Oh, gawd, he’s SO tiresome… This time Bobo is fizzing about kosher food… In “The Orthodox Surge” he breathlessly tells us that a thriving Jewish counterculture prompts reflections on collective commitments in the modern age. It’s as though he had no idea that there were such things as kosher grocery stores, and he talks about his tour guide to Brooklyn… The boy needs to get out more, or at least take his head out of his butt and look around once in a while. (Dairy-free cheese puffs? Really???) Mr. Cohen, in “Evil Banker Syndrome,” says the essential difference between the U.S. and Europe endures. It is over risk and reward. In “The Market Speaks” Prof. Krugman says yes, the Dow Jones industrial average has been setting new records this week, but the message from the markets is actually not a happy one. Here’s Bobo:
In Midwood, Brooklyn, there’s a luxury kosher grocery store called Pomegranate serving the modern Orthodox and Hasidic communities. It looks like a really nice Whole Foods. There’s a wide selection of kosher cheeses from Italy and France, wasabi herring, gluten-free ritual foods and nicely toned wood flooring.
The snack section is impressive. There’s a long aisle bursting with little bags of chips and pretzels, suitable for putting into school lunch boxes. That’s important because Orthodox Jews spend a lot of time packing school lunches.
Nationwide, only 21 percent of non-Orthodox Jews between the ages of 18 and 29 are married. But an astounding 71 percent of Orthodox Jews are married at that age. And they are having four and five kids per couple. In the New York City area, for example, the Orthodox make up 32 percent of Jews over all. But the Orthodox make up 61 percent of Jewish children. Because the Orthodox are so fertile, in a few years, they will be the dominant group in New York Jewry.
Another really impressive thing about the store is not found in one section but is pervasive throughout. That’s the specialty products designed around this or that aspect of Jewish law. There are the dairy-free cheese puffs in case you want to have some cheese puffs with a meat dish. There are the precut disposable tablecloths so you don’t have to use scissors on the Sabbath. There are the specially designed sponges, which don’t retain water, so you don’t have to do the work of squeezing out water on Shabbat.
Pomegranate looks like any island of upscale consumerism, but deep down it is based on a countercultural understanding of how life should work.
Those of us in secular America live in a culture that takes the supremacy of individual autonomy as a given. Life is a journey. You choose your own path. You can live in the city or the suburbs, be a Wiccan or a biker.
For the people who shop at Pomegranate, the collective covenant with God is the primary reality and obedience to the laws is the primary obligation. They go shopping like the rest of us, but their shopping is minutely governed by an external moral order.
The laws, in this view, make for a decent society. They give structure to everyday life. They infuse everyday acts with spiritual significance. They build community. They regulate desires. They moderate religious zeal, making religion an everyday practical reality.
The laws are gradually internalized through a system of lifelong study, argument and practice. The external laws may seem, at first, like an imposition, but then they become welcome and finally seem like a person’s natural way of being.
Meir Soloveichik, my tour guide during this trip through Brooklyn, borrows a musical metaphor from the Catholic theologian George Weigel. At first piano practice seems like drudgery, like self-limitation, but mastering the technique gives you the freedom to play well and create new songs. Life is less a journey than it is mastering a discipline or craft.
Much of the delight in life comes from arguing about the law and different interpretations of God’s command. Soloveichik laughingly describes his debates over which blessing to say over Crispix cereal, which is part corn, but also part rice. Jonathan Sacks, the chief rabbi of the British Commonwealth who is on a tour through New York, notes that Jews are constitutional lawyers: “The Torah is an anthology of argument with a shared vocabulary of common restraint.”
But there are still obligations that precede choice. For example, a young person in mainstream America can choose to marry or not. In Orthodox society, young adults have an obligation to marry and perpetuate the covenant and it is a source of deep sadness when they cannot.
“Marriage is about love, but it is not first and foremost about love,” Soloveichik says. “First and foremost, marriage is about continuity and transmission.”
The modern Orthodox are rooted in that deeper sense of collective purpose. They are like the grocery store Pomegranate, superficially a comfortable part of mainstream American culture, but built upon a moral code that is deeply countercultural.
This sort of life involves a fascinating series of judgment calls about what aspects of secularism can safely be included in a covenantal life. For example, Soloveichik’s wife, Layaliza, was admitted into Harvard, but she went to a religious college, Yeshiva, instead. Then she went to a secular professional school, Yale Law, and now works as an assistant U.S. attorney.
All of us navigate certain tensions, between community and mobility, autonomy and moral order. Mainstream Americans have gravitated toward one set of solutions. The families stuffing their groceries into their Honda Odyssey minivans in the Pomegranate parking lot represent a challenging counterculture. Mostly, I notice how incredibly self-confident they are. Once dismissed as relics, they now feel that they are the future.
Next up is Mr. Cohen:
I was talking the other day to a U.S. banker who works in the City for a British bank. He was complaining about a decision-making process that was cumbersome by American standards. But his main issue was a feeling that bankers in Europe are seen as the enemy — overpaid profiteers. It was a relief to get to New York, he said, where the economic mood was more upbeat and post-meltdown fury fading.
The banker’s words came back to me on my return this week to Europe from the United States. The headlines were all about bankers’ bonuses and executive pay curbs. European Union finance ministers have approved, over British objections, the capping of bankers’ bonuses at twice their salary — and a bonus that big will require the approval of two-thirds of shareholders. The normal cap will be a 1:1 ratio of bonus-to-salary.
The Swiss — no less — have approved in a referendum a series of executive pay curbs, including banning golden hellos and goodbyes and giving shareholders a binding say on executive pay.
When the Swiss get riled over the rich and their money, some big shift is afoot. Europe is doubling down on solidarity.
I understand the anger. A 200 percent bonus should be sufficient for anyone. The recklessness of executives at too-big-to-fail banks in the run-up to the 2008 meltdown cost just about everyone — except themselves. Huge bonuses tend to encourage the taking of short-term risks. The masters of the universe have had their moment: the 1,701 people applying for 8 low-paid jobs as “baristas” in a new Costa Coffee branch in Nottingham should not have to read about multimillion-dollar golden handshakes.
All true — but beware the feel-good retribution that returns to haunt you. City jobs will disappear (Boris Johnson, the conservative mayor of London, called the measures “moronic”). Fixed salaries may rise to offset the loss; they are harder to claw back.
At a more fundamental level, John Authers has argued persuasively in the Financial Times that the real problem is not bonuses but corporate governance. As he writes: “Limit the leverage that banks can use, and require them to hold more capital, and bonuses will be less variable. Tell them that they cannot trade with depositors’ funds, or split the biggest banks, and compensation will be less variable.” What is needed is a “a banking system that can sensibly allocate savers’ capital to productive investment opportunities. The compensation issue, to the extent that there is one, is dealt with in the process.”
But when Europe sees an opportunity to control or regulate free markets it still has a hard time resisting. These measures are good politics for European politicians. They would not fly in the United States, for all the anti-Wall Street anger engendered by the Great Recession.
The essential difference between the United States and Europe endures. It is over risk and reward. The American experience begins with risk, that of immigrants who went there in the first place. The European experience ends with solidarity, the insurance policy an old and war-scarred Continent has taken out against the worst. America yearns to be free, Europe to be free of want: politicians must pitch their appeals accordingly. These are core characteristics, written into the respective DNAs on each side of the Atlantic.
Where America enshrines the individual, Europe ennobles the collective. As to which approach is preferable, that seems to me a matter of personal choice. Capitalist churn can be cruel. On the other hand social democratic solidarity can be stultifying. It may be easier to get ahead in America. It is certainly far better to be left behind in Europe. Which is more important to you?
We may dream of Eumerica, some transcontinental fusion where the can-do attitude is American and the healthcare French. But in the end a choice must be made: Do you want your capitalism raw or remedied?
Some say this is a time of transAtlantic convergence. When President Obama calls for a trans-Atlantic free-trade agreement in his State of the Union address and all the talk in Washington is of avoiding war and saving money, it may indeed seem that this is a time of U.S.-European coming together and that the days of inhabiting Mars and Venus (in Robert Kagan’s phrase) are over.
I do not believe it. Mark Leonard had an interesting Reuters column the other day called “The Europeanization of America,” which noted the points of apparent convergence and quoted Michele Flournoy, a former undersecretary of defense, saying (with caveats): “We don’t want to be the world’s policemen.”
It is true that the U.S. wars without victory in Iraq and Afghanistan have sapped the fires of Mars. America’s new God is the Drone. There is a touch of Europe’s Venus in the U.S. pivot away from Bush-era bellicosity.
The rise of the rest has left Europe and the United States with shared anxieties over insolvency. The convergence, such as it is, has about it something of a desire to dilute misery by sharing it.
But Americans will still take the bonus and run while Europeans strive worthily to redistribute it.
And now finally here’s Prof. Krugman:
Four years ago, as a newly elected president began his efforts to rescue the economy and strengthen the social safety net, conservative economic pundits — people who claimed to understand markets and know how to satisfy them — warned of imminent financial disaster. Stocks, they declared, would plunge, while interest rates would soar.
Even a casual trawl through the headlines of the time turns up one dire pronouncement after another. “Obama’s radicalism is killing the Dow,” warned an op-ed article by Michael Boskin, an economic adviser to both Presidents Bush. “The disciplinarians of U.S. policy makers return,” declared The Wall Street Journal, warning that the “bond vigilantes” would soon push Treasury yields to destructive heights.
Sure enough, this week the Dow Jones industrial average has been hitting all-time highs, while the current yield on 10-year U.S. government bonds is roughly half what it was when The Journal published that screed.
O.K., everyone makes a bad prediction now and then. But these predictions have special significance, and not just because the people who made them have had such a remarkable track record of error these past several years.
No, the important point about these particular bad predictions is that they came from people who constantly invoke the potential wrath of the markets as a reason we must follow their policy advice. Don’t try to cover America’s uninsured, they told us; if you do, you will undermine business confidence and the stock market will tank. Don’t try to reform Wall Street, or even criticize its abuses; you’ll hurt the plutocrats’ feelings, and that will lead to plunging markets. Don’t try to fight unemployment with higher government spending; if you do, interest rates will skyrocket.
And, of course, do slash Social Security, Medicare and Medicaid right away, or the markets will punish you for your presumption.
By the way, I’m not just talking about the hard right; a fair number of self-proclaimed centrists play the same game. For example, two years ago, Erskine Bowles and Alan Simpson warned us to expect an attack of the bond vigilantes within, um, two years unless we adopted, you guessed it, Simpson-Bowles.
So what the bad predictions tell us is that we are, in effect, dealing with priests who demand human sacrifices to appease their angry gods — but who actually have no insight whatsoever into what those gods actually want, and are simply projecting their own preferences onto the alleged mind of the market.
What, then, are the markets actually telling us?
I wish I could say that it’s all good news, but it isn’t. Those low interest rates are the sign of an economy that is nowhere near to a full recovery from the financial crisis of 2008, while the high level of stock prices shouldn’t be cause for celebration; it is, in large part, a reflection of the growing disconnect between productivity and wages.
The interest-rate story is fairly simple. As some of us have been trying to explain for four years and more, the financial crisis and the bursting of the housing bubble created a situation in which almost all of the economy’s major players are simultaneously trying to pay down debt by spending less than their income. Since my spending is your income and your spending is my income, this means a deeply depressed economy. It also means low interest rates, because another way to look at our situation is, to put it loosely, that right now everyone wants to save and nobody wants to invest. So we’re awash in desired savings with no place to go, and those excess savings are driving down borrowing costs.
Under these conditions, of course, the government should ignore its short-run deficit and ramp up spending to support the economy. Unfortunately, policy makers have been intimidated by those false priests, who have convinced them that they must pursue austerity or face the wrath of the invisible market gods.
Meanwhile, about the stock market: Stocks are high, in part, because bond yields are so low, and investors have to put their money somewhere. It’s also true, however, that while the economy remains deeply depressed, corporate profits have staged a strong recovery. And that’s a bad thing! Not only are workers failing to share in the fruits of their own rising productivity, hundreds of billions of dollars are piling up in the treasuries of corporations that, facing weak consumer demand, see no reason to put those dollars to work.
So the message from the markets is by no means a happy one. What the markets are clearly saying, however, is that the fears and prejudices that have dominated Washington discussion for years are entirely misguided. And they’re also telling us that the people who have been feeding those fears and peddling those prejudices don’t have a clue about how the economy actually works.
Me? I live in terror that we’ll have another Republican president and my retirement savings will evaporate. Under C+ Augustus I lost a year’s salary in one memorable month…