Recently the news cycle was captivated by the report from the U. S. Census Bureau that, for the first time in U. S. history, whites of European ancestry account for less than half of new-born children, supposedly marking a tipping point for the economy, the workforce, and politics.  Commentators marked it as a major turning point for American society, and it might well be, but it shouldn’t.

In fact, this milestone should not be of much significance at all.  For if we are the America in which race and ethnicity aren’t decisive in the distribution of public goods; if we are the America in which assimilation into American life, language, citizenship, and founding principles has top priority; and if we are the America that, as Teddy Roosevelt said, has no room for what he called “hyphenated Americanism”, this recent trend in demographics shouldn’t matter.

Unfortunately, in the America that we have become, these statistics do matter.  In the multicultural America and the welfare entitlement state America, we count by race and ethnicity to allocate the intervention of government into the various racial and ethnic group grievances advanced by hustlers with vested interests; in the affirmative action America we discriminate in employment, public contracting, and college admissions based on the “compelling state interest” of racial and ethnic diversity; and we continue to disaggregate accountability for student achievement in public education based on racial and ethnic groupings.  Moreover,  we filter every public decision, such as decennial legislative redistricting and the use of voter ID to protect the sanctity of the rule of “one man, one vote”, and many private ones, such as the allocation of credit by financial institutions, through the judicial scrutiny of the perceived “disparate impact” on racial and ethnic minorities, whether or not there is any malevolent evidence or intent, while ignoring such blatant abuses as the observed intimidation of voters at polling places by leftist thugs.

So we reap what we sow, and race does matter……to racists.  As Thomas Sowell has so well noted, demography is not destiny, but unless this fashionable Balkanization of America is stopped soon, along with the growing double standard in the rule of law, demography will become destiny and a tragedy for all.

As a retired banker and one who struggled mightily through the Texas banking debacle of the mid-1980s, the current debate over the “too big to fail” problem resonates with me.  I served as CEO of a sizable banking organization, but one that was not considered too big to fail, and I watched other banks that were so anointed receive preferential treatment from regulators who were woefully deficient in competency to deal with the massive asset valuation collapse of the time.

Tom Frost, of the venerable San Antonio banking franchise that bears his family name, has recently written a perceptive essay in the Wall Street Journal in which he decries the “too big to fail” moral hazard that plagues the banking regulatory environment, and suggests that the solution to the dilemma is to separate the two business cultures in commercial banking–the basic business of intimate depository and credit relationships with local and regional customers and the higher risk business of proprietary trading in global financial markets which threaten the first culture if they are allowed to exist within the same institution.

There was a time, 25 years ago, when I was supportive of the integration of these two cultures in the belief that the market was a corrective to abuses, but my experience in the 1980s and the continuing concentration of commercial banking assets in institutions that are so dominant as to represent a compelling moral hazard have changed my view.  An institution too big to fail is too big, and we compound the problem by attempting to identify those institutions, bank and non-bank,  that embody “systemic” risk, as the Federal Reserve is attempting to do,  thereby signaling that these will have priority with government assistance in the event of impending failure.  This won’t do.  It actually increases the problem of moral hazard and is a further perversion of the regulatory overkill already embodied in the Dodd-Frank law.

As Allan Metzler of Carnegie Mellon University has noted, we need more capital in banks, not more rules, which are an inadequate substitute.  Bankers can’t add value without taking on risk, but commercial banks need to be able to respond to their customers without the burden of regulatory micromanagement, and with clear capital requirements that penalize them for excessive risk.

In addition, we need deposit insurance reform.  Thirty years ago, FDIC insurance was $40,000 per account, and it was increased to $100,000 on a stealth basis in 1982.  Now it is $250,000.  The insurance of depository accounts was never intended to cover more than the funds of a modest household.  Bank deposit reform has been elusive, but we should take it on, and it should require that institutions pay a risk-adjusted premium for insurance of accounts, in addition to introducing a sliding scale of coverage for depositors beyond a modest minimum coverage per account.

The bottom line is that Dodd-Frank should be recognized as a gross regulatory overreaction to a crisis and repealed.  Then we can start over with the proper recognition of the characteristics of the two banking cultures, as well as revised capital requirements and deposit insurance reform that provide the proper incentives and consequences for risk management.

Mary Eberstadt of Stanford University’s Hoover Institution wrote a very insightful essay for the April 2, 2012 issue of National Review entitled Sexual Counterrevolution, which I highly recommend.  In it she contends that it is not unthinkable that the range of conflicts now raging over the social issues, in which the conflict over who will decide the final legacy of the now half century of sexual revolution, will in the end result in a counterrevolution.  If she is at least partly correct, it goes without saying that this will have momentous implications for our politics, the economy, and the entire public and private sphere, and she believes that the intellectual struggle over all these imponderables has only just begun, for after all and needless to say, there are those who think this revolution has been a benign force in the world and those who think otherwise.

As Eberstadt emphasizes, nothing arouses distaste in reasonable people, those she calls the “voices of reason coalition”, quite as efficiently as the “social issues”, of the advocates on all sides of which the voices of reason ask, “can’t they just go away?” and “why are we talking about this stuff when the economy is in the tank?”  Well, they won’t go away, they shouldn’t go away, and Eberstadt makes it very clear why this is so.  First of all, the revolution isn’t over by a long shot and its premises are not settled doctrine; second, and more important, with the passage of time, it has become increasing clear that the sexual revolution has imposed significant costs on individuals and society that no one predicted when it was started.

And please understand that this is not a theology matter, but one of secular social science.  The bottom line here, from a purely secular perspective, is that the fruit of the sexual revolution, which since its inception has been a corollary of the question of what is human nature, is the destruction of the basic foundation of society, the family.  In fact, we know that the best predictor of youth problems is no longer poverty, but family structure.  And, as Charles Murray notes in his recent work on the subject, “I know of no other set of important findings that are as broadly accepted by social scientists who follow the technical literature, liberal as well as conservative, and yet are so ignored by network news programs, editorial writers, and politicians of both major parties”.

The most frustrating part of this phenomenon, as Eberstadt notes, is that the bane of the “voices of reason coalition”–the rampantly expanding welfare state–is a direct consequence of the family crisis engulfing the entire Western world, but they don’t want to talk about it.  In fact, statism and family breakdown feed off and nurture each other.  Just think of all the infrastructure that has been put in place to replace the broken family.  This is the ugly truth.  Yet when Pope Benedict spoke on the sanctity of the family based on the marriage of one man and one woman before over a million people during Mass at the 7th World Meeting of Families in Milan, there was not a word from the mainstream media.  Imagine the media response to a rally of one million for same sex marriage!

Ten years ago, I asked readers of the Pilgrim to focus on the major themes that would dominate the 21st century and to send me their thoughts on them.  I received some interesting responses and then formulated my own thoughts, which basically proceed as follows:  As important as the daunting geopolitical issues are, there is an issue that will trump even those of worldwide war and peace, the transformation of the Middle East, the configuration of the American role in the world, the rise of China and India, and the reformation of radical Islam.  It is the looming cultural, philosophical, and religious conflict on the question of the meaning of human nature, or what it means to be human.  And this of course is largely centered on the issue of human sexuality, which is the primary focus of Eberstadt’s essay.

And yet the issue is even much broader.  The advances in the biosciences and neurosciences have for the first time provided man with the capability to transform his very nature.  As a result, we will be forced to return to the questions of who we are and why are we here in a way that has been too long absent from public discourse.  If this be a counterrevolution as Eberstadt suggests, it can’t come soon enough.  There will be political decisions on these issues of enormous impact and complexity under deliberation over the next several decades.  To hope that these decisions can be made in a morally neutral vacuum without being judgmental is a delusion, and to delegate these decisions to the scientists and professional bioethicists (or worse, the judiciary) would be a dereliction of duty in a democratic republic.

It is difficult to overstate the outcome in the recall election of Gov. Scott Walker of Wisconsin.  It might still be a little early to tell if his victory signals the end of the mystique of the Barack Obama “narrative”, although that day may come soon enough with the Supreme Court decision on Obamacare.  But Walker’s win is huge in its own right on a number of levels.  Most importantly, it provides long-needed confirmation that there is a limit to the tolerance of Americans in the decades-long process during which we allowed the left to debauch the principles of fiscal responsibility.  And of all places, in the land of Robert LaFollette, among the vanguard of progressivism, and in the state that led the march to the disaster that has become public sector collective bargaining.  Almost as significantly, in the current environment that features the dysfunctionality of a Greece, a California, an Illinois, an Italy, and a Washington, D. C., this election came at a critical time when we were in desperate need of a ray of hope and evidence that a democracy can morally reform itself, confront the welfare entitlement state before it’s too late, and return to sefl-government.  This would be real hope and change.

This is from the Wall Street Journal, quoting columnist Janet Daley from London’s Daily Telegraph of May 19.  It is pointed at the future of the European Union, but substitute US for EU and it’s still timely and appropriate.

How long will freedom survive in the face of mass rage at the loss of the economic security that has come to be seen as a basic human right?  People were told that they could have lifelong protection from want without any restrictions on their liberty or their economic self-determination.  So now the cake has been well and truly eaten and had.  The EU is going to have to admit sooner or later that this fantasy has run its course.