One of the most fascinating aspects of the blogosphere is the phenomenon of the cross-blog conversation. It becomes even more interesting when the participants in the conversation are at the level of John Taylor and David Altig. If you’re not aware of them John Taylor is a Stanford econ professor, frequently mentioned as a possible successor to Ben Bernanke as chairman of the Federal Reserve and David Altig is the senior vice president and research director at the Atlanta Fed. Taylor is perhaps best known for the Taylor rule, a prescription for a strictly rule-based Fed policy in which the Fed would change the nominal interest rate based on inflation and GDP.

The first salvo in the conversation was an op-ed from Dr. Taylor in the Wall Street Journal which urged a twinned long-term approach for restoring growth to the U. S. economy with a fiscal component that included entitlement reform and a monetary component that encouraged more rules-based policy on the part of the Fed. Dr. Altig responded by asserting that the Fed of the early Aughts did, indeed, conform to a rules-based policy. Dr. Taylor then retorted with citations that suggested that Fed policy of the period (which differed from the Taylor Rule) was responsible for fully two-thirds of the housing bubble.

That presents an intriguing counter-factual for contemplation. Presumably, no housing bubble, no financial crisis. However, since much of the economic growth of the Aughts and, particularly, the growth in employment was tied closely to the housing bubble, wouldn’t even worse employment growth than actually have occurred produced a political crisis? 2004 certainly would have looked a lot different without a housing led recovery.

I’m not suggesting that the Fed intentionally set out to get George W. Bush re-elected or that the Fed should act for such reasons, merely that incumbent presidents are the beneficiaries of Fed policies that produce near term growth even if the long term consequences are ghastly.

Professor Bainbridge bangs a drum I’ve been beating here for some time and writes on corporate fiduciary responsibiliy, his area of academic research:

General welfare laws designed to deter corporate conduct through criminal and civil sanctions imposed on the corporation, its directors, and its senior officers are more efficient than stakeholderist tweaking of director fiduciary duties. By virtue of their inherent ambiguity, fiduciary duties are a blunt instrument. There can be no assurance that specific social ills will be addressed by the boards of the specific corporations that are creating the problematic externalities.

When you insist that corporate directors’ fiduciary responsibilities be extended to address all sort of social goods, the good of society as a whole, while absolving legislators and regulators from any responsibilities whatever, you arrive at a destination very much along the lines that we see now. Large corporations do pretty much whatever they care to, with a confidence rooted in experience that they’ll be allowed to skate on their responsibilities, small companies will either have their doors closed by regulators or close their doors themselves because they can’t compete under a set of regulations that were written with the biggest companies in mind, entrepeneurs will be discouraged from forming new companies, and regulators will look the other way at the most egregious offenses of the largest companies, not wanting to threaten their prospects for future employment.

Contrariwise, I agree with Professor Bainbridge:

The social obligation of business is to sustainably maximize long-term profits for shareholders. Nothing more. Nothing less.

that businesses whose managers can’t live up to these fiduciary responsibilities should be allowed to fail, and that regulators’ incentives should be aligned in such a way that they are more likely to satisfy their own fiduciary responsibilities.

They say it was the third heaviest snowfall ever here in Chicago but I was here in Chicago for the second heaviest and it was nothing like this. All night the wind howled and roared through the bare branches of the trees, punctuated occasionally by peals of thunder or a flash of lightning. “Thunder-snow” they called it. It wasn’t a snowfall so much as a nearly solid cloud of roiling snow, lasting all night, dropping between two and three inches an hour.

Every couple of hours I’d go out and shovel what had fallen since my last effort. It’s a lot easier to move three inches of snow than it is six or more.

When we woke up the next morning we were quite literally snowed in. The doors were blocked by the fallen and drifted snow. It took a while to work my way out of the house.

Clearing the walk down to the sidewalk took about forty minutes. After doing it I cam in and rested for an hour or so. Clearing the sidewalk in front of our house took another forty minutes. Another hour or so of rest.

By that time a sort of party was forming in the neighborhood. My wife and I went out and started clearing the snow from the street around our cars. Neighbors plowed each other out, helped each other dig their cars out.

After an hour or so of heavy labor our cars were freed. The Sauganash Community Association emailed us that their plows would start plowing our side streets around 10:00am on Thursday. We’ll see.

The Watcher’s Council has announced its winners for last week. First place in the Council category was The Razor’s Japan Will Not Be Saved Through Immigration. If you know much of anything about Japan you’re probably already aware of this.

First place in the non-Council category was Sultan Knish with Anglophobia or Islamophobia – What’s the Real Problem?.

You can see the full results here.

I’ve just published a foreign policy-related post at Outside the Beltway:

Compressing History

Whatever the outcome of the civil unrest in Egypt it won’t unfold over a weekend. In this post in a few sentences I sketch the histories of the French, Russian, and Chinese revolutions. There’s a dynamics to revolutions and the dynamics is such that we shouldn’t hope that what’s happening in Egypt becomes one.

Over the weekend my wife and I went to the Gorilla Tango Theater to watch a collection of five ten minute plays. It was something of a nostalgia trip for me—the theater very much resembled the theater I built and produced plays in more than forty years ago—audience seats on risers, slightly raised platform for the stage, lighting bar on a pipe across the front of the stage. I could seat about three times as many in my audience as GTT, my venue was three-quarter round, and my lighting had a bit more capability but the resemblance certainly took me back.

The plays varied in quality from excellent to complete mess. I won’t analyze them in detail. Suffice it to say that the play written by our friend (which is what we primarily came to see) was excellent.

If any of you are thinking of writing a play (and most of you probably are), here are a few tips for writing a ten minute play:

• Have an idea for a story that can be told in ten minutes. The Ten Commandments wouldn’t have been all that compelling as a ten minute play.
• A play with only one point of view is a monologue. If you’re only interested in (or capable of) expressing one point of view, why put it in the form of dialogue?
• Don’t have your characters tell the audience how they feel. Show them how they feel.
• Don’t tell your audience what to think. Show them why to think it.
• If your ten minute play starts at fever intensity with the actors shouting at each other, there’s no where left to go. Start quieter.
• Theater is the most collaborative of art forms. Not only is there the creator and the viewer (audience) but there’s a director and one or more actors. Anything you want to control you must write into your play. Anything you don’t write into your play will be beyond your control.
• Write about something you know or at least know of. For example, Chicago cops come in pairs (or more) and don’t routinely banter with perps.
• There are many literary forms: poem, short story, play, novel, essay, sermon, etc.. Very, very few of us can master any of them let alone many of them. There are only a very few Shakespeares or Pushkins. If you want to preach a sermon, a play is a lousy way to do it.

On a side note I can recommend Arturo’s Tacos in Bucktown. Order the tacos; don’t waste your time with anything else.

In the comments to one of my recent posts there was a series of interesting comments on something of a tangent that I think should be brought to the front page and expanded on. Michael wrote:

That’s a study someone should do, or maybe has done, by the way: how have Hollywood tropes affected the self-image of individuals. The “emotionless, ruthlessly-focused male” was invented in the 1960’s with the spaghetti westerns, I suspect. The Duke was never that kind of character. That notion gained traction with Clint Eastwood and Charles Bronson.

I’d be willing to bet that a huge number of men who had their formative experiences in the 60’s and 70’s latched onto this archetype. It’s been quite persistent I’d say in lit and movies, but sort of traveled down the food chain, becoming increasingly eye-rolling.

The new archetype is the Seth Rogan type. We’ll see more and more guys patterning themselves after that kind of character. It’ll be a long couple of decades.

to which sam responded:

I dunno. See, e.g., Kirk Douglas in The Bad and the Beautiful (1952). Interestingly, that film was about Hollywood — an industry ruled, until the demise of the studio system, by probably the most ruthlessly-focused, but highly emotional, group of male homo sapiens to walk the earth since the Borgias.

Michael rejoined:

Oh there were definitely earlier expressions of the type. But I think it rose to the status of a Hollywood go-to later with the iconic Clint. I suspect it had to do with the new role of women. The character type has an air of defensiveness about it, an armored emotionlessness that denies a capacity to cope and substitutes instead a blank emptiness, almost a catatonia.

The Duke, Bogie, Alan Ladd, they all expressed emotion, had feelings, and understood ambiguity. Clint and Bronson and that other guy whose name I forget and I’m too lazy to look up, all typified the new, unemotional, male. The male lead as almost a stick figure. Brittle.

Then came the brooding phase: Pacino, DeNiro on through DiCaprio. And now we’re well into the boy-man thing.

So, for those following along at home, that’d be complex man, comatose man, brooding man, and boy-man.

sam replied:

You might have something there. A Fistful of Dollars is based on Kurosawa’s Yojimbo, which itself was based on Dashiell Hammett’s Red Harvest. The “hero” of that book has no name, he’s just the Continental Op, he’s faceless, really. In Red Harvest he comes to this corrupt town and succeeds in cleaning it up by getting the rival gangs to bump each other off. I can’t recall that he expressed anything in the way of emotion as he set about the cleansing. Clint’s turn as the Man with No Name was pretty much the Continental Op in a serape.

There have been stoic heroes in American cinema for very nearly as long as there has been American cinema. William S. Hart began in Westerns at least as early as 1914. His characters were invariably stoic, forthright, and honest and they laid the foundation for Western heroes ever since. However, these heroes were not emotionless. Often quite to the contrary they were brimming over with emotions. Anger, love, outrage, revenge, jealousy. But they were carefully held in check because the world was a hard, dangerous place and, if you were to handle the challenges it presented, that is what you needed to do.

I think that sam is correct in looking to thrillers for antecedents to the crop of truly emotionless anti-heroes that began with the Clint Eastwood/Sergio Leone teamings, most notably the “Man With No Name” trilogy, a re-hashing of American westerns as dragged through Japanese samurai pictures and, as sam correctly points out, taking its theme material from Dashiell Hammett’s Continental Op stories.

A more recent recurrence of this character is Arnold Schwarzenegger’s Terminator.

The earliest real antecedent to this character that I’ve been able to identify is Alan Ladd’s Phil Raven in 1942’s This Gun for Hire. Ladd, however, did not make a career of nerveless characters like Raven—generally his portrayals were more complex, more human. And that’s a critical difference between “The Man With No Name” or Harry Calahan and Phil Raven. In no way is Raven to be considered admirable. Raven is psychotic. The Terminator is a machine.

I can think of earlier representations of emotionless men. For example, Alfred Abel’s Joh Fredersen in Fritz Lang’s 1927 masterpiece, Metropolis, is coldly rational, virtually devoid of emotion. And there are several representations of mechanical beings in that picture (mostly by Birgitte Helm in an eerie combination of sexuality and emotionlessness). But they are in no way heroes or protagonists. They are closer to being villains.

Over the years I think we have seen a transition in cinematic heroes from the stoic heroes of American westerns, hard men in a hard world, to Humphrey Bogart’s Rick Blaine or Sam Spade, damaged and disillusioned men in a disappointing world, to Dirty Harry Callahan or Paul Kersey, psychotic men in a psychotic world, to DeNiro and Pacino’s brooding anti-heroes in a sad and self-absorbed world.

If Michael’s right and with the rise of actors like Will Farrell and Seth Rogan, the prevailing style of hero may well be childish incompetents, presumably in a childish and incompetent world. It will, indeed, be a long couple of decades. I think I’ll go watch a Douglas Fairbanks picture.

I am completely in favor of the proposal that President Obama made in the 2011 State of the Union for a complete review of the structure of the executive branch with the aims of making it work better and cost less. Like any other human creation I don’t think it’s perfectible but I do believe it’s improvable. Indeed, I think that should go without saying.

However, comments like this one cited in E. J. Dionne’s recent column fill me with dread:

But this cannot mean just moving around government’s boxes, shifting this agency from one place to another, or merging that department with another. Max Stier, president and chief executive of the nonpartisan Partnership for Public Service, likes to cite the Sept. 11 commission report’s observation that “the quality of the people” in government is “more important than the quality of the wiring diagrams.”

“Washington is a city that likes to focus on the wiring diagram,” he said in an interview, because changing the diagram “feels like they’re doing something concrete when, actually, they’re avoiding the problems.”

If this is to be interpreted as “just hire the best people and give them the authority and latitude to work”, could anything be farther from the objective cited by John Adams (he was quoting James Harrington) and enshrined in the Massachusetts Constitution of 1780?

In the government of this Commonwealth, the legislative department shall never exercise the executive and judicial powers, or either of them: The executive shall never exercise the legislative and judicial powers, or either of them: The judicial shall never exercise the legislative and executive powers, or either of them: to the end it may be a government of laws and not of men.

However well intentioned a government of men rather than of laws will inevitably be a tyranny and corrupt. The objective of reform should be to produce a better government regardless of who is working for it not a government that requires the best and the brightest to function.

The New York Times has a round table of authorities discussion the subject of whether the financial crisis was preventable. I agree with Yves Smith:

Follow the money is a simple rule, and it’s one the commission should have heeded. Failing to do so led the commissioners to produce a wandering, ponderous description of things in the capital markets they don’t like.

but the view that most closely resembles my own is expressed by William Black:

In 2008, after it was useless, the Fed finally, under Congressional pressure, used its Home Ownership and Equity Protection Act authority to ban liar’s loans. If it had used its regulatory authority in a manner similar to how we used our authority in 1991 there would have been no financial crisis in the U.S. and no Great Recession.

That would not have required preternatural prescience. It would only have required that regulators do their jobs with the authority they’d already been given.

Why, then, didn’t regulators do their jobs? In my view the fault resides in that regulators’ incentives are not properly aligned and the scale of the U. S. system. Bureaucracies scale worse than linearly and the threshold size at which bureaucracies take on lives of their own, unmoored from their putative responsibilities is too easily met at the federal level.