resolutely opposed any form of health care reform, need to decide which side of the aisle they really want to sit on. If they are not wiling to support the program on which Barack Obama was elected, they shouldn't get a penny in campaign funding from the DNC, and the party should actively seek out progressives to run against them in primaries; the same should be true for Barack Obama himself, whose credentials as an agent of change look more suspect with each week that passes.
On a more immediate note, the sanctimonious Joe Lieberman, who has already announced he will collaborate with Republicans in attempting to ensure that the bill doesn't even come to a vote on the Senate floor if his paymasters in the insurance industry don't like it, should be stripped of his committee chairmanship and expelled from the Democratic caucus. The "big tent" theory is all well and good, but it is no substitute for a party that actually believes in something, and has the will and ability to keep its promises to the voters. In short, the Democrats need fewer time-serving bought-and-paid-for political hacks like "Traitor Joe" Lieberman and more honest mean and women like Dennis Kucinich.
Kucinich is the type of politician the right-wing windbags at Fox News et al love to hate. He is an old-fashioned Liberal and isn't ashamed to admit it. His policy position are driven by principle, not expediency. He isn't afraid to answer tough questions, and he answers them directly. You don't have to peel away layers of nuance and double talk to figure out where he really stands on the issues. Unlike his pompous and self-promoting House colleague Alan Grayson (the self-styled "Congressman with guts"), Kucinich doesn't descend to Republican-style attack politics to make his point on health care. And unlike Barack Obama, he unerstands that the best way to counter the likes of Fox News is not to boycott them but to take them on head-to-head. Unfortunately Dennis Kucinich is unlikely ever to win the Democratic nomination - we have seen repeatedly that the hollow traits of "charisma" and "pragmatism" invariably trump brains and conviction, and that rhetoric beats outsubstance every time. However, I hope he keeps trying. He reminds people of the values that the Democratic party supposedly stands for. Unfortunately there aren't too many others that do.
Saturday, November 7, 2009
We the Subjects
The city of Philadelphia is rich in cultural and historical attractions. One of my favorites is the National Constitution Center, an institution dedicated to increasing public understanding of, and appreciation for, the Constitution of the United States. Through a series of dramatic presentations and interactive exhibits, the Center describes the origins of the War of Independence, the adoption of the Articles of Confederation and the drafting and evolution of the Federal Constitution. A visit to the center provides a reminder of the type of nation envisaged by the founding fathers; one of equality under the law, free of aristocratic rights and privileges.
How ironic, absurd even, that the National Constitution Center would play host to "Diana - A Celebration", Earl Spencer's traveling circus that "showcases [the] unique life and the legacy" of his late sister, Diana Princess of Wales.
The exhibit, which runs through December 31, is on loan from the Althorp Estate, the family home of the Spencer family, and is now on its second tour of the United States. It is a tedious and unmemorable collection of costume jewelry, designer gowns, family photos and the like, seemingly intended to promote the Spencer family in general as much as Diana in particular. To this end, an entire gallery is devoted to the "important women" of the Spencer family who, according to the official handout, "helped shape the culture of their age" (whatever that means). A convoluted family tree purportedly demonstrates Diana's close familial links with the monarchy, and generally touts the Spencers as one of the most significant aristocratic lines in Britain. Of course the most important gallery is saved for last - the souvenir shop, offering fake tiaras and other overpriced knick-knacks bearing the family crest. I was curious to see what the visitors packing the exhibit thought about all of this nonsense and scanned the Comments Book on my way out. I was depressed to find that every entry was a gushing tribute to the Princess and/or the exhibit and/or the Spencer family - but then again, I suppose that is the type of visitor the exhibit is intended to attract.
Earl Spencer has been criticized in Britain for attempting to cash in on his sister's memory. I have no idea how much U.S. punters will be contributing to the family coffers; according to the exhibit's web site, profits go to the Diana, Princess of Wales Memorial Trust, but only after the Spencer family takes its cut, which equals at least 10 percent of the retail sales price of the merchandise sold in the U.S. That's 10 percent of the retail sales price, not 10 percent of the profit. As the English would say, "a nice little earner".
Ironically, the Spencers' attempts to use the Diana exhibit to hone their own aristocratic credentials tend to undercut the carefully-crafted image of Diana as the "People's Princess". In the course of her very public estrangement from Prince Charles, she played (with the assistance of PR advisers and favored journalists) on the sympathies of the British people, portraying herself as the victim of a cold and arrogant system. And in some senses she was. But as the exhibit shows, she was also a product, and indeed a beneficiary, of that same system. She and her family knew better than most the rules by which the game is played in the royal family. She naively believed, to her cost, that she could change them. She could not. She learned too late that the system is one that readily devours its own, and at the end of the day that is really the ultimate tragedy of Diana.
I have no doubt that most of the people forking over their $23 to view the Diana exhibit are enthralled not just by her, but by the monarchy itself. I have never understood the fascination that Americans have for the British royal family, given the efforts they went through to get rid of them. But come to that, I confess I have never understood the fascination that many Britons sill have for them. It is frankly absurd that in any modern democracy the position of Head of State should pass by heredity. The very existence of the royal family, with its attendant legion of lesser aristocracy and social-climbing hangers-on, has long had a stultifying effect on the rest of British society, perpetuating an invidious class system and in turn impeding social mobility. This isn't mere speculation. A 2009 study by researchers at the London School of Economics and the Sutton Trust found that Britain and the U.S. have the lowest rates of social mobility among the eight developed nations studied, and that in Britain the rate is actually declining, notwithstanding increases in expenditures on education.
The current occupants of Buckingham Palace have shallow British roots. They are basically German imports, a combination of the houses of Hanover and Saxe-Coburg-Gotha, who had the good sense to adopt the name "Windsor" in 1917, as Britain fought the armies of their cousin the Kaiser. A few have served in the military (Prince Andrew did so with distinction during the Falklands conflict and Prince Harry served briefly with British forces in Afghanistan) but in general the Windsors have done little if anything to earn the respect or admiration of the people whose taxes support their lavish lifestyles. Opponents of the monarchy portray them as a rather dim-witted group of reactionary and profligate philistines, with an ill-concealed contempt for those who foot their bills. I happen to share this view, but I believe a more serious problem is that they just don't seem to understand the concept of a "constitutional monarchy" and refuse to acknowledge the impropriety of meddling in affairs of state or using their public office for personal gain.
Former government ministers have disclosed the repeated and entirely improper efforts of Prince Charles (whose views on most subjects could most charitably be described as "eccentric") to interfere in public policy and planning decisions. In one recent and highly publicized case, he brazenly used his influence to have a leading British architect removed from a multi-billion dollar redevelopment project in West London, so that an architect of his choosing could be brought in. Charles, whose views on architecture appear to be mired somewhere in the mid-eighteenth century, nonetheless regards himself as an authority on the subject, and seems intent on turning London into an outdated architectural pastiche better suited to the "Olde Englande" pavilion at Disneyworld than to a modern capital city. His eccentricities don't stop with his opinions on architecture. His "Duchy Originals" company, which peddles high-priced organic health supplements and prepared meals, recently found itself in hot water with regulatory authorities for making unsubstantiated claims about the therapeutic effects of two herbal concoctions, while a third such product, the so-called "Duchy Herbals Detox Tincture" was branded by one expert as "outright quackery". Always quick to lecture others about what's good for the country, Charles recently proposed that Britons should give up their cars in favor of public transportation. Good advice perhaps, were it not coming from a man who owns two Jaguars, two Audis, a Range Rover and an Aston Martin, and who has consistently fought government proposals to scrap the royal family's private train, funded by the hapless British taxpayer to the tune of over $1.1 million per year. The mere possibility of this man ascending the throne should be enough to send shivers down the spine of anyone who believes in a transparent and representative democracy.
Or consider the case of his younger brother Prince Andrew, who for some unaccountable reason was able to get himself appointed as a roving "trade ambassador" for Britain, and whose frequent taxpayer-funded first class junkets have earned him the nickname "AirMiles Andy". The Prince, who needless to say has no actual experience in trade or commerce, incurred the wrath of MPs earlier this year when he refused to make public a report he himself had commissioned from Pricewaterhouse Coopers in the hope it would demonstrate his effectiveness in the post. Last month he again drew widespread criticism when he foolishly chose to weigh in on domestic economic issues about which he he equally ill-acquainted, defending the huge bonuses paid to City bankers and urging the government not to proceed with plans to close tax loopholes that favor wealthy non-domiciliary UK residents (many of whom, no doubt, he regularly sees on the golf course or polo field). This is not the first time the aging playboy turned "ambassador" has embarrassed the government with his verbal gaffes. He should never have been given the job in the first place, and needs to be shown the door before he causes further damage and wastes more taxpayer money.
The youngest of the three "Windsor" brothers, the Earl of Wessex, and his wife, are no strangers to scandal either. He is alleged to have used public funds for an overseas trip during which he sought to raise cash for his ailing TV production company, which happened to be based in a facility that had been renovated at the public's expense. In a separate incident, his overly-ambitious wife was taped making indiscreet remarks about members of the royal family and some leading politicians to an investigative journalist posing as a sheik, apparently in an effort to secure a lucrative contract for a PR firm in which she had an interest.
The royals have survived one scandal after another because they have learned the importance of a well-oiled PR machine. They have also been able to count on a cadre of fawning hacks in the right wing press to keep making the case that the monarchy represents "good value for money". That is an increasingly difficult argument to make, and the royal spongers don't exactly help their own cause. In the face of an economic crisis that has lead to spending cuts throughout the British economy the Guardian newspaper disclosed that the royals were demanding an increase in the "Civil List" - the annual laundry list of taxpayer handouts for the Queen and her family - even though they currently have a surplus of over $30 million in the kitty. They apparently won't get their increase - even the usually compliant Tories have said no to that - but it seems they will not be asked to take a cut either. Had they any sense of civic responsibility (or simple common decency), they would have offered to take a cut. But they apparently have no interest in sharing any of the sacrifices their subjects might have to make. The time has come to call a halt to this. The monarchy performs no function - from opening Parliament to opening garden fetes - that could not be performed as or more effectively, at lower cost and with greater transparency and public accountability, by an elected Head of State or other elected official.
Abolishing the anachronistic institution of the monarchy would not only save money but - more importantly - would be an important step towards eliminating the insidious and pervasive web of patronage and privilege that permeates British society. At the very least, Britons deserve to vote in a referendum on the subject. Proponents of the status quo should have no objection - assuming, that is, that they really believe they can sell the case that the monarchy earns its keep. After all, public endorsement of the monarchical system in a referendum would give it a legitimacy it currently lacks. Regrettably the Liberal Democrats are alone among the major political parties in advocating a referendum on the future of the monarchy. Gordon Brown and his New Labour colleagues would do well to endorse the proposal too, as they look for ways to regain some political momentum and avoid the general election defeat now looks increasing inevitable.
How ironic, absurd even, that the National Constitution Center would play host to "Diana - A Celebration", Earl Spencer's traveling circus that "showcases [the] unique life and the legacy" of his late sister, Diana Princess of Wales.
The exhibit, which runs through December 31, is on loan from the Althorp Estate, the family home of the Spencer family, and is now on its second tour of the United States. It is a tedious and unmemorable collection of costume jewelry, designer gowns, family photos and the like, seemingly intended to promote the Spencer family in general as much as Diana in particular. To this end, an entire gallery is devoted to the "important women" of the Spencer family who, according to the official handout, "helped shape the culture of their age" (whatever that means). A convoluted family tree purportedly demonstrates Diana's close familial links with the monarchy, and generally touts the Spencers as one of the most significant aristocratic lines in Britain. Of course the most important gallery is saved for last - the souvenir shop, offering fake tiaras and other overpriced knick-knacks bearing the family crest. I was curious to see what the visitors packing the exhibit thought about all of this nonsense and scanned the Comments Book on my way out. I was depressed to find that every entry was a gushing tribute to the Princess and/or the exhibit and/or the Spencer family - but then again, I suppose that is the type of visitor the exhibit is intended to attract.
Earl Spencer has been criticized in Britain for attempting to cash in on his sister's memory. I have no idea how much U.S. punters will be contributing to the family coffers; according to the exhibit's web site, profits go to the Diana, Princess of Wales Memorial Trust, but only after the Spencer family takes its cut, which equals at least 10 percent of the retail sales price of the merchandise sold in the U.S. That's 10 percent of the retail sales price, not 10 percent of the profit. As the English would say, "a nice little earner".
Ironically, the Spencers' attempts to use the Diana exhibit to hone their own aristocratic credentials tend to undercut the carefully-crafted image of Diana as the "People's Princess". In the course of her very public estrangement from Prince Charles, she played (with the assistance of PR advisers and favored journalists) on the sympathies of the British people, portraying herself as the victim of a cold and arrogant system. And in some senses she was. But as the exhibit shows, she was also a product, and indeed a beneficiary, of that same system. She and her family knew better than most the rules by which the game is played in the royal family. She naively believed, to her cost, that she could change them. She could not. She learned too late that the system is one that readily devours its own, and at the end of the day that is really the ultimate tragedy of Diana.
I have no doubt that most of the people forking over their $23 to view the Diana exhibit are enthralled not just by her, but by the monarchy itself. I have never understood the fascination that Americans have for the British royal family, given the efforts they went through to get rid of them. But come to that, I confess I have never understood the fascination that many Britons sill have for them. It is frankly absurd that in any modern democracy the position of Head of State should pass by heredity. The very existence of the royal family, with its attendant legion of lesser aristocracy and social-climbing hangers-on, has long had a stultifying effect on the rest of British society, perpetuating an invidious class system and in turn impeding social mobility. This isn't mere speculation. A 2009 study by researchers at the London School of Economics and the Sutton Trust found that Britain and the U.S. have the lowest rates of social mobility among the eight developed nations studied, and that in Britain the rate is actually declining, notwithstanding increases in expenditures on education.
The current occupants of Buckingham Palace have shallow British roots. They are basically German imports, a combination of the houses of Hanover and Saxe-Coburg-Gotha, who had the good sense to adopt the name "Windsor" in 1917, as Britain fought the armies of their cousin the Kaiser. A few have served in the military (Prince Andrew did so with distinction during the Falklands conflict and Prince Harry served briefly with British forces in Afghanistan) but in general the Windsors have done little if anything to earn the respect or admiration of the people whose taxes support their lavish lifestyles. Opponents of the monarchy portray them as a rather dim-witted group of reactionary and profligate philistines, with an ill-concealed contempt for those who foot their bills. I happen to share this view, but I believe a more serious problem is that they just don't seem to understand the concept of a "constitutional monarchy" and refuse to acknowledge the impropriety of meddling in affairs of state or using their public office for personal gain.
Former government ministers have disclosed the repeated and entirely improper efforts of Prince Charles (whose views on most subjects could most charitably be described as "eccentric") to interfere in public policy and planning decisions. In one recent and highly publicized case, he brazenly used his influence to have a leading British architect removed from a multi-billion dollar redevelopment project in West London, so that an architect of his choosing could be brought in. Charles, whose views on architecture appear to be mired somewhere in the mid-eighteenth century, nonetheless regards himself as an authority on the subject, and seems intent on turning London into an outdated architectural pastiche better suited to the "Olde Englande" pavilion at Disneyworld than to a modern capital city. His eccentricities don't stop with his opinions on architecture. His "Duchy Originals" company, which peddles high-priced organic health supplements and prepared meals, recently found itself in hot water with regulatory authorities for making unsubstantiated claims about the therapeutic effects of two herbal concoctions, while a third such product, the so-called "Duchy Herbals Detox Tincture" was branded by one expert as "outright quackery". Always quick to lecture others about what's good for the country, Charles recently proposed that Britons should give up their cars in favor of public transportation. Good advice perhaps, were it not coming from a man who owns two Jaguars, two Audis, a Range Rover and an Aston Martin, and who has consistently fought government proposals to scrap the royal family's private train, funded by the hapless British taxpayer to the tune of over $1.1 million per year. The mere possibility of this man ascending the throne should be enough to send shivers down the spine of anyone who believes in a transparent and representative democracy.
Or consider the case of his younger brother Prince Andrew, who for some unaccountable reason was able to get himself appointed as a roving "trade ambassador" for Britain, and whose frequent taxpayer-funded first class junkets have earned him the nickname "AirMiles Andy". The Prince, who needless to say has no actual experience in trade or commerce, incurred the wrath of MPs earlier this year when he refused to make public a report he himself had commissioned from Pricewaterhouse Coopers in the hope it would demonstrate his effectiveness in the post. Last month he again drew widespread criticism when he foolishly chose to weigh in on domestic economic issues about which he he equally ill-acquainted, defending the huge bonuses paid to City bankers and urging the government not to proceed with plans to close tax loopholes that favor wealthy non-domiciliary UK residents (many of whom, no doubt, he regularly sees on the golf course or polo field). This is not the first time the aging playboy turned "ambassador" has embarrassed the government with his verbal gaffes. He should never have been given the job in the first place, and needs to be shown the door before he causes further damage and wastes more taxpayer money.
The youngest of the three "Windsor" brothers, the Earl of Wessex, and his wife, are no strangers to scandal either. He is alleged to have used public funds for an overseas trip during which he sought to raise cash for his ailing TV production company, which happened to be based in a facility that had been renovated at the public's expense. In a separate incident, his overly-ambitious wife was taped making indiscreet remarks about members of the royal family and some leading politicians to an investigative journalist posing as a sheik, apparently in an effort to secure a lucrative contract for a PR firm in which she had an interest.
The royals have survived one scandal after another because they have learned the importance of a well-oiled PR machine. They have also been able to count on a cadre of fawning hacks in the right wing press to keep making the case that the monarchy represents "good value for money". That is an increasingly difficult argument to make, and the royal spongers don't exactly help their own cause. In the face of an economic crisis that has lead to spending cuts throughout the British economy the Guardian newspaper disclosed that the royals were demanding an increase in the "Civil List" - the annual laundry list of taxpayer handouts for the Queen and her family - even though they currently have a surplus of over $30 million in the kitty. They apparently won't get their increase - even the usually compliant Tories have said no to that - but it seems they will not be asked to take a cut either. Had they any sense of civic responsibility (or simple common decency), they would have offered to take a cut. But they apparently have no interest in sharing any of the sacrifices their subjects might have to make. The time has come to call a halt to this. The monarchy performs no function - from opening Parliament to opening garden fetes - that could not be performed as or more effectively, at lower cost and with greater transparency and public accountability, by an elected Head of State or other elected official.
Abolishing the anachronistic institution of the monarchy would not only save money but - more importantly - would be an important step towards eliminating the insidious and pervasive web of patronage and privilege that permeates British society. At the very least, Britons deserve to vote in a referendum on the subject. Proponents of the status quo should have no objection - assuming, that is, that they really believe they can sell the case that the monarchy earns its keep. After all, public endorsement of the monarchical system in a referendum would give it a legitimacy it currently lacks. Regrettably the Liberal Democrats are alone among the major political parties in advocating a referendum on the future of the monarchy. Gordon Brown and his New Labour colleagues would do well to endorse the proposal too, as they look for ways to regain some political momentum and avoid the general election defeat now looks increasing inevitable.
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