Opinion

Nicholas Wapshott

Yes, there is a better way to run a railroad

Nicholas Wapshott
Dec 28, 2012 15:19 UTC

Before we consign Mitt Romney and the whole of his failed program to the trash, it is worth recycling one of his proposals that has considerable merit: the privatization of Amtrak. Passenger railroads have rarely if ever made money. Even at the peak of the Railroad Age, the ferrying of humans rather than freight was a money-losing enterprise designed to add allure to the more mundane but profitable business of hauling goods. Amid the failure of private enterprise, however, a clear need was exposed for an environmentally friendly passenger service that linked city center to city center.

Human rail transport was considered so desirable, and met such a public need, that when the free market failed it was considered unconscionable to simply abandon the idea as a noble experiment that failed. Out of the ashes of the free enterprise rail system was salvaged a truncated nationalized railroad network, Amtrak – and what an awkward, unloved, poorly run travesty of a public service it has become. The heir to the romantic experiment of the iron horse and railroad barons that opened up the continent and funneled pioneers and investment into sparsely populated spaces has become a faded, complacent, dowdy rail system that would not pass muster in the Third World.

Rescuing the best of the passenger rail service so it will earn at least part of its keep for the rest of the century offers a conundrum that cuts to the heart of the argument about the border between the public good and the free market. Like the provision of universal healthcare, social security and welfare, there is no easy way to match the evident public benefit of a rapid transit rail system to the failure of the free market to provide one. The quandary is made more confused because, while railroads no longer compete with one another, they do compete with airlines, cars and buses.

The easy laissez-faire solution would be to withdraw the federal subsidy – currently at $1.4 billion per annum– forthwith, let Amtrak go bust and sell the assets in land and plant to the highest bidder, who most likely would make no attempt to restore passenger rail services. But that is to throw away a rare public resource that, given the right management and inspiration, could offer a green and convenient alternative to plane and bus travel, delivering vast numbers of passengers in speed, comfort and safety.

Amtrak has had 41 years to establish a high-level service that travelers would be eager to buy. But successive Amtrak boards and managements have miserably failed to live up to their obligations to the American people, who are not only their customers but, as taxpayers, their owners. They have also betrayed those who argue that a publicly owned and administered utility need not be run on Soviet lines, deaf to complaints and contemptuous of its users. In countries like Japan and France, where governments spend freely on railroads, the public is well served. But the reluctance of Congress to spend the vast amounts of money needed on the American system leaves little room for optimism that a system wholly funded by the state will ever come about. Barack Obama’s expansion into high speed rail is a gamble that may well end in an expensive, unfinished line to nowhere.

After Newtown, guns are one more rift in the GOP

Nicholas Wapshott
Dec 19, 2012 18:02 UTC

When political parties lose after a bitterly fought electoral battle, they prefer to lick their wounds in private. The glare of publicity is not helpful in exploring what went wrong and charting a fresh course. The Republicans, however, find their election postmortem taking place in the full public gaze. When it comes to the most urgent issue confronting the nation, the fiscal cliff, they face an invidious choice. They must decide by Dec. 31 whether to persist in the stance they adopted at the election, saving the ultra-rich from higher taxation, or to raise taxes on all Americans. If they hold firm, they will be blamed for levying $1,200 a year on every middle-class family. That is not good news for the party of low taxation.

If their fiscal cliff dilemma were not bad enough, since the slaughter of the schoolchildren in Newtown, Connecticut, Republicans are set to defend a challenge to the Second Amendment’s right to bear arms. Concerned, angry Americans are asking why lawmakers have failed to protect them and their children from arbitrary execution. The Republican leadership must now choose whether to join the president in finding a way to avoid similar massacres or face the electoral consequences. If they get that pivotal decision wrong, they risk being cast as coldhearted villains, out of touch with the moderate voters they need to win back the White House and the Senate.

Little wonder that Republicans backed by the National Rifle Association have made themselves scarce. Finding a Republican legislator to appear on camera to defend the status quo is as hard as finding someone to argue that hard drug dealers perform a valuable public service. NBC’s Meet the Press contacted all 31 NRA-backed senators for comment, and every last one kept his head below the barricade.

Central bankers have abandoned Milton Friedman

Nicholas Wapshott
Dec 17, 2012 18:38 UTC

It is a cruel irony of fate that 2012, the year that celebrates the centennial of Milton Friedman’s birth, is the year that marks the end of his preeminence as an influence over economic policy. Since the emergence in the early 1970s of stagflation – a corrosive combination of lack of growth matched by inflation in double figures – Friedman’s dictums on the causes and cures of rising prices have been the mood music behind management of many leading economies. Since the Great Recession took hold, however, the priorities of government economists have evolved, and once more growth and employment are emerging as the prime goals of public policy.

In the 33 years since Paul Volcker was made Federal Reserve chairman by President Jimmy Carter in 1979, Friedman’s idea that inflation is the economy’s greatest danger has ruled the roost. So long as inflation is kept at around 2 percent, unemployment has been allowed to find its own level. But times have changed. At the first meeting of the Federal Reserve since Barack Obama’s re-election, Federal Reserve Chairman Ben Bernanke has made the creation of jobs a principal aim alongside keeping inflation in check.

In practice, this means interest rates will not be raised so long as unemployment remains above 6.5 percent and inflation is forecast to remain below 2.5 percent. With this tap on the tiller, Bernanke has quietly dispatched the Age of Friedman, replacing it with a policy that harks back to the Keynesian days when “full employment” was the sole target. (Technical note: In economics, “full employment” does not mean when everyone is employed; to allow for the churn as workers move among employers and other adjustments to the labor force, “full employment” is usually deemed to be when 94 percent to 97 percent of those seeking jobs are employed.)

Newtown: Family drama as national tragedy

Nicholas Wapshott
Dec 14, 2012 23:31 UTC

We may never come to understand exactly what was on the crazed mind of Adam Lanza, the man identified as the Connecticut gunman who set out from his home with murder in his heart. All we know, based on reports, is that this troubled young man had an issue with his mother, a schoolteacher in Newtown, Connecticut, that so enraged him he drove with a .223-caliber assault rifle and at least two other guns to attack in cold blood  an elementary school where she taught.

By mid-morning break at the Sandy Hook Elementary School, a reported 20 children and six adults were also dead,* pointlessly killed as they went about their peaceful business of teaching and being taught. As a nation, all we are left with are chilling pictures of frightened schoolchildren clutching each other in a crocodile line, weeping in fear and in horror at what they have just witnessed.

We are left wondering, what was Lanza thinking? Why should so many suffer for his agitated state? Why does a possible family quarrel end in a massacre of unrelated innocents? What price must we continue to pay in human lives to protect the Constitution’s apparent guarantee for us to bear arms?

Is conservativism going extinct?

Nicholas Wapshott
Dec 12, 2012 17:40 UTC

There was so much cacophony at the Republican National Convention in Tampa this summer that some unscripted remarks were not given the prominence they deserved. One of the most prescient, in light of Mitt Romney’s defeat, was this from South Carolina Senator Lindsey Graham: “We’re not generating enough angry white guys to stay in business for the long term.” Graham’s bleak demographic assessment of the conservative future was confirmed by David Bositis, of the Joint Center for Political and Economic Studies, whose harsh verdict was that the “Republican Party base is white, aging and dying off.”

Has the GOP really become a redoubt for “angry white guys”? Will Republicans put themselves out of business by not appealing fast enough to young voters? To put it at its most stark: Are conservatives going extinct? Graham’s view was echoed this past weekend by the Republican sage George Will. Pondering whether the Supreme Court will declare gay marriage legal, he said, “There is something like an emerging consensus. Quite literally, the opposition to gay marriage is dying. It’s old people.”

The problem with many aging Americans is that their reactionary views are out of sync with those of women, people of color, immigrants and gays who make up the Democrats’ election winning “rainbow coalition.” As the 2012 results show, when it comes to social issues ‑ women’s rights, such as equal pay; women’s health, including contraception and abortion; the rights of racial minorities, including basic elements of democracy such as access to the ballot; immigration, both legal and illegal, and equal rights for children of illegals; gay rights and homosexual marriage ‑ the Republicans fiercely defend the status quo. And the older the Republicans, the more reactionary they tend to be.

The crumbling of the Murdoch dynasty

Nicholas Wapshott
Dec 4, 2012 22:59 UTC
Rupert Murdoch has had a rough few weeks. He had to race to Melbourne, Australia, to visit his 103-year-old mother, Dame Elisabeth, who has died in Australia.* There is nothing like the death of your mother to remind you of your own mortality.

Then last month the political party he supports and largely owns lost the election. When you have Sarah Palin, Mike Huckabee, Roger Ailes, Karl Rove, John Bolton, Liz Cheney, William Kristol, Dick Morris, Oliver North, Rick Santorum, and Newt Gingrich on the books and have all your media properties conduct a virulent, ad hominem campaign against the president, then watch the Republicans lose so convincingly, it must be hard to know where you went wrong.

Then on Monday Murdoch announced his reluctant splitting of News Corp. in two, dividing the company between News Corp.–containing the mostly hard-copy waning press properties he dabbles in as an expensive hobby–and Fox Group, made up of the money-making media properties, like the Fox movie studio, the Fox TV network, and Fox News, that the company’s non-family and therefore non-voting shareholders prefer. The restructuring was forced upon Murdoch in the wake of the revelation that phone hacking had become quotidian at his British newspapers, a crime of which, despite his addiction to editorial micromanagement, he has always denied all knowledge. Had he not taken the initiative and divided his company, the report by Lord Justice Leveson on corruption in the British press might have demanded a more painful remedy.

To stem the damage being done to his company’s profit centers, and to appease one of his biggest sleeping shareholders, Saudi Prince Alwaleed bin Talal, Murdoch closed the News of the World, the scandal rag he used to intimidate those who did not toe his line, and he lost his chief executive in London, Rebekah Brooks, who awaits trial for interfering with the course of justice, among other charges. Almost all the other 86 arrested so far, except those they are accused of bribing, are former Murdoch employees.

Here’s the path around the fiscal cliff

Nicholas Wapshott
Dec 3, 2012 18:40 UTC

The “fiscal cliff” talks offer a chance to rebalance the American economy so that the long years of living beyond our means — spending too much and raising too little, paid for by borrowing from the Chinese – will be brought to an end in an orderly fashion. As we have seen from the pitched battle between the White House and the Republican House leadership, finding the right balance between tax increases and spending cuts is not easy.

The guiding principle for both sides, however, should be primum nil nocere: First, do no harm. Having survived the worst financial crash in 80 years, the United States should do nothing to put the fragile recovery at risk. Since the turmoil of 2008, economic growth remains positive but feeble, which is more than you can say for comparable economies, such as the eurozone and Britain, that have battened down the hatches and nosedived into slump. The 17 eurozone countries are deep in recession with joblessness at more than 11 per cent; last quarter the U.K. briefly emerged from a double-dip recession of its own making but is expected to enter a triple-dip recession by the end of the year.

If we get the fiscal cliff bargain wrong–too-large tax increases combined with too-deep, too-early cuts in public spending–we risk tipping the economy back into the painful recession we have just escaped. In Washington, the trade-ff between tax and spending is portrayed as a quid pro quo, with Democrats demanding tax cuts for everyone except high earners and Republicans pressing for deep cuts in Medicare but not defense. The politicians have badly framed the argument. Think of tax and spending — if you will excuse the battered simile — as the knobs on an Etch-A-Sketch. To draw a perfect circle entails turning both knobs together at exactly the right rate.

Barack Obama and the lessons of Lincoln

Nicholas Wapshott
Nov 20, 2012 18:56 UTC

You have got to admire Steven Spielberg. He has taken the well-worn story of Abraham Lincoln’s final days and turned it into a pointed piece of contemporary political commentary. When he first met Doris Kearns Goodwin back in 1999, well before she had completed her masterly account of the Lincoln White House, Team of Rivals, it seems Spielberg decided to film an episode in Lincoln’s life that would ring true at the time of release many years later. He chose to concentrate his “Lincoln” movie on a pivotal time in the presidency: the final five months when Lincoln had just been re-elected, when the Civil War was all-but won, and when the fractious House was undecided about whether to fall in with Lincoln’s stated aim of abolishing slavery.

There is an obvious comparison to today’s politics, with President Barack Obama newly re-elected and facing a similarly hazardous short period to dragoon a recalcitrant and largely hostile House to do his bidding over taxes, entitlements and spending. Where Lincoln was working against the clock to ensure the Civil War would continue long enough to prevent Southern pro-slavers from returning to the Union Congress to wreck his plan to outlaw slavery, so Obama is teetering at the edge of a similarly perilous precipice. And just as Lincoln was surrounded in government by his old rivals, so Obama has as loyal lieutenants his former challengers for the Democratic candidacy, Joe Biden and Hillary Clinton.

As Spielberg’s movie shows, Lincoln rejected his close colleagues’ assessment that the daunting arithmetic of the divided House meant he would fail to force through his emancipation measure. Lincoln’s towering achievement is so well known to make a spoiler alert unnecessary. Through guile, arm-twisting, argument, bribery, and bullying, the president pressed on and, while he kept members of a Southern peace delegation kicking their heels, the requisite votes were found to convert his Emancipation Proclamation of 1863 into law. Whether Obama can pull off a similar coup and save America from a ruinous combination of high taxes and deep public spending cuts remains to be seen.

Conservative media eat their own

Nicholas Wapshott
Nov 12, 2012 18:41 UTC

In the civil war that broke out between Republicans the minute the election was called for President Obama, media conservatives have turned on media conservatives. But none have shown more recklessness than Andrew Sullivan, chief American columnist for Murdoch’s Sunday Times in London, who on “Real Time With Bill Maher” cheerfully chewed off the hand that feeds him. “The Republican Party has to say, ‘We have no part of Fox News,’ ” Sullivan declared.

Attacking Murdoch’s grip on the post-defeat Republican debate through the strict party line dictated by Fox News, the Wall Street Journal and the New York Post, the clearly agitated Sullivan said, “The media-industrial complex on the right is so lucrative they don’t want to lose it. And it is now controlling a political party. That has to be severed. Fox News has to be demonized and cut off.”

Sullivan is no leftie. An avowed Reagan and Thatcher fan who moved to Washington  from Britain and became a U.S. citizen to more closely involve himself in conservative thinking, he is the moderate right’s equivalent to that other naturalized Brit, the late Christopher Hitchens. [r2] Sullivan is smart, eloquent and has championed individual rights and attacked social conservatives, not least because he is openly gay.

A lost chance to overturn Keynes with the fiscal cliff

Nicholas Wapshott
Nov 9, 2012 23:27 UTC

If free-market economists were serious about their ideas, they would surely be arguing vociferously right now for the economy to plunge over the fiscal cliff. But where are the laissez-faire economists lining up to urge John Boehner to lead his Tea Party tribe in the House to veto all compromise and put our money where their mouths are? They are strangely silent. Instead, the debate is about how Keynesian we should be.

A reminder for those who haven’t read John Maynard Keynes lately, or who have never read Keynes but oppose him anyway out of principle, he was a British math whiz who transformed economics forever with the publication of his “General Theory” in 1936. It suggested three ways to put wind in the sails of an economy in the doldrums. The problem, Keynes suggested, was that there was not enough demand for goods and services, and that governments should take a lead in stimulating spending to encourage business leaders to invest and create jobs.

Keynes’s first prescription was for central banks to make borrowing as cheap as possible with low interest rates. This deters saving and makes new investment in business activity more attractive. Businesses will employ workers who go out and spend their earnings. After studying the roots of the Great Depression, Milton Friedman and Anna Schwarz blamed the economic slump on money being too tight for too long. Such was the fear of returning to the deflationary devastation of the 1930s that successive Federal Reserve chairmen have taken this lesson to heart. Faced with a recession in 2001, even Alan Greenspan, a lover of the free market who flirted in his youth with the Lioness of Laissez-Faire, Ayn Rand, kept money rock-bottom cheap for the whole of the first decade of this century.

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