A Lesson In Morality – Nathan Cardozo’s 1889 Commencement Address: “The Altruist In Politics”

While we wait for new information on the main subject of this blog, consider the wisdom of this brilliant essay by one of America’s most famous Supreme Court justices.  The Columbia College Class Book of 1889 states that this was delivered as Cardozo’s commencement oration on June 12, 1889.  It has laid buried and largely forgotten for 100 years, but now, in the age of the internet, it must not be allowed to die.  Please spread this around.  If you read nothing else, read the final paragraph!

There comes not seldom a crisis in the life of men, of nations, and of worlds, when the old forms seem ready to decay, and the old rules of action have lost their binding force. The evils of existing systems obscure the blessings that attend them; and, where reform is needed, the cry is raised for subversion. The cause of such phenomena is not far to seek. “It used to appear to me,” writes Count Tolstoi, in a significant passage, “it used to appear to me that the small number of cultivated, rich, and idle men, of whom I was one, composed the whole of humanity, and that the millions and millions of other men who had lived and are still living were not in reality men at all.” It is this spirit — the spirit that sees the whole of humanity in the few, and throws into the background the millions and millions of other men — it is this spirit that has aroused the antagonism of reformers, and made the decay of the old forms, the rupture of the old restrictions, the ideal of them and of their followers. When wealth and poverty meet each other face to face, the one master and the other dependent, the one exalted and the other debased, it is perhaps hardly matter for surprise that the dependent and debased and powerless faction, in envy of their opponents’ supremacy, should demand, not simple reform, but absolute community and equality of wealth. That cry for communism is no new one in the history of mankind. Thousands of years ago it was heard and acted on: and, in the lapse of centuries, its reverberations have but swelled in volume. Again and again, the altruist has arisen in politics, has bidden us share with others the product of our toil, and has proclaimed the communistic dogma as the panacea for our social ills. So today, amid the buried hopes and buried projects of the past, the doctrine of communism still lives in the minds of men. Under stress of misfortune, or in dread of tyranny, it still is preached in modern times as Plato preached it in the world of the Greeks.

A Prediction About Rush Limbaugh

Once again today Rush Limbaugh avoided anything that sounded like an endorsement of Newt Gingrich, preferring to categorize the South Carolina results as a message to everyone rather than an endorsement of Newt.  And he made a point of repeating his concerns that Newt engages in “anti-capitalist” rhetoric.

Here’s an observation and prediction:  Just like the recent article by Daniel Henninger in the Wall Street Journal, which repeated nothing but generalities and platitudes in contending absurdly that Bain Capital “saved America,” the regular tactic of the anti-Newtonians has been to distort Newt’s words and imply that his allegations go far beyond, and are much different from, what Newt actually said.   (See the sidebar to this website for a clear statement of Newt’s argument).

Just as Rush (and Drudge) continued to repeat the incorrect report that Newt was backing down from the Bain charges, even after it should have been clear that the original sources were misreporting Newt’s words, what we have here is a failure to communicate.  A large part of the problem is that Rush has been focusing on what the Establishment has said ABOUT what Newt said, instead of Newt’s own very focused comments.

To this day Rush has yet to articulate the the full and legitimate criticism:  that private equity in many cases does NOT act as venture capitalists or turnaround specialists, but in fact engages in a conscious business plan of immense borrowing, immediate capital withdrawal, and little or no re-investment, followed shortly by bankruptcy or sale of the hobbled shell of a company that is left behind.  And the fact that Rush has NOT articulated Newt’s argument is very telling.

So here’s the prediction:  Rush has for many years been a stalwart defender on conservative values, but he has rarely devoted much time to studying the details of how some of the arcane dealmaking on Wall Street really works.  The time will soon come when SOMEONE will get to Rush and explain to him in full detail what the allegations against Private Equity are all about, and at that point a light will go off in the half his brain not tied behind his back, and Rush will say to himself  “So THAT’s what Newt was talking about!”

Newt has the allegiance of some of the best economic minds in the country, not the least of which is Arthur Laffer.  It’s long past time someone gave Rush the details he needs to put this story in perspective.  We have one too many Ann Coulters already.

The Leading Book on Private Equity And Bain Capital – Josh Kosman’s “The Buyout of America”

One of the leading books currently on the market that explains the details of “Private Equity” and Bain Capital’s involvement in it is Josh Kosman’s “The Buyout of America.

Kosman examines the history of Private Equity and the techniques that distinguish it from “venture capitalism” in chapters one through five, and then in chapter six focuses directly on Bain Capital and Mitt Romney.

Excellent reading and essential for anyone who wishes to understand the Private Equity controversy.

Check Your Premises on Capitalism and “Private Equity”

Some people argue that questioning the details of Mitt Romney’s actions at Bain Capital, or any actions by “Private Equity” firms, amounts to questioning capitalism itself.  Such people argue that Mitt and others engaged in Private Equity are essentially entrepreneurs engaged in the “turnaround” game, buying weak companies and reorganizing them back to profitability. The argument goes that that some turnarounds succeed, some fail, and it’s an essential part of Capitalism to rejuvenate older companies or move them in new directions, even if some workers have to be laid off in the process.

But is defending every action of Private Equity really the same as defending Capitalism? As Ayn Rand was famous for saying, “Check your premises.”