“It is hard in this world to do well.  It is hard to do good.  When I hear a claim that an institution is going to do both, I reach for my wallet.  You should too.”–Former Treasury Secretary Lawrence Summers, in “Notable & Quotable”, The Wall Street Journal.

Former Treasury Secretary Summers reminds us of the folly of good intentions gone overboard without market discipline.  First, the question:  How can the virtuous American objective of widespread home ownership be best supported and the most adequate financing be assured?  Answer:  With creative capitalism, by chartering private companies as government sponsored enterprises with the mission of promoting home ownership.  Give them the credibility of a public/private partnership, with a social responsibility objective for financing access to “affordable housing” balanced with the profit motive, and make it tacitly clear that the government stands behind their capital market creativity so that they have unfettered access to the markets at subsidized rates.  And incidentally, allow the management of these companies unlimited lobby budgets and access to government policy makers.

If this reads like an invitation to witness a case study in terminal moral hazard facilitated by political cronyism, you’re describing the outcome of the Great Society brainstorm for the restructure of Fannie Mae and the subsequent chartering of Freddie Mac.  It took about 40 years for all of these good intentions to play out into the unintended consequences resulting in the inevitable bailout approved last month by Congress, but anyone with minimal insight should have forseen the eventual outcome. 

In fact, let’s give some credit where it’s due for the insightful and tireless reporting and editorial coverage of this looming disaster by The Wall Street Journal over the past six years.  For a recap of this coverage and its chronology, WSJ Editor Paul Gigot has recently written a great article, noteworthy as much for its restraint in condemnation of the cabal of cronies who collaborated in responsibility, protection, and apologies for the perpetrators and the debacle they created, and who were so critical of his publication for calling them out.  The culpability ranges across the spectrum of fellow travelers on Wall Street, in Congress, and in the mainstream media,  as Gigot characterizes this crowd, “…..journalists on the left,  pseudo-capitalists on Wall Street,  liberal Democrats and country club Republicans”. 

This history and this bailout are outrageous and scandalous, reflective of crony capitalism at least as bad as anything that has been witnessed in Russia since the fall of the Soviet Union, and I am disappointed that President Bush didn’t veto the bailout bill, as futile a gesture as that would have been.  But it will be compounded if we don’t put a permanent end to these kinds of monstrosities.  These two entities should be placed into receivership under the jurisdiction of a trustee beyond reproach, with authority to fully privatize them, issue a preferred security to the government so that the taxpayers are provided some possibility of recouping their “investment”, and wean them off the public subsidy on a definitive timetable not longer than five years–no more government line of credit, no more implied guaranty of liabilities by either the Federal Reserve or Treasury.  And then we should kill this idea of creative capitalism through government sponsored private entity forever. 

If the indictment of Senator Ted Stevens of Alaska doesn’t trigger a major turnaround and a cleansing of Republican Congressional leadership, then they are beyond hope.  This guy, Mr. Bridge to Nowhere, is the “poster child” for everything that went wrong with the Revolution of 1994 and the “earmark” culture spawned by the disastrous ”K Street Project” that began the downfall of the credibility of Republican leadership in Washington.  John Fund has it nailed in his column last week:  the GOP choice is between two models–the Stevens model, the motto for which could be his statement, “if we start cutting funding for individual projects, your project may be next”, or the Tom Coburn model, which is illustrated by the Oklahoma Senator’s crusade against earmarks, bloated spending bills, and the culture of parochialism that undermines the national interest.

Frankly and amazingly, it seems that it could go either way.  Coburn himself admits that far too many of his colleagues are unwilling to return to the principle of limited government.  Exhibit A is the farm bill, an embarassing $307 Billion monstrosity that doles out subsidies to the growers of every crop, including those in the top one percent of earners, in spite of the fact that national farm net income has increased by 56% over the past two years!  It passed with 81 votes in the Senate and 318 in the House, and almost half of Republican House members subsequently voted to override President Bush’s veto.  To his credit, John McCain opposed the bill, and issued this statement:  “It would be hard to find any single bill that better sums up why so many Americans in both parties are so disappointed in the conduct of their government, and at times so disgusted by it.”

His reputation for fiscal toughness may be one area in which McCain can gain some significant traction in the presidential race, but he will need to be much more outspoken on it.  I didn’t hear one word from him in response to the Stevens indictment.  He should have characterized this event for what it is–a shameful testament to a strategy and culture gone wrong, and moreover an opportunity to assume a strong leadership role in making his party’s choice for the Coburn model and its immediate turnaround on spending policy. 

If John McCain somehow defies the current odds and defeats Barack Obama in November, analysts might look at a particular moment as the turning point.  At no time and in no appearance has Obama revealed his worldview more vividly than in his appearance and speech before a reported 200,000 or more during his stop in Berlin on his recent grand tour of the Middle East and Europe.  I was so struck by a couple of the bites on TV that I printed and read the full text of the speech, and it was most revealing, not so much for any policy pronouncements, of which there were none of any significance, but rather because of what it revealed about the man and his disingenuous and dangerous message.

This speech could have been the transnational progressive manifesto, because it reflected the worldview, not simply of a liberal internationalist of which there are many in America across the political spectrum, of one who has no concept of how American power and purpose has shaped and led the free world we have known since 1945 and no appreciation of how American led power and politics will be necessary to insure free world leadership in this century.  From there, it goes without saying that he has no appreciation for the concept of American exceptionalism, which has informed and provided moral context for our foreign policy for over two centuries.  In short, there was in evidence no appreciation of the realities that make his “can’t we all just come together and get along” appeal a trip through fantasy land.  (David Brooks called it a “Disney” moment.) 

Does he really believe in “global citizenship” as an objective reality?  Does he think that the Berlin wall came down because “there is no challenge too great for a world that stands as one”?  Does he really think that the success of the Berlin airlift of 1948-49 to which he referred was a testament to anything other than the stubbornness of an American President, a Democrat no less, along with this country’s prowess and perseverance?  And does he truly believe that “this moment”, to which he refers on almost every campaign stop as a metaphor for his election as President, is the equivalent of a Godsend for the people of the world he addressed from Berlin?  If so, such naivete, such arrogance, such presumption and demagoguery, is fraudulent to his base of supporters and even worse than that, it may succeed.

“Truth eludes us if we do not concentrate with total attention on its pursuit………..truth is seldom pleasant; it is almost invariably bitter.”–Alexander Solzhenitsyn at Harvard University, June 1978.

The death this week of Alexander Solzhenitsyn eliminates one more among the few really significant personalities who, along with Reagan, Thatcher, Pope John Paul II, and Lech Walesa, converged on the world stage at a crucial point in time to finally defeat Soviet totalitarianism.  His emergence as a Russian dissident and novelist in the early 1960s provided transparency and moral condemnation to the horrors of the Stalinist regime during a period when there remained considerable sympathy for the communist model among fellow traveling leftists in the intellectual class in Europe and the U. S.  Some of his most outspoken criticism, however, was of the crisis of moral courage in the West, and he continued to deliver a message of warning to the West of the need to arrest its decline into political weakness and cultural decadence. 

Never was this message more eloquent or forceful than in his commencement speech at Harvard in June 1978, entitled “A World Split Apart”.  This is a classic analysis of what he calls the decline of civil courage in the West brought about by the primacy of materialism and consumerism, destructive and irresponsible freedom, and the dominance of a humanism which has elevated personal autonomy to the exclusion of our moral heritage.

It is ironic that he had achieved a popular and official revival of sorts in Russia in recent years with the blessing of President Vladimir Putin, a period during which all indications are that the country is returning to autocratic rule and a tendency toward some of the forms of tyranny that he spent his entire life opposing.  In fact, it would have been greatly beneficial to the Russian people and the country if he had been able to lead a “truth commission” to fully investigate, disclose, and enable some semblance of closure on the murderous lies and systematic terror of the Soviet regime.  He might have been the only person with the moral authority to have led such a movement.