While we are engaged in the typical American habit of self-flagellation and assignment of blame for the attacks of 9-11-01, I am reminded of an only partly facetious rule of thumb from the private sector in the form of the “five stages of a project”: (1) excitement and euphoria, (2) disenchantment, (3) search for the guilty, (4) punishment of the innocent, and (5) distinction for the uninvolved. Not a pure analogy, but close. Actually, prior to the prostitution of almost everyone involved in the ongoing pandering to the duplicity of former anti-terrorism “czar” Richard Clarke, there was some hope of productive work from the Commission, but the expectation that we can “get to the bottom of it” with conversation about what we knew and when we knew it is hopelessly misguided. The “bottom of it” is that there are two types of thinking about the War on Terror—pre-9-11 and post-9-11—and there is absolutely no objective way to put ourselves back in the pre-9-11 thought box, because everything, and I mean everything, changed on that day. Why can’t we understand this? When will we grasp the fact that we must have a new way of thinking about U. S. engagement in the world, new ways of thinking about pre-emption and just war theory, about whether or not there must be an identified nation-state as the enemy in a state of war, about our long-standing relationships with our Middle Eastern “friends”, about the degree to which we must merge domestic law enforcement and intelligence, about how much legal “due process” is owed those who intend harm to Americans, indeed, about whether or not the U. S. Constitution is being treated, as some have suggested, as tantamount to a suicide pact? (For an instructive view of the pre-9-11 mindset, I recommend Richard H. Shultz’s article in the January 26, 2004 issue of The Weekly Standard, wherein he outlines nine reasons why, for example, a “seek and destroy” mission against al Qaeda prior to that day was considered strategically unthinkable and politically unpalatable.)Even more importantly, we must think seriously about why we can’t openly discuss these issues in an atmosphere of presumed good intentions. Have we lost this capacity for intellectually honest introspection? Have we become so cynical and so acclimated to the presumption of bad faith that we cannot expect integrity? For example, am I in the minority in being disturbed by the apparent fact that a large number of people actually believe that the Iraq war was “a scheme hatched by Bush down in Texas for political purposes”, that the war is mainly about control of Iraq’s oil and war profiteering by Bush/Cheney’s corporate friends, or that Osama bin Laden has already been captured and Bush is merely waiting for the politically opportune time to announce it? I am reminded of the late Christopher Lasch’s 1979 book, The Culture of Narcissism, in which he laments “American life in an age of diminishing expectations”, and I fear that the most devastating loss of expectation is that of the capacity for mature republican citizenship in the face of a significant challenge to our civilization.

As an investment advisor, I am frequently asked about the immediate direction of the securities markets, and my answer has been, and will no doubt continue to be, that no markets are safe in a Presidential election year, much less one that is being conducted while in a state of war. Markets abhor uncertainties, so how can any rational investor not be extremely nervous in the current whirlwind of uncertainties in every element of our economic and political life? However, aside from the constant threat of the uncontrollable surprises of war, there are some areas in which we have some semblance of control, primarily in the policy and political arenas. For example, even if you don’t worry about which of our enemies or other foreign leaders prefer Kerry over Bush, at least you should worry about how the securities markets would discount an apparent victory by Kerry in November, not a totally irrational notion. In addition, major issues of importance in economic policy are under deliberation, and the outcomes of these debates are far from benign. To name a few: tax policy, mainly the permanence of the Bush tax cuts; trade policy, and the avoidance of protectionist expediencies designed to stem the job outsourcing scare; monetary policy, primarily the avoidance of the threat of resurgent commodity inflation; the constant demagoguery over the size, causes, and impact of the budget deficit; and the incessant bashing of corporate leaders through such overkill as the Sarbanes-Oxley law, the subjecting of corporate governance to political processes, and other anti-competitive rules and regulations. Meanwhile, the Barney Franks of the world are lamenting that our problem is “too little government”, the new leader of his party provides a de facto “amen” with his policy priorities, and, guess what?—we have an apparently equally divided electorate. Protectionism and paternalism are losers, and “industrial policy”, in which resource allocation is determined by government, was discredited long ago, but what is missing is a loud and consistent message that properly identifies these failed strategies and aggressively advances the “opportunity society”. A big part of the responsibility for this message belongs to the Bush administration, and I’m sure the campaign will catch up, but a major responsibility also lies with business leaders, who seem as a group to be too much on the defensive, overly protective of their special interests, and prone to look to the administration for “cover” on these issues.

Most Pilgrim subscribers know that I am pretty heavily involved in public education reform and, in my work in this arena, at least one Texas teachers’ union has described me as a proponent of education “privatization”. An interesting characterization, no doubt intended as a pejorative in my case, and I assume it is assigned to me because I am a long-time proponent of school choice. But it caused me to think more deeply about the ideas underlying much of the debate on reform of the delivery of public services generally, whether health care, education, social services of various types, postal services, etc. Basically, where is it written that high quality public goods cannot be delivered by market-based delivery systems, and what is the reason for the seemingly innate aversion to this innovation? As TV personality John Stossel has noted, the media consistently attempts to convince us that the public, non-profit world is warm and caring and totally devoted to the public good, whereas, the greedy, for-profit world is involved with exploitation of the weak. (To quote the head of the American Federation of State, County and Municipal Employees: “we refuse to be marketized…”, and Ted Kennedy: “What we will not tolerate is the Republican efforts to privatize Medicare”.) One of Stossel’s favorite illustrations is to juxtapose Mother Teresa and financier Michael Milken, and pose the question, which one really helped the most people? Think about it.A good treatment of this debate is by Frederick M. Hess, in his “Making Sense of the Public in Public Education”, in which he defines the various conceptions of “public”, and refocuses the question on the best way to deliver the public goods intended by a particular service, so that the basic concern of public consensus becomes the objective of the service, not its method of delivery. This is a debate that will not go away, and will become more heated as globalization continues to drive down costs and place increasing pressures on governments at all levels to compete for capital and human resources. Only fools, Luddites, and the protectionist left can rest assured that they will not ultimately be subjected, directly or indirectly, to the dynamics of competition.

In the annals of instruction on leadership and statecraft, Niccolo Machiavelli’s The Prince (1513) was the break from the idealism of the virtues of antiquity and Christianity and the handbook for pragmatists and realists more concerned with the ends than the means of the preservation and advancement of the interests of the modern state. In previous issues, I have highlighted portions of James MacGregor Burns’ Leadership on the difference between transactional and transformational leadership, and the difference it makes. Now comes The Modern Prince, by Carnes Lord, which I am now completing. Basically, it is a tour of the “best regime” theories of the Greeks, the theories and best practices of a number of successful leaders, including the American Founders, some of the wisdom of Burns with a little of George Wills’ “statecraft as soulcraft” added, and some practical ideas on approaches to some of the most challenging leadership problems of the 21st century. In the end, Lord is a small “r” republican in the tradition of our founding, he shares my bias toward transformational leadership and the practice of “soulcraft”, and he offers much to ponder as he places Machiavelli’s lessons in the current context. Well done.