The Starting Point

Yesterday as I was listening to the U.S. Senate debate the financial reform legislation pertaining to Consumer Protection, it seemed to me that the Senators were more like squabbling juveniles than statesmen.  But both sides did make good points for why the other side's proposal was bad.  And they were right.  Both proposals are bad.   

The Republicans wanted a Consumer Protection section added to the FDIC.  Obviously, the FDIC doesn't have authority over all financial institutions in which a Consumer might need regulatory protection so the Republican solution is inadequate.  

The Democrat's proposal put the Consumer Protection function under the control of the Federal Reserve with no reporting requirements and no oversight by Congress - and no funding from Congress.  The Federal Reserve had regulatory authority over mortgage lending but they chose not to exercise it.  The Federal Reserve is charged with the responsibility to ensure full employment and control of inflation.  Under Alan Greenspan's watch, they redefined inflation to mean rises in workers wages and he recommended to Congress that they flood our labor market with imported workers while the major corporations were exporting high dollar jobs to India.  Apparently, Greenspan expanded his mandate for full employment to mean the entire world - rather than just the United States.  It was Greenspan's philosophy of self-regulation for financial institutions, the redefinition of inflation and his recommendations to Congress that led to the meltdown of our economy and now the Democrats want to give them regulatory authority to "protect" us?  Really?

They also discussed the size of the banks and the consolidation in the banking industry after the repeal of Glass-Stegell.  In the 1990's, the banks apparently argued that they need the repeal so that they could compete with European banks.  One of the banks apparently is now a $2 trillion bank.  I believe one of the Senators said that the top 5 banks represent 63% of our GDP.  That is in incredible statistic. Part of the discussion was "Too big to fail" and "To big to live"  but I didn't hear "Too big to audit" which is really a significant consideration that they aren't even discussing.  And where is the benefit to the American people and our country in having banks that much control over the economy? According to a report by the Federal Reserve, there is no benefit in terms of economies of sale for banks over $100 billion. 

I watched this debate with a kind of morbid fascination and I was struck by the thought that for as long as I've been watching the Congress, they are always "reforming" to repair damage that they did a few years before when they were reforming what they did before that.  And for as long as I've been an adult and living with the "unintended consequences" of "reforms", things in this country have gotten progressively worse to the point we are on the brink of economic failure and collapse.  We've lost our national sovereignty to some unknown international organizations that have no accountability to the people in this country.  There are murmurings of the United States breaking up as a nation.  All in all, the state of the nation is that it is one  colossal freaking disaster.  And Congress wants to reform it.  My God... 


Modeling Our Way to Disaster

Systems are a series of interdependent processes.  If there is a problem in a system and you don't trace it back to the source of the problem and fix it there, then you are simply compounding the problems.  The condition of our country and the progressive compounding of problems brought to us by the Congress of the United States is case in point.   Recently, I completed some research that traced the history of the Club of Rome and to my surprise, the origins of it trace back to the U.S. Government National Security apparatus,  Lyndon Johnson's Great Society program and Harvard. 

At the height of the Cold War, Johnson authorized the establishment of an international organization comprised of Soviet and American Systems Specialists to "solve our common problems".   The American Director was Howard Raiffa.   The name of the organization is the International Institute of Applied Systems Analysis (IIASA).

In history of the IIASA under the heading of 'Setting the Agenda', Raiffa said the following:

The issue of global modeling was very intense. Some people thought it was the main purpose of IIASA. Aurelio Peccei, who was president of the Club of Rome, was a strong advocate. So was the Canadian representative. But Lord Zuckerman insisted that there be nothing about global modeling and he threatened to pull out The Royal Society. The enmity between Sir Solly and Peccei was very severe.

The compromise was that IIASA itself would not do any work on global modeling, but would host a series of conferences to review contributions to global modeling and document the results. I think it was a good compromise.


And the two people most responsible for the establishment of the IIASA, McGeorge Bundy and Howard Raiffa had both had been at Harvard.  Harvard's School of Government was established with a 1925 grant by Lucius N. Littauer and it became significantly influential following the Great Depression in the mid 1930's.    On the school website, there is a decade by decade history that is worth looking at more for the understatement of the school's history than an overstatement.

In 1989, a New York Times article titled, "Harvard's Kennedy School: Is Competence Enough?" about Michael Dukakis' defeat and the school itself.  The following are excerpts from the article:  


Harvard's Kennedy School: Is Competence Enough?

Some see the Bush landslide as a repudiation not only of liberalism, of Massachusetts and of Harvard, but of that particular brand of steely-eyed policy analysis and managerial rigor long associated with the ''temple of technocracy'' on the Charles.

....IRONICALLY, THE school's distinctive approach to government had its flowering in the Kennedy Administration, specifically in that bundle of techniques, sometimes called ''cost-benefit analysis'' or ''systems analysis,'' developed by the Rand Corporation, then elaborated by the ''whiz kids'' in the Defense Department under Robert S. McNamara. If statistics, econometrics and microeconomics failed to carry the day in Vietnam, they were the bedrock of the ''program planning and budgeting'' process used to chart the major initiatives of the Great Society, such as the poverty program and subsidized housing.

The policy analysts who designed such programs see political markets much as economists see economic markets. For example, if a Pentagon analyst was studying whether women ought to serve in combat, he would devise economic models that would tell him whether the benefit would be greater than using them in noncombat roles, and whether it would be more cost-effective than having men in those roles.

Such analytical tools proved particularly seductive to the young academics who joined the new Kennedy School. The ''founding fathers'' who helped transform the old Graduate School of Public Administration into the Kennedy School -Thomas C. Schelling, economist; Richard E. Neustadt, political scientist; Frederick Mosteller, statistician; Howard Raiffa, decision theorist -were distinguished scholars with no reason to fear a loss of status from casting their lot with the new venture. But the ''founding babies'' - such as Graham Allison, political scientist, and Richard J. Zeckhauser, economist - were taking a greater risk. Their reputations - indeed their expectations of academic tenure -depended on the sanction of more traditional academicians on the Faculty of Arts and Sciences.

.... The doctrine's very rigor made it vulnerable to critics who charged that it had drained all the human juices from the most human of all enterprises - politics. In a widely-quoted 1983 article for The Washington Monthly, Jonathan Alter inveighed against this effort to ''quantify the unquantifiable.''

But such ''quant-bashing'' had already been overtaken by events. By the early 1980's, a faction long headed by Dick Neustadt and now spearheaded by Mark Moore, a feisty young professor of criminal-justice policy, had succeeded - after intense internal warfare - in getting a healthy dose of ''management'' added to the policy-analysis curriculum.

In taking up the problem of combat roles for women, the manager would put aside the equations and ask how men and women would work together in a unit, who the commanders would be, how you go about building support for such a policy.

''Politics, we believed, was central to the manager's job,'' Mark Moore explains. ''All of a sudden, we were talking about coalitions, consensus-building, listening to your constituency, learning from them.''

.... The school still has vocal critics in the other disciplines, notably in the Government Department, who have long resented the resources poured into the behemoth across the square. ''They're trying to teach people government without philosophy, theory, history and ethics,'' says Prof. Stanley Hoffmann. ''They're telling them how to be good bureaucrats and write memos. Frankly, it's a pretty limited science they've got down there.'' Samuel H. Beer, a professor emeritus of government, worries about the economists' dominance at the school. ''Economists are brilliant people with blinders on,'' he says. ''You can't let economists run anything.''

.....''The traditional Kennedy School process,'' he says, ''is that somebody has defined a problem, somebody has come up with a set of alternatives, and somebody has defined the criteria by which to choose - now get to work. I'd like to see us roll back the problem to reveal some of our hidden assumptions, to ask: Who got to do the defining? Is that the only way these things can be defined?''



Hmmm... now let me think.  Who would have defined the problem, the alternatives and the criteria?  How about the International Institute of Applied Systems Analysis?   This is really a no-brainer because clearly, our system of government has been sovietized and the failures of our economy are due to central planning based on statistical models.  Data from statistical models when presented as real data, constitute classic, felony fraud.   And how do I know they are using statistical models?  Because I proved it with a little research project on social security tax receipts that I called, "Fabricated Statistics".   In the case of social security, there was no reason to model the tax receipt numbers because the tax rate on social security is a fixed percentage and payments from employers are due quarterly.  And if they had been reporting actual statistics, the Congress wouldn't have been surprised in 2004 when income tax receipts dropped to their lowest level since the 1950's.  And it wasn't just U.S. taxpayers that were defrauded.  Businesses owners that rely on government statistics on the health of the economy, wouldn't have made the decisions they did if they'd had an honest view of the U.S. economic condition. 

Who else was using models?   The Wall Street financial firms were using models that didn't allow for the price of homes to go down.  Was that a mistake?  Hell no it wasn't a mistake.  Again a no-brainer.  Values go up and they go down - always have and always will. 

The Federal Reserve was using models of the economy and that's no doubt why the alleged "mathematical genius", Alan Greenspan recommended continuing to flood our labor markets with imported foreigners on visa and giving a blind eye to illegals crossing the border  -  at the very same time that there were MASSIVE layoffs of Americans due to the export of jobs to India.  Proof that they knew what they were doing is that the government stopped producing the Mass Layoffs Report. 

Cut the Fiber

I could continue on listing my evidence for the corruption of our government coming by way of Harvard School of Public Administration but the point I wanted to get to was the starting point for cleaning up the disaster that our country has become.  What we need to do - besides cutting the funding and the ties to all universities that produced the high class con men and fraudsters who have driven our country into the ground, we need to start unraveling 'The Great Society' programs.  And I do mean unraveling as opposed to simply halting them because people in this country have been hurt enough - and it wouldn't serve anybody's interests to go all the way - turning our country into one big Calcutta. 

It is the states and the governors who will have to man up - and step up to say 'No More' to the federal government and to begin the process of eliminating Great Society programs - beginning with the education system and the programs mandated by the federal government.  We used to say, cut the cord to indicate severing a relationship.  Today, we must "Cut the Fiber" with the Feds.  The Feds have no business in our schools and now that we know positively, their orientation and objectives, we need to get them out of our lives, out of our homes, out of our schools, out of our health care, out of everything.  Get them out.     

Vicky Davis
May 7, 2010

Additional Reading:  Diplomacy and Domestic Politics:  The Logic of Two Level Games

Data Modeling for Health Care:   Russian Roulette anybody?   (Shhh  don't tell... all six chambers have bullets)

Hot off the Presses from Brookings Institute:  Charting a Course for Health Care Quality Improvement: Data-Driven Strategies for Eliminating Health Disparities