Letter #85: Ethics, the Capital Markets, and Retro-innovation

This is yet another political letter home.  This letter discusses a  mundane topic: banking as a public utility.  Traditional banking services arguably act like utilities in that they are ‘natural’ monopolies, like municipal water companies or local electric utilities.  That is to say: their unhindered interest in providing these services is to maximize economies of scale to make themselves a ‘market of one’ reaching out to the limits of a self-contained service area. 

In earlier times, with the prevalence of community banks, these areas were most often cities or towns. As communications made the world a village, states and regions became that perimeter of self-containment.  Finally, globalism and the inter-net turned much of the world into a rumpus room. Big banks got even bigger, spanning continents and occasionally spreading financial incontinence.

Speculative ‘hot-money’ currency trades and, later, derivatives, questionable value propositions and corrupted ‘gain-on-sale’ accounting fueled these dislocations. The derivatives were particularly hazardous because they frequently were not hedges but the means by which an institution could squeeze a few basis points (i.e., per-cents of a per-cent; e.g., one basis point of $100 being a penny) out of an efficient market through algorithms. 

In the late 1990s, after wearing down regulations argued to be archaic, the U.S. Congress finally knocked out the last of the bank laws legislated sixty-six years before. The Bank Act of 1933 (37 pages long and known as ‘Glass-Steagall’, to honour its Congressional sponsors, Senator Carter Glass, D-VA, and Representative Henry Steagall, D-AL) had split the investment banks from the commercial banks for a very good reason. 

Investment banking tended to bet money while traditional banking (think Bailey Home Loan from It’s a Wonderful Life) tended to preserve it, through savings accounts, and intermediate it. In other words, in earlier times, when investment banks underwrote securities, they often assumed the ‘market risk’ of the stock or bond issue.  That is to say: the institution effectively purchased all of the securities, for a cheaper price than expected in the market, directly from the company raising money through the re-sale of stocks or bonds.  These investment banks then re-sold those securities to the larger capital market at the anticipated price. 

Sometimes, the pricing did not work out, leading to losses by the investment bank.  Though it is not often assumed anymore, this underwriting risk of a securities offering presents us with an instructive example of proprietary trading.  Most securities trading is similar to traditional banking: brokers intermediate funds between people selling securities and others buying them with a few basis points skimmed (i.e., the bid-ask spread) by the broker-dealer for handling fees.

When, however, the institution represents one side of the trade without offsetting it in a symmetrical transaction (i.e., funds are not intermediated, as they were not in a bond underwriting) in which an institution expends some of its ‘capital’ on a trade in the capital markets, that bank or broker is making a bet by assuming the risk inherent in its particular side of the transaction. 

These bets, more like educated guesses most of the time, have higher profit margins than the less glamorous, more prudent service of intermediation.  Yet these bets entail higher risks because losses can burn through the institutional capital very quickly.  Since most brokers and banks make the bulk of their business from intermediation, they tend to lend out all but a small amount of funds taken in as capital and deposits (i.e., as a safety margin).

So there is little capital left to burn through before the ship is sunk.  These one-sided 'proprietary' banking transactions, these bets, explained events like cornered gold markets and the crashes that accompanied them in the 150 years before the Great Depression.  The consequences would ripple or metastasize through the financial system since intermediation, in mature markets, meant that almost everybody had a piece of the action by re-lending out funds received.

(Nowadays, the securitization of risks via sales of existing portfolios of loans and computer-driven trading accelerates this metastasis.) Such betting, intuitively, ought not to involve others’ money, especially without their knowledge and consent.  Thus, for many years, these activities involved partnerships in which people bet their own money or funds entrusted by people whom they knew and who understood the risks involved. 

For the rest of us, the only loans from the banks were often secured; that is, there were fixed assets pledged as collateral (i.e., the house in a mortgage). If the borrower reneged on his commitment to repay the loan, the bank would re-possess the collateral for sale to generate the proceeds to repay much or all of the debt still to be re-paid.

Investment banks often had to pledge securities, usually issued by well-respected companies (i.e., traded frequently and indicative of underlying value), as collateral with a significant haircut (a 20-50% discount from the market price on the date of the pledging). If collateral values dropped sufficiently, the investment banking / trading partnership or individual investor in the 1920s had to put up more collateral. 

If there were a long and proven history of cash-flows able to absorb short-term borrowings for working capital, some large corporate borrowers would need to pledge collateral, as valued net of its 'hair-cut', at less than the full amount of the borrowing (i.e., all the way down to no collateral for 'unsecured' loans). This traditional, lower-risk financial intermediation, based on a skinny-income business model, made banks natural utilities.  

That is, the ideal supplier would be one giant generic bank for a market that minimized non-intermediation expenses relative to the customer-base and income generation. But, like any monopoly, the bank would then elevate prices (interest rates on loans) to its market to maximize profits for its owners (be they partners or shareholders).  Like any ‘monopsony’ (i.e., one purchaser, the bank taking deposits, versus a splintered array of sellers, average-Joes with their pay-checks, etc.), the bank could get away with paying little or no interest on people’s savings. 

As a natural monopoly fulfilling a vital function in the larger economy, banks came to be viewed, and, under the provisions of the Banking Act of 1933, regulated as public utilities. Like any utility – and particularly one that took on debts to produce more debt (as opposed to taking on debt to provide water or electricity) – banks required a sufficient capital base (i.e., money sitting in the vault) to withstand occasional shocks to the system. 

Remember the scene in It’s a Wonderful Life when George Bailey pulled the last dollar out of his pocket to pay off a depositor withdrawing money and, in doing so, dissuaded others from withdrawing funds?  The newlyweds, George and Mary, forfeited their honeymoon to save his bank and their town. That was a classic bank run since, pre-New Deal, banks would lend out almost every dollar they got to earn interest, thus leaving them unable to honor more than a modest spike in withdrawals. 

While Frank Capra’s family film may seem innocently simple to us today, the mechanics were not all that different in 2008, except for the level of sophistry flowing around the market and the business news circles to justify a similar impulse toward speculation heedless of the longer term fall-out.  So the New Deal, under a lot of heat these days, brought in two new key measures and reinforced another to stop the three banes of banking and investment banking:

• a tendency of traditional banks to start taking speculative positions in a search for more income after a market had been fully exploited – a brand extension strategy that seems logical but entails a discrete change in the risk profile from that of a pure monopoly to a book-maker;

• a run on the bank when depositors lose confidence in the bank and want to get their money out before others do, lest there be none left for them (i.e., the slower fool theory); as well as,

• abusive pricing or speculative practices, in lending or in attracting deposits, of a natural monopoly if left unchecked.

As an inherently high-risk proposition, rational capital markets professionals assumed that investment (or merchant) banking activities would be best left to smaller groups of partners investing what they could afford to lose or those funds entrusted to them by others of means and similar risk appetites. 

That is to say: a market where people knew they were preserving most of their assets and betting what money they could manage without.  The only market related risk among these partnerships was the hazard of perpetrating frauds on unsuspecting investors.  So, what did the New Deal do to try to prevent a repeat of the 1930s?

While I am not familiar with the laws and have forgotten the alphabet soup of regulations from the Federal Reserve, the régime built on traditional usury laws (to prevent over-charging on interest levied against borrowers) with three basic pillars, one dependent upon the other:

• splitting investment banking from traditional financial intermediation;

• capping rates paid to depositors; and,

• insuring people’s deposits. 

What the New Deal did, I believe, is exercise regulatory power in the manner it should be applied: by establishing universal and perceptible ground-rules in a market, leaving enforcement latitude to the Central Bank. The beauty of the simplicity of the New Deal banking régime was that its basic pillars reinforced each other. 

The bettors kept betting, but through partnerships meant to remain small enough not to bring down an entire system when they failed, as many would over the normal course of time and betting.  The Federal Reserve either received the power or was encouraged to assume the power of direct intervention to maintain the orderly function of the capital markets, when these partnerships got to be big enough to disrupt the markets, as they did by the 1950s.

Through Glass-Steagall, banks became the public utilities they were all along by virtue of being natural monopolies. Like such monopolies, the public interest was served by enumerating clear and universal pricing limits (like those imposed on the water company for pricing its services). 

Finally, the base of the utility (i.e., people’s savings and deposits) was insured to forestall bank runs; that is, people could trust the public utility. This system worked very well.  Depositor insurance was extended to people with savings invested through broker-dealers. 

This interview with Senator Elizabeth Warren (D-MA), backs up an unmistakable track-record of good regulation done right.  To be sure, there was more than one exception to the success of Glass-Steagall, a lot more.  Yet, by drilling down in cases as diverse as Hutton, Continental-Illinois, Barings, Long-term Capital, Drexel and the rest, one will see a variant of one of two reasons underlying these spectacular collapses:

• taking the eye off the ball and over-leveraging money relative to risk assumed; or,

• actions that betrayed or lost the confidence of the market.

That is to say: good rules make markets work better but can not prevent occasions of stupidity or malfeasance.

In fact, in the majority of these collapses, the very depositor insurance often gave the struggling bank a deep and stable deposit base, thanks to the New Deal programs, to buy enough time for them to muddle through (Mellon) or merge with somebody else (Hutton). 

In those cases where this was not the case – Barings, Continental-Illinois, Long-term Capital – regulators could intervene and proceed with an orderly recapitalization (Continental) or liquidation of a partnership (Barings and Long-term Capital). In the case of Long-term Capital, the Federal Reserve used its discretion artfully, just as it failed to do in 2008.

After thirty years of work-arounds, loop-hole arbitrage and gradual erosion, Glass-Steagall finally fell.  The rationale was not greed but efficient capital markets.  The big reason I heard back then for repealing Glass-Steagall was that the obsolete structure was an economic friction and disadvantage for U.S. money-center banks in the now supra-nationalized global banking market. 

The argument basically stated that money was a form of capital and for capital to create wealth, it had to be mobilized. In the information age, with "business @ the speed of thought”, the higher the mobility (or velocity) of money, the more projects or purchases it could finance and the more growth enjoyed by everyone.  At least, that's how I think the argument proceeded: the swirling dollar becoming a whirling dervish.

The division of banks and investment banks decreased the hallowed free-flow of this capital and, therefore, diminished the profitability for which financial institutions thirsted in an era of a perceived market discipline of grow-or-die.  As long as Glass-Steagall remained in place, depositors’ insurance need not be a visible moral hazard because banks tended to be limited to traditional lending. 

True, that frame-work did not prevent stupidity but it had largely assuaged cupidity, as spectacular exceptions – like The Bank of New England – proved the rule.  Since depositors’ insurance was, by the 1990s, as American as apple-pie, its repeal would almost certainly never occur.  As long as Glass-Steagall remained in place, it did not need to go anywhere.  The problem became one of identity.

Over time, senior executives (at least a large enough number) of the traditional banks saw themselves less as stewards of a public utility and more the captains of industry bent on a profit that would reward them handsomely in bonuses and symphony chairmanships. Investment banks, in their turn, looked ravenously at the deep pools of money (i.e., capital and deposits) languishing on banks' balance sheets. 

That damn Glass-Steagall stood in the way.  The thinking went something like this: look at all of that dormant capital those fat sluggish banks are sitting on!  Boy, if we could only get at that pot of money. That ‘archaic’ New Deal law slowed the flow of money and, therefore, profits, jeopardizing New York’s pre-eminence of the global financial hub (or so the argument went). 

Besides, with the on-rush of globalism ushered in by the E.U. and N.A.F.T.A., American banks were at a ‘systemic disadvantage' to European and Japanese banks that brooked no such 'petty' distinctions.  (Now let us take a generational view of what happened to European and Japanese banking.  Neither system has fully recovered from a leveraged betting binge.)

So, good-bye Glass-Steagall BUT NOT depositor insurance with the Gramm, Leach Bliley Act of 1999.  The two together created the moral hazard that caused the meltdown within a few years.  Here’s why the dynamic duo of free-wheeling financial betting and depositors' insurance was dynamite.

1. As long as Glass-Steagall remained in place, insured deposits tended to be passive, adding a 'soft' layer to the utilities’ capital base. 
2. If Glass-Steagall were repealed along with depositors’ insurance, at least in theory, bankers would have to look over their shoulders, lest their excesses in betting would precipitate runs on the banks they mismanaged.
3. Lastly, the repeal of Glass Steagall and the retention of depositors’ insurance allowed the bettors to mobilize, or leverage, all that ‘dormant’ capital through proprietary trading (i.e., betting) and corporate finance to earn higher margins than had been realized by antiquated banking practices.

This 'reform' and 'modernization' enabled financial speculators to bet with other people’s money, knowing that almost all, if not all, of the other people would get completely bailed out by depositors’ insurance. To be sure, at the time as an international banker, I felt ill-at-ease with the undoing of this New Deal pillar of sound finance.

My mentality was more that of the lazy mind of the middle-manager: "if it ain't broke, don’t fix it."  Yet, whenever I questioned the wisdom of this ‘reform’, I endured a torrent of verbal abuse for being a reactionary idiot. Upon conceding my double-digit I.Q. and pressing on for explanations, none that really seemed coherent came along. It all sounded like so much peer pressure to smoke cigarettes at sixteen. 

Confessing to being a curmudgeon before my time did not work, either.  When it came to questioning the economics and mechanics of derivatives trades, particularly credit derivatives, I will 'not even go there' when it comes to the words that came bouncing back to me at times.  So, like Winston Smith in 1984, I swallowed hard on the fake gin, suppressed a tear of surrender and went along with the true-speak.

Fast-forward to the night before the 2008 election, when I looked up the respective stands on the financial crisis of Senators John McCain (R-AZ) and Barack Obama (D-IL).  By then, I was out of banking and on tour in Iraq for the State Department. In truth, I had already decided on Senator McCain because he had been a war-hero but, impressed with the first African-American presidential candidate, I made one last due-diligence check. 

Senator Obama’s ideas on the detestable bail-out of Wall Street seemed unclear and muddled to me; Senator McCain was much more in line with what I felt.  By then, I had accepted the fact that President Bush had had one day to react for the first banking bail-out; that is, he took the immediate course, the only one open to him to buy the time for more comprehensive reform.  Any president would have done what President Bush had done, though doing so was a regrettable necessity. 

But I was damned if another bail-out was going to happen because people had made other people’s money into an ingredient of intellectual tinker-toys (i.e., structured finance) yet would not face up to the consequences of the cultural malaise, if not corruption, pervasive within so many banks. What I recall as being the big argument for another bail-out was that Main Street needed to be protected from Wall Street’s mess. 

One way the money center banks had skimmed a few pennies, seemingly for free, was in overnight lending to smaller banks to balance out the books of the banking system on a daily basis. That vital utility of local banking would go away without the bail-out to preserve overnight lending, so the argument seemed to go.  That premise sounded tinny and rather false to me. 

In fact, since the largest wire-transfer systems were under, or easily placed under, the control of the Federal Reserve, there was no reason why the Federal Reserve could not take that money, proposed under T.A.R.P., to liquefy the overnight market and keep it functioning, under its direct auspices rather than pump fictitious greenbacks into flagging Banks. 

The big-bank theory (of bail-outs) could be shattered as the institutions filed for bankruptcy (under an express plan) and got to work on re-building the compromised public utility. During that Chapter-11 catharsis, the banks would disgorge their money drains (securities structuring and underwriting as well as proprietary trading) as well as spin their bad assets off into trusts so they would re-emerge as the utilities of the Glass-Steagall era. 

The Federal Reserve might need to guarantee bank capital for a while to absorb the accounting losses incurred with 'sunk' funds being securitized at 20-40¢ on the dollar.  Such losses from spinning off squidgy assets would be book-keeping in nature, since the money financing them was already gone forever. That guarantee until organic recapitalization could occur, however, would not be nationalizing the banks in the sense of managing them.

The T.A.R.P. money would not go – as it eventually did – to the banks for purchasing assets or, as it turned out, to sit idly on the balance sheets matched by preferred stock, both of which created money out of thin air.  Investment banking and trading would be dead, but only for a short while until hedge funds would begin to see opportunities in the bundled baddies being mis-priced and new companies came to the market (savings banks?), etc.

In fact, Senator McCain’s thinking, informed by his ordeal during the savings and loan crisis of twenty years before, was far closer to a regulatory philosophy of ground rules in an open arena rather than trying to control people through rules-based behaviors. Wall Street Reform and Consumer Protection Act, ('Dodd-Frank' per the legislative sponsors) with its 848 pages, was D.o.A., a ready victim to human nature and frailty, not to mention the blah blah blah ad blauseam inherent in most contemporary legislation. 

Much of Dodd-Frank may make sense over time; let that be legislatively ingested incrementally.  But, as Blaise Pascal observed so long ago, men may be as weak as reeds (grass blown over by the wind) but men are thinking reeds... dammit. Regulation should empower oversight to be equally clever in reigning in those thinking reeds who are 'too clever by half'. 

After all, clear and explicit ground rules, enforced with latitude to respond to unique ‘next-war’ circumstances, enable limited and rational government. The recent bill introduced by Senators Elizabeth Warren; Angus King, I-ME; and, John McCain answers that necessity of republicanism.  This tri-partisan trifecta is overdue and welcome.  

Bringing back Glass-Steagall will not be a panacea for human failings but it will lead to reasonable incentives and behaviors for a sector of the economy rightfully deemed as key public utility. And, no, Wall Street has not learned.  The hearings led by Senator Levin (D-MI) on the ‘whale-trade’ derivatives portfolio in London of J.P.Morgan of six months ago reminded me so much of the type of evasiveness I encountered from people who did not know, or refused to say, the answers to my questions as a risk manager, tedious as they were.  

Finally, I should have known the jig was up with the hope that bankers had shed their hubris when, in the preceding year, J.P.Morgan Chairman, Jamie Dimon, testified to a Congressional Committee that revoking Glass-Steagall had not precipitated key problems underlying the 2008 melt-down. Masterfully, Dimon was half-right, it was that revocation without a simultaneous end to deposit insurance – accelerated by corrupted micro-incentive structures – that did.

Letter #84 to Friends and Familiares: the Proof may be in the Putin...

It is time to listen our country’s leadership and to inform our respective Representatives and Senators of what we – each one of us – really believe to be the appropriate course of action with respect to Syria.  My opinion is plain and remains unchanged, variously categorizing me as smart, stupid or simply self-involved.  http://nedmcdletters.blogspot.mx/2013/08/letter-83-thoughts-on-syria-case-for.html That is not the purpose of this note to my loved ones. 

The best note of skepticism I have come across is that of one politician whom I trust, though his politics differ sharply from mine. http://www.huffingtonpost.com/dennis-j-kucinich/syria-war-questions_b_3870763.html  The arguments in favor are being presented capably by Secretary of State Kerry and Secretary of Defense Hagel. http://www.c-span.org/flvPop.aspx?id=10737441229  My interest lies not in those two but in General Dempsey, Chairman of the Joint Chiefs of Staff.

This letter, too, is about Syria. But not about Syria herself. Rather, I want to discuss just why Russia is acting the way she is.  For days, I have scratched my head in puzzlement as to why Russia is being almost provocative in the face of terrible depredations, evidently attributable to the régime she supports categorically.  This afternoon, when I was composing my weekly letter to my compañeros in the engineering research center where I serve, I was thinking about a question several colleagues had posed to me as "their" norteamericano.

That question was why the U.S. government is not listening at all to the government of Vladimir Putin.  Admittedly, there is far more interest around me in why the National Security Agency is monitoring the various communications of Presidents Peña-Nieto and Rousseff, respectively.  (My response being because it is easier to spy than ‘google’, a dumb joke that wrests the requisite chuckles).  Nevertheless, as I tied together the Syria debate with technology transfer in Mexico (?¿?¿?), President Putin’s view came into focus.

A basic question – a serious question – about the Syria discourse remains unaddressed.  Specifically, the reasons I have heard about why President Putin is acting like a jerk are unconvincing.

1. Vladimir likes to “poke America in the eye”.  This argument seems weak and does not get any stronger with the re-telling ad nauseam.  It is hard to believe that a man who has survived the rough-and-tumble politics of the U.S.S.R. and of Russia would allow his personal feelings to affect his judgement and behavior when the stakes are so high.  Poking in the eye is reserved for things like Mr Snowden but to risk a regional war or worse? No, I don’t think so.
2. Russia needs a Mediterranean port for her navy to maintain her status as a world power.  This thinking, at least as far as the port is concerned, makes more sense.  Yet why did President Putin not offer a deal: “Hello, Joe, we will support your meddling in Syria if you guarantee that we retain the right to our base in beautiful downtown Tartous?
3. Back in the U.S.S.R.  This sentiment tends to link onto the previous idea of naval access to the Mediterranean.  It argues that President Putin rues, misses and aims to restore the lost status of a super-power.  Nevertheless, setting out the great-power swap would play better into this fantasy as co-equals negotiating the fate of another bastard-child of the Sykes-Picot affair.
4. Economics.  This argues that dueling pipelines through Turkey versus the Caucusus is driving this pariah status assumed by Russia.  Honestly, I know too little to address that question.  This trade-off could well be true but I wonder if it would rise to the level of great power confrontation.  Additionally, given the harrowing destruction of the one-time jewel of the region, it may be a very long while before any business runs through Syria, except for illegal arms, of course.

So, unconvinced by any of these reasons for the great bear’s growling obstinacy, I pondered – indulging myself in a fruitless exercise – about what I would be thinking if I were President Putin.  That I cannot do.  The cultures of Russia and the United States are so different as to make direct empathy impossible. The intricate nature of Russian politics and President Putin’s role in it make empathy sheer speculation; frankly, I would trust more my chances at playing darts without my coke-bottle glasses.

So, I went to a second line of thought. In looking at the Syrian dilemma, I asked myself, “Now, hot-shot, why do you think President Putin would be so stubborn in his support for an unseemly régime that likely has used poison gas on its people, especially as refugees swell in number and dwell in suffering?”  Then a thought crossed my mind.  It was one of those moments I flashed back in time, thirty-three years ago, when I was a senior in college.

It was Clark Mollenhoff’s class in journalism and contemporary political issues in the winter semester at Washington and Lee in early 1980.  It had been snowing one of those damp Blue Ridge snows that made Lexington, Virginia almost celestial in its small-town splendor.  But it made getting to class a soft-shoe in Hell.  So, I was late, already well on my way to getting the only hook ever administered by Mr Mollenhoff, a retired, if not retiring, investigative reporter for the Des Moines Register. 

Mr Mollenhoff was a kind man, not least for his grading students on a pass-fail basis: A = PASS; B = fail.  Yet I found a way to a precedent-setting ‘C’.  Leave it to me to prove myself so exceptional as to prove the Mollenhoff grading rule.  That day, the contemporary political theme was the then-recent invasion of Afghanistan by the U.S.S.R. along with the U.S. response to it (i.e., wheat embargo, Olympics boycott, etc.).  Back then, the widely discussed reasons for that invasion revolved around a desire for Soviet a deep-water port.

 

That seemed nutty to me, even then.  The idea of invading a land-locked country to wrest docking rights in Pakistan strained my wretched little mind into a migraine.  So far-fetched.  There were other things flitting through my mind that day: recent taking of hostages in Iran; the attack and take-over of the Mecca mosque by extremists; and, other reports of rising Islamic extremism.  The U.S.S.R. had a large population of Muslims. 

 

So, in class that day, I said that the U.S.S.R. attacked Afghanistan to send a message to its large, apparently restive Muslim minority: “Hey, if we are willing to take this flak in the United Nations and around the world by publicly invading this bozo country next door, imagine what we will do to you who are out of the public eye.  Sooo, quiet down…”  That idea was laughed out of the room because, well, I was well on my way to a hanging hook and the idea, admittedly, seemed outlandish.

Since then, I have found out that senior Soviet foreign policy leaders (supposedly in released Kremlin papers or interviews; I do not know which one, if either) have stated that the reason I had cited was one of, of course, several reasons, the simultaneity of which prompted the follow-trhough of an already-planned invasion.  The point I am making is that the Russians today, sans les Stans, have reason to be anxious with what happens in Syria.  So why would President of Russia be one petty Putin?

• The Russian sphere of influence most definitely still extends strongly to the south via the Commonwealth of Independent States (http://en.wikipedia.org/wiki/Commonwealth_of_Independent_States).
• There are some twenty million Muslims living in today’s Russia and up to another eighty million in Tajikistan, Azerbaijan, Uzbekistan, Georgia, Turkmenistan and Kyrgyzstan, largely living under secular authoritarianism.
• Russia has already lived through a civil war and a bloody insurgency in Chechnya and, perhaps, Dagestan.

Where would al Qaeda go next once it were to triumph in Syria?  With possibly the largest stockpile of chemical weapons in the world? You make the call.  Before doing so, please also ponder the more general question of what motivates nations in the anarchy of international relations.  My guess would be fear and the prospect of aggrandizement. Perhaps we have an inkling of what President Putin’s answer might be: a desire to keep that navy base and a fear of Islamaoists, armed with convenient instruments of mass murder headed his way. 

Since some of the toughest jihadists around come from Chechnya, where might these people look for their next indulgence in blood-drunk blood-sport of stamping out takfiris and combatting the heresy of secular governments, especially one under the possible thrall of those awful orthodox Christians?  So, President Assad’s remaining in power may not be the worst-case scenario in the Russian mind; instead, the great Russian bear may want to defend her cubs far away from home.

Letter #83: Thoughts on Syria; a case for muscular humanitarianism

The West may be lurching toward armed intervention into Syria.  The stakes are higher than most Americans (e.g., me) can appreciate.  Policymakers live by a combination of historical analogies and, often, the ‘persistence’ method (i.e., repeating the same action as the last intervention).  The arguments have long been aired on this conflict.  The Administration of President Obama, rightfully cautious after the protracted conflicts of Iraq and Afghanistan, however, has hesitated too long.  With the added reticence expressed by the British Parliament, at least for now, the way forward seems difficult for the United States. 

1. If we act alone will we find ourselves in a rabbit hole of the colonial powers' making (i.e., the Sykes-Picot Agreement) of a century ago?
2. If we wait for the rest of the West to catch up, will the situation and misery become that much more unmanageable?

Disclaimer

These are serious questions elevated in the few hours since I wrote this first draft.  The situation is fluid, fraught with hazards for America. Nevertheless, decency has its demands and the Syrian civil war is at a cross-roads.  What I outline and propose in this letter must bear in mind my limited knowledge; my bias; and the 'serenity' prayer of Reinhold Niebuhr (http://skdesigns.com/internet/articles/prose/niebuhr/serenity_prayer/). 

That prayer is as famous as it is helpful.

God, give us grace to accept with serenity the things that cannot be changed, 

(I.e., we cannot control people's sympathy or enmity toward us or make al-Qaeda play fair.)

Courage to change the things which should be changed, and the

(I.e., we can alleviate suffering, educate children and help others re-build.)

Wisdom to distinguish the one from the other.

(I.e., we should be open to change at every blind step of the way forward.)

Buster’s last stand

More than half a year ago I wrote a letter home arguing against an invasion of Syria (http://nedmcdletters.blogspot.mx/2012/12/letter-72-why-invading-syria-is-bad-idea.html). Though I am better informed now, I still believe that an invasion would be all wrong for the following reasons.

1. The death toll, especially if these actions actually prolonged the killing, would be beyond the threshold of what civilized men and women, especially the millions trapped in or near Syria, could countenance.
2. Syria is a flashpoint for regional conflict since it is the cultural center of the Levant and Middle East and yet could be the precursor to a much larger Arab-Persian conflict. (http://www.washingtonpost.com/blogs/worldviews/files/2013/08/Levant_Ethnicity_lg-smaller1-zoom.jpg)
3. Logistically, the country would be hard to conquer and harder to occupy.
4. The United States can not afford another expensive conflict for anything but existential threats; this is not one.
5. The geopolitical challenges of the current-day Levant are of Franco-British making from a century ago.
6. U.S. actions in leading the eventual killing of Colonel Gadhafi in Libya go a long way toward explaining President Assad’s behavior now; Assad figures he has nothing to lose since he will likely end up dead no matter how nice he plays.

This ever larger conflict, while dissipating Israel’s enemies for now, may eventually be resolved by scape-goating the Jewish people and state, turning the fury of more than two hundred million people against the only viable, if flawed, but tiny democracy. Israël can still be an example of popular governance to aid people in that part of the world toward liberty.

The context

Before going into any thoughts on what I think will occur and what I think we should do, I would like to review certain antecedents that ought to inform whatever response we take.

1. The most fitting battle-space analogy might be a combination of World War I and the Balkans in the 1990s.  The ethnic groups are interspersed with a lack of secular granularity sufficient to aim missiles at the bad guys on the ground, subjectively targeted.  That fact translates into the current, brutal reality of street-by-street fighting with a lot of artillery and available chemical weapons, much like the trench warfare of 1917. (http://www.aljazeera.com/indepth/interactive/2013/07/20137188552345899.html)
2. A more immediate threat is the spill-over of the conflict.  The mainly Kurdish National Coordination Committee, centered in the northeast, has called for negotiations and may be a moderate voice.  Jordan and Lebanon are at their breaking points with refugees; Turkey feels the strain.
3. The Assad régime, being drawn from one minority has protected other minorities from persecution.  Conflict tends to harden and de-sensitize people.  After two years of truly awful bloodshed, radical Sunni Arabs and, perhaps, their Shi´ite opponents from the outside, have reportedly started persecuting Christians, Jews (if any), Druze, Alawites, Kurds. Wahhabis and their Salafists are particularly menacing since they see Shi´ites as apostates (apparently a deadly sin in Islam), collaborators and, otherwise, easy to bully bloodily.
4. The no-fly zones worked in Iraq.  Karl Rove is wrong in saying that no-fly zones will get us stuck in Syria as they did in Iraq.  What kept us stuck in Iraq was an unwillingness in the mid-to-late 1990s to deal firmly with Saddam Hussein who – like the Assad régime, the religious dictators of Iran and President Milosevich in Serbia – was never materially affected by the sanctions though his people suffered mightily for a decade.
5. Until petroleum became the desert king, Syria (including Lebanon) had been the focal point of U.S. attention in the larger region.  For the better part of two centuries, until the 1950s, various missionary groups set out for the Holy Land, setting up clinics, schools and hospitals.  These activities built up a reservoir of goodwill that has dissipated in the last fifty years.  Nevertheless, the ties remain deep.  (http://en.wikipedia.org/wiki/Power,_Faith_and_Fantasy).
6. Tens of thousands of officers and soldiers of the Syrian Army have deserted and are in refugee camps in adjacent countries, principally Jordan and Lebanon, or hiding with their clans inside the country.  These men are disciplined and can be ideal for a new police force to help maintain order after the fighting stops.
7. Not every Alawite has been living like a King.  At the face of things, one would find this statement stupid.  Truth is that I spent a great deal of time in Iraq stating to Shi´ites in Iraq that every Sunni had not been rich under Saddam Hussein; that many had suffered just as they had.  Such blanket perceptions are serviceable only to those who are bent on sectarian genocide.
8. The United States succeeded in Iraq, not only on the battle-field.  Through the surge of just U.S. troops that represented 0.1% of the Iraqi population, the U.S. prevented a sectarian genocide and empowered the moderates on both sides of the Sunni / Shi´a divide.  The saddening state of affairs now in Iraq has more to do with the current government’s power-grab and corruption opening up an opportunity for blood-drunk terrorists to do what they want to do: kill and maim in the name of G-d and the pursuit of mammon.
9. The United States has planted the seeds of long-term success in Afghanistan, much as she did in Viêt Nam.  That victory will take at least two generations to manifest in Afghanistan.  The key point is that the opportunity to change has been secured for the rising generation and its children.
10. The Afghanistan surge was a political exercise.  The lack of imagination of the surge displayed an insensitivity to topographical and cultural differences between Iraq and Afghanistan. Additionally, relieving two commanding officers in a year doomed the surge, guaranteeing that drone-flown assassinations would become the preferred method of counter-insurgency.  In short, the surge was an expensive and bloody agitprop as a means for the U.S. to appear to give the war 'a good college try' before leaving.
11. Community policing does work.  Since many insurgencies cover for crime-waves, top-down police-training – a worthwhile method for improving or setting standards of professionalism across a country – fails to harness the participation of the townies who know the people and activities of their areas.  That knowledge (i.e., field intelligence and situational awareness) is vitally necessary to stop the hard-to-detect activities of guerrillas, terrorists and less pretentious gangsters.
12. The disregard of Congress in policing actions has enabled presidential adventurism, often guided by political considerations.  Often these undeliberated initiatives have degenerated into quagmires, leading to national trauma in terms of lost treasure and personnel. (http://www.speaker.gov/press-release/boehner-seeks-answers-president-obama-syria)

What we should do

The antecedents and elements taken from my earlier essay, of December 2012, that argued against invasion basically point the way toward what I would like to see.  In previous discussions on Facebook and in counter-insurgency circles, I have stated just about everything that I state below, especially with respect to the very limited deployment of U.S. Special Forces (S.F.). Before that re-hash, I would like to focus upon two elements that have changed in recent days: no-fly zones and peaceful exile for the Assad family. 

That is to say: the efficacy of no-fly zones, if focussed carefully, in creating ink-blots of peace and the rule of law make that option compelling.  With respect to the Assad family, conditions may be ripe for negotiating toward a cease-fire, followed by reconstruction should the cease-fire hold.  The repeated use (of some fourteen instances) of chemical weapons, assuming the régime is primarily responsible, clearly represents a change in kind of warfare beyond the limits of long-standing international law.  But this viciousness may signal that the leadership is falling and desperate. 

As the map shows, such no-fly zones would not be large and could provide the air-cover for the new Syrian police force, basically those deserting soldiers trained by U.S. Special Forces (SOF), to re-enter those enclaves of Druze, Christians, Aramaic Chaldeans, Kurds and Armenians contiguous with Jordan, Turkey and Lebanon.  Later, should outside peace-keepers be deployed and manage to maintain peace in the rest of the country, this core police force could train other community police units, thus expanding the inkblots to counter a crime-wave, not an insurgency. 

Again, if the Assad régime is responsible for recent attacks of chemical weapons, as seems probable though yet to be confirmed, the dictator is likely to be desperate and may be open to exile because he is losing. It is worth a try.  Such an attempt at providing safe-passage and initiating a cease-fire will not take long to resolve one way or the other.  Such a determination will take less time than preparations for military action likely will.  Hence, checking out the possibility of a peaceful exit can be executed concurrently with military mobilization.  There would be conditions for that safe passage:

1. admission of guilt of a crime against humanity, if President Assad or a member of his government deployed those chemical weapons;
2. formation by President Assad an interim council to guide the country toward a new régime;
3. establishment by President Assad of something similar to the Truth and Reconciliation Council employed by South Africa when a minority régime surrendered power to a majority;
4. deployment of what remains of the Syrian Army to secure the stockpiles of chemical weapons; as well as, 
5. presidential order of the police to protect minority populations.

The rest of the scenario remains largely unchanged from previous comments made in other virtual venues (with details added from recent shifts in information and perspective):

• due presidential consultation with, and approval by Congress, per the Constitution, prior to military action;
  
• such congressional authorization to be, preferably, a declaration of war or, at least, an authorization to use military force;
• such declaration of war or authorization to be effective against the régime, not the Syrian people, only after a roll-call vote on prime-time television;
• transparent reporting and timing of deployments required by, or conducted under, any congressional authorization to be tightly aligned with the Wars Powers Resolution of 1973; 
• no-fly zones in the areas noted and enforced by N.A.T.O. air forces; 
• protection of the Alawite strongholds and, perhaps Lebanon, by the British and French navies (now, possibly in doubt, http://www.bbc.co.uk/news/uk-politics-23892783); 
• American S.F. deployments to the refugee communities in Jordan, Lebanon, Turkey and, if possible, Iraq to partner with forces from those host-countries to assure the delivery of humanitarian supplies; 
• S.F. partnerships with Jordanian, Turkish and Lebanese forces to police said refugee areas to try to push back on extremist intimidation of any form; 
• S.F. partnerships to train a new police, trained from the soldiers of the Syrian Army who have defected, for post-war Syria with forward deployment into areas protected under no-fly zones; 
• safe-passage, if negotiable and upon the conditions cited above, for the Assad family and those officials not involved in crimes against humanity into West with the aid of witness protection programs and a $10 million, thirty year annuity for the Assad family and $1 million, ten year annuities for the other civilian or military leaders and their families, with all illicit treasure in the national treasury and foreign banks (i.e., billions of dollars) repatriated to a Syrian reconstruction fund described immediately below; 
• freeze all assets of Syria in international financial institutions to be placed under the trusteeship of the International Red Crescent and Red Cross further to be administered by the U.N. aid mission in Syria for future development;
• American S.F. only, together with trained New Syrian police, to escort in peace-keeping troops from Muslim countries outside of the ‘Islamic belt’ (i.e., Middle East, North Africa, Turkey, the Caucasus and east through to Pakistan; that is, troops deployed from nations like Indonesia, Senegal and Malaysia, if they are willing); 
• American S.F.  to leave immediately upon settlement of peace-keepers (or escorting said peace-keepers out if the threat environment be too pronounced) if the number of the latter is adequate to secure and remove the chemical weapons;
• American S.F.  to remove chemical weapons if the peace-keeping force not adequate to the task;
• no further entry into Syria by S.F. contemplated and possible only with a second "prime-time" declaration by Congress; as well as,
• said peace-keepers to assure safe passage in of relief workers from credible non-governmental organizations, including Médecins sans Frontières, Mercy Corps, the International Red Crescent, the Grameen Foundation, etc. to accelerate reconstruction.

What I am afraid of happening
Blow up a few runways; fling a few drones; talk tough; and, bask in the balm of bombs with the pyro-theatrics of 24 / 7 television reporting. 

Letters to Friends and Familiares #82: the sine qua non of indispensable sinecures

THE INVISIBLE LINE BETWEEN RISK AVERSION AND PERVERSION.

Sure, this topic may sound obtuse, esoteric and otherwise irrelevant to tech transfer.  Yet, not is it as the wise ugly guy in “Star Wars” says.  We in the tech transfer program face the challege of trying to change the way people think and the way institutions act.  The Mexican government is quite clear in its message: get going, guys and gals.  Win or lose – take a shot at the big time (Article #51 of the C.yT. law).

Truth is that CONACYT has been around for 40+ years and the I.P.N. for over half a century.  While the Republic fails to meet lofty goals of economic commitments of 1% of the G.D.P. to RD&I – duly legislated and ritually ignored – Mexico has built her knowledge base over time.  The rub is this progress has been a cost center and not an idea generator.

Now it is time to mobilize – to monetize – this inert intellectual capital; a vast pool of basic research basically doing nothing.  Now this comment by me, while dour and amply reflective of my curmudgeonly ways, really is not a criticism of Mexico or my great and gifted colleagues in CIDESI.  This thought merely reflects the difficulty of changing.  Hey! Have you ever tried to get anyone to quit smoking?

Well, keep on truckin’.  The challenge that we volunteers uniformly face is that we confront cultures of ingrained risk aversion.  Think of it: Mexican techie types get rewarded incrementally for decades.  Dust off some research from last year; jazz it up a bit; publish it; get your S.N.I. points; and, you are done for this year: kids’ schooling, house and car payments covered yet again.  Take the bonus and run, baby.

Overcoming habit is difficult enough.  Now let’s factor in the ever-present human ego.  A scientist or engineer has spent a decade or two building up a personal dominion of knowledge for which (s)he enjoys significant recognition and prestige.  This status has been earned through time and toil; in the eyes of its possessor, it is not to be squandered recklessly.

If a volunteer can not sympathize with the professional dilemma weighing down on his or her counterpart, and many do not, perhaps that individual ought to return to the world of machines rather than machinations.  For commercializing unexploited technology is all about machinations from everyday tasks getting completed to strategies playing out for a new firm entering or generating a new-fangled market.

Such maneuvers encompass arguing for price points, reaching consensus on product valuations and strategies, deciphering market opportunities or intelligence, as well as negotiating financing agreements (the big-daddy of them all); not the province of data dinks.  So these daunting challenges, plus a rewarding comfort-zone (until now, at least), almost guarantee risk aversion. 

No one wants to fritter away his or her scholarship through failed product developments and launches.  One public failure and hello, square-1, and re-building than long-acquired now squandered reputation (at least in the mind of the inventor).  Some people simply can not imagine growing beyond failure, so deep runs this false sense of shame.  And to make prospects really sobering, only one in every 200-300 revolutionary ideas turn over sustained turnover during a five year horizon.

Simply said, there is too much to lose and too many ways to lose it.  So, what to do?  El presidente Peña-Nieto is trying out electoral shock therapy, converting his discernible plurality into a broad national mandate for Mexico to take her place on the international stage, right here and right now.  So, he is serious about getting CONACYT out of neutral and Mexico into overdrive by:

1. cutting funding control of CONACYT by 15-20%;
2. pushing hard for new Centros to extend the knowledge-base into aerospace, biotechnology and automobiles;
3. aligning different power blocks into a new Science and Innovation ministry;
4. partially privatizing PEMEX and CONACYT to receive and lever the best in cutting-edge knowledge; as well as,
5. employing other measures I can not quite recall with my agèd brain.

So now the dilemma has just increased for the average, risk-averse ‘Investigador(a)’.  Thus overt risk aversion goes covert with risk perversion.  These latter behaviors are designed primarily to temporize through active inactivity, fast-motion self-promotion or powerpoint optimism.  This is not a uniquely Mexican phenomenon.  It is typical corporate politics, especially in restructuring institutions.

There are three forms of risk perversion initially to which I would alert my fellow volunteers:

• always cooking, always hungry;
• abnegation through collaboration ; and,
• selling high-flying air-rights (not gender-specific).

The first form of risk perversion is a trick I have discussed several times in various venues.  The idea?  Always have one prototype ready and a better one at-the-ready.  As time progresses, the ‘inventor’ (more like a science fiction writer), shifts the focus from the current prototype to the next, even more commercially profitable idea.  One shines like a star without ever having really to twinkle.

The second manifestation of risk perversion is to become a partnership patsy, while extolling trendy notions of teamwork.  These are the ‘team players’ absorbed with partnerships and other projects that transfer or develop too little or no technology. Sadly, they degenerate into scientific serfs for sale to the biggest-name lowest-bidder.  They love Shakespeare and live out ‘Much Ado about Nothing’.

The last example (of many) is a technique imported from good old America.  This risk perversion is essentially a Houdini act, not of beating impossible constraints but dancing from one extravagant claim to the next, a stutter-step ahead of inevitable complaints.  A favorite recent example is claiming experience in sales strategy based on digitalizing call-reports.  These intellectual blow-hards then use their false claims to discredit reasonable ideas of others, lest they be discovered, called out and fired.

These are merely three of many examples, some of which you all have already encountered.  What cheap perfume is not passing your smell test?  Heed those suspicions.  The ruse most often distracts others away from a dubious present toward a salubrious future to re-arrange the empty inning of baseball into NO ERRORS, NO HITS, NO RUNS therefore NOBODY LEFT. 

The moral of this cautionary tale is that moving minds may be harder than moving mountains, with or without a mustard-seed.  Patience and compassion toward human limitations sweeten the crock-pot.

Adiós, over and out.

P.S. Wupps.  The end of this essay is rather uncharitable and unconstructive.  So, I want to direct a few comments to the younger volunteers since anyone my age has learned to deal with these inter-personal gimmicks or has the emotional intelligence of a jack-hammer.  In this brief follow-up, allow me to invoke the traditional R.C. teachings on sins; not because I am religious but because these teachings can shed light on matters of human nature.

The first ruse of the ‘turkey solution’ is much like a venial sin of commission.  Often it arises from failing to pay attention to the task at hand.  Being an entrepreneur – and settling in to big-time risk-taking – is intoxicating.  The daily drudge-work of bringing that dream into the realm of possibility is difficult enough.  Taking that possibility toward plausibility is painstaking.  Adapting the plausibility into practicality entails phone-calls, meetings, memos galore.  All that occurs before going to market.

What to do? Try gently to keep the counter-part on task, stating that this current and less sexy invention may establish his or her name in the market so (s)he can go to Tahiti on the next product under development now.  If your counterpart continues this waltz with a third turkey in the oven, admire his optimism and find something else to do; take your time, however, with the disengagement in the event that (s)he may come around.

The second pitfall is more like a sin of omission.  This problem is perhaps the easiest of the three examples (among several) to address.  The counterpart may understand the necessity of mobilizing capital but may lack the knowledge and experience to negotiate the effective transfer to your Centro of needed knowledge or technology.  This business is a tricky one that frequently eludes volunteer (i.e., me) and counterparts (i.e., everyone else) alike. 

There are several volunteers, usually of the “and wiser” type, who can impart valuable advice; I am not one as all of these topics were new to me almost three years ago.  That advice may help out in aligning activities (e.g., setting up inside or external partnerships) with strategy (i.e., trading less expensive expertise for valuable knowledge).  These conversations are delicate since the counterpart may well be omitting contract terms, etc. rather than consciously avoiding his or her next right step.

The third problem is a biggie, much like a mortal sin after, usually, accumulated commissions of venial sins.  The key variable to consider is the age of the counterpart.  Under thirty, the person may well be merely insecure but, over thirty, that person may have a thoroughly compromised sense of inter-personal ethics.  One must rely on intuition here to discern whether ever-present insecurity has hardened into a full-blown defect of character.  If the latter, head for another department.

In the end, these and other strategies reflect either possible responses tothe foibles typically encountered among people or fragmenting fears of failure.  Fear is difficult to overcome through outside counsel; that conquest must come from within.  Time takes time and the two year stint is often way too short to realize the change.  But planting seeds through humility and integrity is always right on schedule…

Letter-81: Windsor and D.O.M.A.

NOTE in 2016: I switched my political preference to sanction the term "marriage" for same-gender couples when religious freedom laws emerged after this decision. The vote against the term marriage had been contingent upon same-gender couples availing themselves of very right accorded to 'traditional' married couples. When it became obvious that such justice would not proceed for 'civil unions', justice required that the term "marriage" be applied, with its full cultural approbation, to same-gender couples. 

The Supreme Court acts as a Council of Elders for the Republic in which we live.  That does not imply infallibility but should command our respect.  The Supreme Court for over two centuries has successfully asserted a role of clarifying what the law says under the Constitution.  In controversial decisions, some see the Court as over-reaching while others believe it is protecting the rights of citizens and States as enumerated and implied under the Constitution. 

Either way, what the Supreme Court does is judicial review to provide checks on the powers of other branches of government and of aggressive or belligerent majorities.  And, on this day of all days, we ought to be properly grateful to the nine men and women who serve not us alone but those yet to come.  The Decision of U.S. versus Edith Windsor (“Windsor”), which overturned the key provisions of the Defense of Marriage Act of 1996 (“D.O.M.A.”) conforms to this tradition of deferential goodwill.

Truthfully, I voted against same-sex marriages in a Maryland referendum in 2012.  That proposition only passed 53-47% in one of the bluest of blue states; gay marriage is not a ‘gimme’ nor is it a gimmick.  These unions are here to stay.  I would still vote against that proposition, notwithstanding Windsor, were it held again today. Yet declaring D.O.M.A. to be unconstitutional was “meet and right so to do” by the Supreme Court. 

The Court’s opinion – written by Justice Kennedy on behalf of himself as well as Justices Ginsburg, Kagan, Sotomayor and Breyer – made a compelling, pithy point that, “D.O.M.A. seeks to injure the very class New York [law] seeks to protect….”  Further, the split decision (five votes to four) found a common ground in favor of two constructions of the Constitution and precedents consistent with the national charter.

First, the D.O.M.A. law went far beyond a simple definition of marriage to disenfranchise a group of couples from economic rights and political sanctions afforded to other couples in a manner outside of the scope and against the spirit of the Constitution.  Second, committed relationships are the proper province of state laws. Contrary to the assertions of this decision being an example of judicial over-reach, Windsor corrected flagrant legislative over-reach and economic discrimination.

Under this decision, states still have latitude to legislate or regulate marriages.  Yet Justice Kennedy stayed in the everyday real-world by stating, “….until recent years, many citizens had not even considered the possibility that two persons of the same sex might aspire to occupy the same status and dignity as that of a man and woman in lawful marriage.”  The argument against expanding traditional definitions of marriage to include gay unions is actually one that is well thought out.

Though I still agree with the essence of those arguments, its disturbing application under D.O.M.A. spelled the law’s demise.  Basically the conservative view, outside of the bullies bloviating across the air-waves, is simple.  First, with few exceptions, across millennia and societies, marriage had meant monogamy between a man and woman, principally for the creation and socialization of children.  Without the secure transmission of values, civilizations falter.

And we see evidence of that verity, however unfashionable, to this day.  The statistics are unmistakable: children of broken families and single parent households, especially boys, tend to run into more behavioral and adjustment problems as adolescents and adults.  This may likely apply to children growing up under same-sex couples.  The rub here is that wealthier families with intact extended family networks often compensate for any real or perceived deficiency of a non-traditional family unit.

In a nutshell, that is the argument: tradition and statistics (at least as the latter apply to the more economically stressed and isolated).  Now, anecdotally, same-sex couples seem largely to be affluent and often nurtured by loving extended families that are well educated.  That is great.  For me, I would like to see a meeting of minds of the more civil arguments between both sides.  Marriage remains a heterosexual monogamous union while civil unions are available to committed same-sex couples.

That would mean, at least on the national level, absolutely no discrimination of one status over the other, with equal protection under the law and equal access to the advantages of being American citizens.  While conservatives may object to a mere semantics game suggested here, I would submit that this compromise balances respect for the tradition of matrimony – still a sacrament in many people’s eyes – with fraternal acceptance of all manner of goodwill and righteous citizenship.

There still remain a couple of house-keeping points brought to the fore by the dissent of Justice Scalia.  First, should the Supreme Court have ruled on this case at all, since it basically upheld the findings of lower courts?  Yes, it should have, as Justice Kennedy wrote, “relevant prudential factors that counsel against hearing this case are subject to ‘countervailing considerations [that] may outweigh the concerns underlying the usual reluctance to exert judicial power.’”

While the decision stated that the lack of ‘precedential’ guidance for ninety-four district courts and over a thousand laws mandated this exertion of judicial power, I would go beyond that to the underlying purpose of the Constitution itself: to secure the blessing of liberty for the citizenry.  Since the Constitution is a user’s manual for republican government based on natural law, its aim is to limit national powers as those specifically delegated to the government by the governed (i.e.,  in our case, states and people).

Those enumerated powers belong to the government for two reasons: scope and protection of natural rights.  Scope is easy to identify.  There can only be one foreign policy of the United States, at least at a time.  Most of the other enumerated powers focus on matters truly national or international in nature.  The protection of natural rights is a little trickier.  Often, such rights – always open to differing interpretations – are best left to the states.

On the other hand, there are rights that transcend the states and transcend people.  They are the natural rights endowed by the Creator as expressed through His nature manifested on Earth.  For the less religious among us, I suggest re-phrasing this idea as a neo-platonist notion that there are certain practices, norms, behaviors, etc. that consistently emerge across time and space.  This persistence of overt behaviors implies an absolute upon which specific conventions and norms are modelled, if imperfectly.

The beauty of our Constitution is that it really is a how-to book of the natural law captured in short-hand within the Declaration of Independence.  These inalienable rights of life, liberty and the pursuit of happiness (i.e., property) are what the Constitution is designed to protect within a larger scheme of social and national interaction.  When state-level or popular practices abridge these inalienable rights, without merit in the eyes of a reasonable and disinterested fellow citizen, the issue is no longer one for the states.

That explains why – despite brilliant compromises and articulate Supreme Court opinions – slavery never went away until it was abolished without exception or mercy.  That is why the dilemma of pro-life versus pro-choice keeps nagging at us even after the Supreme Court tried to resolve it by reserving such judgments to the states and protecting an implied right of privacy.  In this vein, D.O.M.A. did not resolve this question of equality for same sex couples; it abridged the rights of gay Americans. At the least, the right to equal economic benefits.

The other implication of Justice Scalia’s erudite and articulate dissent with which I disagree was best put forward by my F.B. friend and, virtual oracle, Dr William Monie Bauer.  Bill and I agree on what Justice Scalia implied – making these cases piecemeal.  We differ on their effect on the larger society.  If the Court had dismissed the hearing without definitive precedent, every instance of discrimination against same-sex couples would have to go through a separate suit.

Dr Bauer is right that the judicial cholesterol would clog the system and the government, finally forcing much-needed reforms of the court system ridding it of its most burdensome dysfunctions.  Yet, piecemeal trials would permit people to slow the progress toward eliminating abridgements of natural law in service of a more perfect union.  My inarticulate argumentation ought not render inscrutable a fairly straight-forward perversion of justice.

Take the 1954 ‘Brown versus Board of Education’ decision, for example.  If Topeka had simply let those black children into the white school before the Supreme Court had rendered a decision, then (under Justice Scalia’s reasoning), the case would have had not standing and been dismissed.  What an ingenious way for white supremacists to pursue apartheid: every time a case came close to decision, let a few black kids into the white school.

The at-most dozen or so black children thus admitted every year to foil a governing precedent would be so small compared to the white majority that, in areas of overt racial oppression, those children would probably be out of there soon and, if not, would have so little influence that “99.9% separate would be inherently unequal.”  In fact, segregation would still be in place today under the precedent of the ‘Plessy vs Ferguson’ decision of 1896. 

The decision to gut D.O.M.A. is a welcome application of judicial and national power to eradicate a systemic injustice.  As for my own feelings about gay unions; that is irrelevant.  Heterosexuality is my preference, but it ought not be my presumption.  I would suggest to those fond of citing Sodom and Gomorrah, as examples of the unnatural state and consequences of homosexuality, that they have overlooked one very important aspect of the larger story that prefigures the compassion later exemplified in other faiths. 

Abraham taught God all about compassion (and, for those who see homosexuality as something sinfully deviant, forgiveness) by haggling Him down to finding one good man in the city limits to get that desert dumpster off the hook.  Frankly, I am not one to buy into the forgiveness argument for I see nothing to forgive.  The incidence of homosexuality rises with levels of sentience among beings.  Additionally, findings suggest that sexual preference is either innate or manifested early in life.