The almost singular driving purpose of our American economic policy should be* to encourage productive capital to move here. (Not high finance engineering, but actual means of production, to use the old terminology.) In fine, the driving purpose of our policy should be Hamiltonian through and through — the difference being that while he had to build a base of productive capital all we have to do is restore one.

What is the dearest thing on earth right now? Capital.

So we offer a two year tax holiday — on everything: income, payroll, cap gains, business, corporate, you name it; and to this tax holiday append a mechanism to grandfather in any company that moves operations into the United States. In other words, I propose to institute a radical Federal tax holiday until 2012, say: at which point the previous regime kicks back in — except for those operations that moved into America during that window of tax abeyance.

To mitigate some of the budgetary nightmares implied by this, we could go with a flat 50% tax on income above some level of wealth. (My thanks to Francis for suggesting this modification.)

Sure, we create the outlines of a mischievous regime of economic aristocracy, which our descendants will likely abuse, but at least we give ourselves a shot at recovering to real economic health, sooner rather than much later.

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I have heard and read a lot of panic and resignation out there. On the edges of it are despair. Hedge fund operators talk of the new economy of canned food and ammunition, and buying farmland in Canada. Normal family men evidence a peculiar despondency, retreating from the world. What is this?

Today is the last day to capitulate to despair. Today is the last day to retreat from the business of the country — her politics, her traumas, her public disputes. Today is the last day to forget what our ancestors here in America were, and cower in the face of long odds.

Canned food and ammunition are fine, but remember that in most cases your greatest asset is your mind. Even the Capitalism that has largely failed was right about that. The resources of the human mind exceed those of his brute capacity, unless we submit to the crudest tyranny of of philosophical materialism.

So my recommendation to any who may struggle with despair is Remember your wits. Yes, in a sense it is that simple. Your mind is your greatest asset: remember your wits. Despair will take them from you. Despondency is the father of quietism and resignation. Desperation midwifes reckless gambles. Neither condition is one worthy of the people of this Republic. Instead, remember your wits as your fathers remembered theirs in times of trouble.

Let me offer a couple rhetorically-presented examples:

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Anyone familiar with the lineaments of the debate over same sex marriage will have encountered what we might call the Libertarian Variation. This is the view that all the commotion surrounding this dispute could be avoided if only we could persuade the state to have done with marriage altogether, leaving it a strictly private affair. Most commonly the it will be advanced with a kind of cry of exasperation: “I just want the government out of the marriage business!” The cry is less one of realistic hope for policy reform than a forlorn utterance of resignation.

Commonly Libertarian Variation will be advanced by someone with enough perception to realize that the standard compromise in favor of tolerance on all sides — gays can have their recognition, but don’t worry, no one will ever be forced to participate — is not now a realistic option, and probably never was. In short, the Libertarian Variation is commonly advanced by someone who realizes, deep down, that, indeed, churches will be forced to open their grounds to gays, that wedding photographers will be forced to accept business for marriages they have a principled opposition to. Coercion has happened, and will happen. Hence our poor libertarian’s exasperated cry of resignation.

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A woman with a peculiarly mercenary streak is auctioning off her virginity for a considerable sum of money: $3.7 million, according to this Telegraph report. It’s one way to beat the recession, I suppose. The idea of enterprising degradation came to her, it is further reported, because her sister was able to pay for “her own degree after working as a prostitute for three weeks.” Ain’t that nice?

Don’t miss the remarkable statement that concludes that Telegraph report: “It’s shocking that men will pay so much for someone’s virginity, which isn’t even prized so highly anymore.”

It’s rare for so much irony to be packed into a single sentence. One could note that only in the modern age could someone claim that it is “shocking” for men to prize purity and chastity, which are exemplified above all in virginity. One might observe that the whole impetus for her offer was a keen insight into how highly prized purity still is, even refracted through a distorting lens of degradation. One might therefore observe that the subordinate phrase in this poor woman’s statement is, strictly speaking, horse puckey; and that all the force of mercenary instinct, of licentiousness, of free love and all the other heresies of the modern age — in a word, all the force of that ponderous amalgam of Capitalism and License which has become the very mark of our society — cannot efface what human sexuality actually is. Even the most hidebound evolutionist or materialist can arrive at the truth of the importance of chastity, which is the source of the power of female sexuality.

Even the evolutionist can discover that female chastity is a thing of extraordinary power. Even he must realize that when a man proceeds to estimate the chances of carrying his genetic features into the next generation, a great portion of the estimate must hinge on the fidelity of his mate. And the only true surety in this estimate is virginity. Fidelity is built upon that.

In base economic terms, this woman is selling herself short. Her virginity, her purity, her chastity is worth much more than 3 or 4 million dollars. Ten times that amount would probably fall short. And the puzzle is how exactly it came to be that the modern age convinced so many women to throw away their most prized asset, all the while calling it a grand liberation.

Damon Linker thinks there were (I almost said are) two Fr. Richard John Neuhauses. The good one and the bad one. Very generously, Linker writes that “I’m not mistaken, the first, more thoughtful Neuhaus has reasserted himself in the past two years.” What a relief that is.

But what did that other one do? What are the second Neuhaus’s crimes?

Well, he encouraged “the American bishops to deny the sacrament of Communion to pro-choice Catholic politicians” and even conjectured along the lines that the Democrats being the party of abortion, “faithful Catholics” might have “a positive duty to vote for the Republican Party.” Linker imagines that this second Neuhaus might have “come roaring back, hurling theological invective at the new president, fretting about the end of democracy in America, rallying the religious right for the next round in the culture war — the battle to wrest the White House from the clutches of the culture of death.”

But consider this:

What man who “aimed to be a ‘thorough revolutionary’ during the 1960s and who later brokered a political alliance . . . in order more effectively to wage a cultural war” in the 1960s or any time since; what man who “walked a fine line between predicting that the culture war was on the verge of erupting into violence and actively inciting such violence” at any time between then and now; what man such as this is not a common member of the great Pantheon of Liberal Heroes on any given month?

Linker faults Neuhaus for being too passionate about his arguments, and too good at causing them to win the day. In a word he faults him for his sincerity — which is of course the very currency of 1960s emotionalism.

Linker’s hostility toward Neuhaus is clearly rooted in something other entirely than Neuhaus’ arguments or public teaching.

Most likely it is rooted sheer partisan bias. Which is pathetic. The man who gave him employment at a presitigious magazine, Linker decided to treat with psychoanalytic suspicion, with a bizarre lack of charity, on the very day this man died — for offenses against political propriety far exceeded by, say, a number of major formative figures in the life of the president-elect.

The tedium of the commentary on the Middle East sort of resembles Bob Dylan’s Idiot Wind:

Idiot wind, blowing through the flowers on your tomb,
Blowing through the curtains in your room.
Idiot wind, blowing every time you move your teeth,
You’re an idiot, babe.
It’s a wonder that you still know how to breathe.

I myself doubt that there will ever be peace in the Middle East until Our Lord returns, and of that date I am as unsure as anything on earth.

So let this Open Thread be free of polemics on said subject.

Keynes (right) with Harry Dexter White

The volume of Keynesian and neo-Keynesian economic prescriptions churning out of the newspapers and talking heads on TV right now is a something to behold, ain’t it? One shudders at the thought of the despondency that will greet the eventual failure of most of these remedies. We have a very unusual and in a basic sense unstable condition where the economic outlook is grim as grim can be, and yet there is an extraordinary outpouring of vague political hopes, much of the substance of which rests on a dubious foundation of Keynesian assumptions and platitudinous rhetoric.

But even leaving aside the specifics of the Keynesian prescriptions, I think it can be shown that they all participate in an error so fundamental as to undermine whatever merits they might otherwise possess.

In the Financial Times, though surrounded by some useful advice, we find this peculiar statement: “Keynes’s genius – a very English one – was to insist we should approach an economic system not as a morality play but as a technical challenge.” Here, concisely stated, is the error of modern economics, and indeed an aspect of the modern error itself.

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Learning of the kinds of exotic instruments used by Wall Street in the years before the crash can be a mind-boggling experience. First, of course, because of the complexity of these things; but also because of the staggering sums of “paper wealth” they produced. AIG and other firms sold credit default swaps in such massive numbers that there was at one point insurance on over $60 trillion in credit. In other words, they wrote so many CDS contracts that on paper they were insuring a credit market that exceeded, several times over, the GDP of the whole country. Try to wrap your mind around that.

Now they did this because each one of those swaps generated a steady revenue stream. Let’s say I hold a mass of Lehman Brothers corporate bonds, and I start to get wind the Lehman Brothers may not be in the best shape. So I call the AIG Financial Products office in London and place an order for swaps protecting $10 million in Lehman debt. For this I agree to pay AIG, say, 150 grand in premiums every year for five years. I feel good because my Lehman debt is now insured. AIG feels good because they have another revenue stream — my yearly premiums. Of course, I don’t even have to actually hold any Lehman debt to buy the swaps. Maybe I just think Lehman’s in deep trouble, and suspect that there could be a nice profit to turn if the poor company defaults. The CDS become a speculative instrument for me.

Nor is that all. Turns out you can purchase swaps on almost anything. Not just on companies, but on countries’ sovereign debt (CDS on Icelandic debt soared in the days before its banks failed), on municipal bonds (CDS for cities and states is soaring right now, making their budgetary issues even more severe), on basically any kind of debt instrument imaginable.

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I’m standin’ in the shadows with an aching heart
I’m lookin’ at the world, tear itself apart

— Bob Dylan, “Mississippi”

Here Dylan has given us a brilliant summation of the condition of the simple citizen in the face of the economic crisis that exploded in our faces in mid-September, and which may well prove more momentous than another calamity, another September, seven years earlier.

This thing has had the general characteristics of a Bob Dylan song: a long tale of human squalor and calamity, punctuated by flashes of biting humor and vaguely undergirded by a strange sense of sympathy, even a touch of paradoxical joy.

I can only speak, of course, as the simplest layman, and even that may be too bold. No doubt whatever I say about the crisis will include error, for the world of finance, despite by best efforts, remains to me mind-bogglingly opaque in many respects.

Nevertheless, I feel it is a perfectly defensible statement to say that we have beheld some astonishing sights in these last two months. What follows is a scattershot set of what can only be called notes. The notes of citizen watching the world tear itself apart.

At the height of the crisis in September, I asked a knowledgeable friend to try to explain what he was observing. He groped briefly for a way to convey it, then said, “Imagine you woke up and the sky was green instead of blue.” Another analogy he used was, “What if you looked, and found that the sun was rising in the west?”

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The airwaves are full of talk about how to revive or renew the GOP and Conservatism. Rightly so. But such a task must be undertaken on a number of levels. One level is that of intellect and scholarship; and renewal on that level will be a matter of introspection, careful study, and refinement of arguments. We need to go back and recover our roots.

Now what is it, exactly, that we aim to conserve? It is, I submit, nothing less than the American political tradition, which our Liberals have spent generations now attempting to derail. So our work of intellect and scholarship should begin with a recovery of that tradition.

Alas, the academy being what it is, many of us are left to grope in the dark as it were. We have few reliable guides.

One such guide is Georgetown’s George W. Carey, whose achievement is the subject of a useful little book recently released by ISI, an excerpt of which may be read here.

He was a great man — one of the greatest of our age. To my mind there can be no doubt that had the West heeded his prescient warnings in his famous Harvard Address, the world today would be a far better, saner, freer place. Many years before Soviet Communism fell, Solzhenitsyn had already discerned the deeper crisis: the “tilt of freedom in the direction of evil.”

Requiescat in pace.

Some months ago we learned something that should have surprised no one — at least no one in the least bit familiar with the stultifying intellectual paralysis that afflicts much of the Republic on the subject of Islam. We learned that various federal agencies, including Homeland Security, are expressly resisting the use of descriptive terminology — “jihadist,” “Islamic terrorist,” “Islamist,” etc. The reasoning here is plain enough: using these words, according to one Homeland Security memo, “glamorizes terrorism, imbues terrorists with religious authority they do not have, and damages relations with Muslims around the globe.” It goes on to counsel officials to “draw the conflict lines not between Islam and the West; but between a dangerous, cult-like network of terrorists and everyone who is in support of global security and progress.” The memo also makes a rather audacious assertion: “The fact is that Islam and secular democracy are fully compatible — in fact, they can make each other stronger. Senior officials should emphasize this positive fact.”

Unpacking the assumptions behind all this is a tedious business, but there is one assumption particularly worthy of note. It is the assumption of complete or final knowledge. The writer of this memo believes that he knows what Islam is, or more importantly, what it is not: and believes it with sufficient confidence as to counsel against giving even a contrary impression. Islam is not terrorism; there is no natural association between the two.

This is something that has long troubled me. To assert that Islam is peaceful and terrorism unrelated to it, is no less sweeping an assertion than its opposite. But men who assert the latter — that Islam is war and that’s that — are invariably rebuked in the most strident terms. Even men who argue, with greater care and nuance, that while Islam is not war merely, it cannot be overlooked that Islam contains a unique tradition enjoining aggressive war — even these men are rarely well-received in polite circles. There is a troubling irony here, which the memo aims to make policy: It is allowed that a man may pronounce on the true nature of the Islamic religion, so long as he pronounces it peaceful.

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The debate over immigration, when it ranges over the subject of costs and benefits, tends to favor anodyne abstractions and economic postulates. The costs of securing the border and, by attrition, reducing the illegal immigration population include conjectures about economic decline, about the loss of our prestige as a welcoming nation. The benefits, meanwhile, generally take a similar form: cheap products, fluid labor, corporate profits, etc.

There is a place for such speculations and conjectures, to be sure: no discussion of immigration policy would be complete without them.

How much more inadequate is the discussion when it neglects to concrete human costs, like Ft. Myers’ police office Andrew Widman, shot dead early Friday morning by an illegal alien outside a night club?

This too must be part of the debate — along with all the other murders, rapes, assaults and burglaries committed against Americans by foreign nationals trespassing upon our land, to the pristine insouciance of our political elites who favor those easy and anodyne abstractions.

John Zmirak has written a graphic novel, which recapitulates Dostoevski’s great episode from which it takes its title. This grand inquisition takes place in Rome, its protagonist is an African bishop, and the inquisitor is a most unlikely personage. The dialogue is a powerful and evocative blank verse, and the artwork is beguiling. I am by no means an expert on graphic novels, but this one is well worth a read.