Streetwise Professor

October 17, 2017

Dead Penguins Don’t Matter If They Don’t Advance a Political Point

Filed under: Climate Change,Politics — The Professor @ 7:25 pm

What, you didn’t hear/read the story about the “massive breeding failure” among Adélie penguins, in which only two–yes two–offspring of 18,000 breeding pairs survived? Well, there’s a reason for that.

You can guarantee that you would have heard about it 24/7 had it been even remotely plausible to pin this catastrophe on anthropogenic global warming. Algore, every A through Z list celebrity (looking for an opportunity to distract from Harvey Weinstein’s shrubbery), every politician from Australia to Zimbabwe would have been on about it incessantly, at high volume, and in the highest dudgeon.

But the die-off was due to–wait for it–excessive sea ice which greatly increased the distance that the adults had to go to get food. So because they died for the wrong reason–and indeed, died for a highly inconvenient reason (or would that be truth?)–the story made barely a ripple. Move along, nothing to see.

Financial Regulators Are Finally Grasping the Titanic’s Captain’s Mistake. That’s Something, Anyways

Filed under: Clearing,Commodities,Derivatives,Economics,Financial crisis,Regulation — The Professor @ 7:11 pm

A couple of big clearing stories this week.

First, Gary Cohn, Director of the National Economic Council (and ex-Goldmanite–if there is such a thing as “ex”, sorta like the Cheka), proclaimed that CCPs pose a systemic risk, and the move to clearing post-crisis has been overdone: “Like every great modern invention, it has its limits, and I think we have expanded the limits of clearing probably farther beyond their useful existence.” Now, Cohn’s remarks are somewhat Trump-like in their clarity (or lack thereof), but they seem to focus on one type of liquidity issue: “we get less transparency, we get less liquid assets in the clearinghouse, it does start to resonate to me to be a new systemic problem in the system,” and “It’s the things we can’t liquidate that scare me.”

So one interpretation of Cohn’s statement is that he is worried that as CCPs expand, perforce they end up expanding what they accept as collateral. During a crisis in particular, these dodgier assets become very difficult to sell to cover the obligations of a defaulter, putting the CCP at risk of failure.

Another interpretation of “less liquid assets” and “things we can’t liquidate” is that these expressions refer to the instruments being cleared. A default that leaves a CCP with an unmatched book of illiquid derivatives in a stressed market will have a difficult task in restoring that book, and is at greater risk of failure.

These are both serious issues, and I’m glad to see them being aired (finally!) at the upper echelons of policymakers. Of course, these do not exhaust the sources of systemic risk in CCPs. We are nearing the 30th anniversary of the 1987 Crash, which revealed to me in a very vivid, experiential way the havoc that frequent variation margining can wreak when prices move a lot. This is the most important liquidity risk inherent in central clearing–and in the mandatory variation margining of uncleared derivatives.

So although Cohn did not address all the systemic risk issues raised by mandatory clearing, it’s past time that somebody important raised the subject in a very public and dramatic way.

Commenter Highgamma asked me whether this was from my lips to Cohn’s ear. Well, since I’ve been sounding the alarm for over nine years (with my first post-crisis post on the subject appearing 3 days after Lehman), all I can say is that sound travels very slowly in DC–or common sense does, anyways.

The other big clearing story is that the CFTC gave all three major clearinghouses passing grades on their just-completed liquidity stress tests: “All of the clearing houses demonstrated the ability to generate sufficient liquidity to fulfill settlement obligations on time.” This relates to the first interpretation of Cohn’s remarks, namely, that in the event that a CCP had to liquidate defaulters’ (plural) collateral in order to pay out daily settlements to this with gains, it would be able to do so.

I admit to being something of a stress test skeptic, especially when it comes to liquidity. Liquidity is a non-linear thing. There are a lot of dependencies that are hard to model. In a stress test, you look at some extreme scenarios, but those scenarios represent a small number of draws from a radically uncertain set of possibilities (some of which you probably can’t even imagine). The things that actually happen are usually way different than what you game out. And given the non-linearities and dependencies, I am skeptical that you can be confident in how liquidity will play out in the scenarios you choose.

Further, as I noted above, this problem is only one of the liquidity concerns raised by clearing, and not necessarily the the biggest one. But the fact that the CFTC is taking at least some liquidity issues seriously is a good thing.

The Gensler-era CFTC, and most of the US and European post-crisis financial regulators, imagined that the good ship CCP was unsinkable, and accordingly steered a reckless course heedless to any warning. You know, sort of like the captain of the Titanic did–and that is a recipe for disaster. Fortunately, now there is a growing recognition in policy-making circles that there are indeed financial icebergs out there that could sink clearinghouses–and take much of the financial system down with them. That is definitely an advance. There is still a long way to go, and methinks that policymakers are still to sanguine about CCPs, and still too blasé about the risks that lurk beneath the surface. But it’s something.

October 12, 2017

Trump Treasury Channels SWP

SWP doesn’t work for the Trump Treasury Department, and is in fact neuralgic to the idea of working for any government agency. Yet the Treasury’s recent report on financial regulatory reform is very congenial to my thinking, on derivatives related issues anyways. (I haven’t delved into the other portions.)

A few of the greatest hits.

Position limits. The Report expresses skepticism about the existence of “excessive speculation.” Therefore, it recommends limiting the role of position limits to reducing manipulation during the delivery period. Along those lines, it recommends spot month on limits, because that is “where the risk of manipulation is greatest.” It also says that limits should be designed so as to not burden unduly hedgers. I made both of these points in my 2011 comment letter on position limits, and in the paper submitted in conjunction with ISDA’s comment letter in 2014. They are also reflected in the report on the deliberations of the Energy and Environmental Markets Advisory Committee that I penned (to accurately represent the consensus of the Committee) in 2016–much to Lizzie Warren’s chagrin.

The one problematic recommendation is that spot month position limits be based on “holistic” definitions of deliverable supply–e.g., the world gold market. This could have extremely mischievous effects in manipulation litigation: such expansive and economically illogical notions of deliverable supplies in CFTC decisions like Cox & Frey make it difficult to prosecute corners and squeezes.

CFTC-SEC Merger. I have ridiculed this idea for literally decades–starting when I was yet but a babe in arms 😉 It is a hardy perennial in DC, which I have called a solution in search of a problem. (I think I used the same language in regards to position limits–this is apparently a common thing in DC.) The Treasury thinks little of the idea either, and recommends against it.

SEFs. I called the SEF mandate “the worst of Frankendodd” immediately upon the passage of the law in July, 2010. The Treasury Report identifies many of the flaws I did, and recommends a much less restrictive requirement than GiGi imposed in the CFTC SEF rules. I also called out the Made Available For Trade rule the dumbest part of the worst of Frankendodd, and Treasury recommends eliminating these flaws as well. Finally, four years ago I blogged about the insanity of the dueling footnotes, and Treasury recommends “clarifying or eliminating” footnote 88, which threatened to greatly expand the scope of the SEF mandate.

CCPs. Although it does not address the main concern I have about the clearing mandate, Treasury does note that many issues regarding systemic risks relating to CCPs remain unresolved. I’ve been on about this since before DFA was passed, warning that the supposed solution to systemic risk originating in derivatives markets created its own risks.

Uncleared swap margin. I’ve written that uncleared swap margin rules were too rigid and posed risks. I have specifically written about the 10-day margining period rule as being too crude and poorly calibrated to risk: Treasury agrees. Similarly, it argues for easing affiliate margin rules, reducing the rigidity of the timing of margin payments (which will ease liquidity burdens), and overbroad application of the rule to include entities that do not impose systemic risks.

De minimis threshold for swap dealers. I’m on the record for saying using a notional amount to determine the de minimis threshold to determine who must register as a swap dealer made no sense, given the wide variation in riskiness of different swaps of the same notional value. I also am on the record that the $8 billion threshold sweeps in firms that do not pose systemic risks, and that a reduced threshold of $3 billion would be even more ridiculously over inclusive. Treasury largely agrees.

The impact of capital rules on clearing. One concern I’ve raised is that various capital rules, in particular those that include initial margin amounts in determining liquidity ratios for banks, and hence their capital requirements, make no economic sense, and and unnecessarily drive up the costs banks/FCMs incur to clear for clients. This is contrary to the purpose of clearing mandates, and moreover, has contributed to increased concentration among FCMs, which is in itself a systemic risk. Treasury recommends “the deduction of initial margin for centrally cleared derivatives from the SLR denominator.” Hear, hear.

I could go into more detail, but these are the biggies. All of these recommendations are very sensible, and with the one exception noted above, in the Title VII-related section I see no non-sensical recommendations. This is actually a very thoughtful piece of work that if followed, will  undo some of the most gratuitously burdensome parts of Frankendodd, and the Gensler CFTC’s embodiment (or attempts to embody) those parts in rules.

But, of course, on the Lizzie Warren left and in the chin pulling mainstream media, the report is viewed as a call to gut essential regulations. Gutting stupid is actually a good idea, and that’s what this report proposes. Alas, Lizzie et al are incapable of even conceiving that regulations could possibly be stupid.

Hamstrung by inane Russia investigations and a recalcitrant (and largely gutless and incompetent) Republican House and Senate, the Trump administration has accomplished basically zero on the legislative front. It’s only real achievement so far is to start–and just to start–the rationalization and in some cases termination (with extreme prejudice) of Obama-era regulation. If implemented, the recommendations in the Treasury Report (at least insofar as Title VII of DFA is concerned), would represent a real achievement. (As would rollbacks or elimination of the Clean Power Plan, Net Neutrality, and other 2009-2016 inanity.)

But of course this will require painstaking efforts by regulatory agencies, and will have to be accomplished in the face of an unrelentingly hostile media and the lawfare efforts of the regulatory class. But at least the administration has laid out a cogent plan of action, and is getting people in place who are dedicated to put that plan into action (e.g., Chris Giancarlo at CFTC). So let’s get on with it.




October 9, 2017

The Thaler Nobel: A Nudge to Progressivism in a Populist Age

Filed under: Economics,Politics — The Professor @ 9:02 pm

Richard Thaler won the 2017 economics Nobel. Another win for Chicago. Ironic, in a way, given that in many ways Thaler is the anti-Chicago. The fact that the prime critic of homo economicus is on the faculty of the school most associated with neoclassical economics that utilizes homo economicus as its primary analytic engine is an indication of Chicago’s self-confidence, and reflects a belief that intellectual tension is a spur to scholarly innovation. Also, it may well indicate a canny instinct about future trends in economic science.

Insofar as the Nobel is a measure of impact, this one is warranted: there is no doubt that behavioral economics, of which Thaler is the recognized leader, has had an impact on the profession. That said, this area was recently recognized with Kahneman’s Nobel a few years back, and it would have been preferable IMO to have awarded Thaler along with Kahneman.

Insofar as the substance of behavioral economics is concerned, I largely agree with Mario Rizzo’s opinions on the Thaler award. Along with Rizzo, I find it useful to divide things into positive and normative economics.

With respect to positive economics, as Rizzo notes the primary use of the rational actor assumption is to derive predictions about aggregate/market behavior. It is not at all evident how the irrational actor assumption leads to more empirically robust models.  I vividly recall Gary Becker’s discussion of irrationality in an Econ 301 class at Chicago, in which he showed that rationality (in the form of utility maximization) is not necessary to derive the law of demand (though it is sufficient). Random choices on the budget line lead to a downward sloping demand curve, meaning that the location of the opportunity set, rather than how agents choose a point on that budget set, is the more important factor in causing the demand curve to slope down.

Indeed, there is a danger of falling prey to the fallacy of composition: even if certain behaviors are observed at the level of the individual does not imply that they will characterize behavior at larger elements of aggregation. Allowing for individual irrationality certainly adds modeling degrees of freedom, but that’s more of a bug than a feature, especially given the now vast number of alleged behavioral biases. There is always the risk of cherry picking this bias or that to explain a particular phenomenon, and then cherry picking another (which could be completely at odds with the first one) to explain another. This creates the risk that behavioral economics is empirically vacuous.

Further, there are already plenty of degrees of freedom even within the standard economics maximizing agent framework. Information environment–note that the most die-hard advocate of neoclassical economics and the exemplar of the Chicago School, introduced costly information in the form of search costs to explain price dispersion, which is inexplicable in the Marshallian costless information, perfect competition framework. Preferences–which raises a question: is habit persistence rational or irrational? Strategic interaction–one of the problems with game theory is that virtually any outcome is possible with rational actors depending on the details of the game, the information environment, beliefs, etc. Many phenomenon that seemed anomalous in one type of model with rational actors have been explained by tweaking one of these features all the while retaining the rational actor assumption.

So I’ve yet to see how deviating from the maximizing agent framework (and maximization is really what rationality means) improves the ability of economics to improve the empirical performance of its predictions regarding aggregate/market behavior. Meaning that the contributions of behavioral economics to positive economics are dubious, in the sense that they are unnecessary, and often subject to abuse.

But what really distinguishes behavioral economics is its avowedly normative thrust. People are irrational, and would be better off in objectively measurable ways if these behavioral biases were corrected. Furthermore, many behavioral economists, and Thaler specifically, are quite confident in their ability to identify and correct these biases–and make people better off–through “nudges”.

I have two major objections to this. The first is the fallacy of composition problem mentioned earlier. Nudged agents interact in markets, organizations, and institutions. Individual behavioral changes will lead to changes in prices and market outcomes. It does not follow that “better” individual behavior will result in “better” market outcomes–that’s the fallacy of composition in action. Economies are emergent orders, and small changes in individual behavior can lead to very different emergent outcomes. The law of unintended consequences is ruthless in its operation in emergent settings.

My second objection is more straightforward. Behavioral economics of the nudge variety is relentlessly progressive, in the political sense. There are the elite nudgers, and the irrational hoi polloi who can be improved by the beneficent interventions of the nudgers. Moreover, the elite are apparently not just benevolent, but also devoid of their own behavioral biases.

To which I reply: one of the major biases identified by behavioral economists is the overconfidence bias. Mightn’t the nudgers be particularly prone to that bias? The likely commission of the fallacy of composition suggests that they are. As does the dreary experience of social and behavioral engineering efforts large and small, where technocratic elites in their overweening confidence wreaked great havoc around the world.

Ironically, I would assert that behavioral economics actually feeds the overconfidence bias among its practitioners. A seemingly powerful intellectual tool has the tendency to do that. In economics, I would proffer Keynesianism as an example.

Shall we consider other biases as well? Given that there are many of them, we could be here for a while. Suffice it to say that once you admit the nudgers are themselves imperfect decision makers, the case for nudging becomes very weak indeed. When you add the fact that even Spock-like nudgers operate with seriously limited information (about outcomes of emergent social processes in particular), the case becomes weaker still.

Behavioral economics therefore is just what a would-be technocratic elite ordered. It provides a justification for their existence, and also for an existence that should be independent of check by popular institutions. For it would be irrational, wouldn’t it, to subject rational, bias-free technocrats to the whims of irrational individuals crippled by various behavioral biases? Decision making elites unconstrained by popular forces is the essence of progressivism (and in its extreme form, totalitarianism).

Behavioral economics is particularly precious to the elite in this populist age when technocratic elites are under attack from the hoi polloi. The Nobel committees are notoriously political, and often make political statements through their choices. I would not be surprised if the Thaler award has a strong political undercurrent, given the palpable elite panic at resurgent populism, and the decidedly elitist, progressive thrust of behavioral economics generally, and its Thaler-inspired nudge variety in particular.

Behavioral economics is very congenial to top-down approaches to social problems. It is viewed by deep skepticism with people like me who believe that the knowledge problem; emergence and the law of unintended consequences; and the deforming effects and perverse incentives of power (to name just three things) make top down solutions disastrous in most cases.

So the Thaler Nobel is accurately reflective of the influence of behavioral economics on the profession, and on the profession’s contribution to policy debates. And that is a disturbing reality.

October 6, 2017

Las Vegas, the Liberty-Gun Nexus, and Gun Control

Filed under: Guns,Politics — The Professor @ 11:21 pm

The horrific massacre in Las Vegas has, predictably, led to calls for greater gun control. Or “common sense gun control” as the no-doubt-focus-group-tested Democratic/liberal mantra puts it.

But here’s the thing. Gun control measures (even up to attempted confiscation) will have the least impact on mass shootings a la Las Vegas or Virginia Tech or Aurora or Sandy Hook. Restrictions on guns (like restrictions on drugs, or alcohol) don’t make these things disappear: they raise the cost of acquiring them. The higher cost indeed induces some people not to buy them: but these people are the marginal demanders, those who get relatively low value from them. In contrast, someone like Stephen Craig Paddock is way inside the margin. The likes of him are about as infra-marginal as you get.

Paddock acquired a large number of weapons and a large amount of ammunition. He rented an expensive condominium as his sniper’s nest. He made elaborate plans. He clearly spent lots of time, effort, and money to carry out his twisted plans. Raising the cost or difficulty of obtaining firearms substantially –and far more than the “common sense gun control measures” would– would not have deterred him from his evil plot. He obviously had a high willingness to pay, and an ability to pay.

But there is a perceived need to do something, and hence much time and breath is wasted obsessing on what are in reality trivial details. In the Las Vegas shooting, the focus is on “bump stocks” which allow a shooter to increase the rate of fire of a semi-automatic weapon to near automatic weapon levels: Paddock had such stocks on several of his weapons.

Well, particularly for the kind of shooting that Paddock was doing, it is doubtful that the bump stock (or even a fully automatic weapon) increased his lethality, and quite possibly reduced it. Automatic fire from a non-crew served weapon is notoriously inaccurate: it isn’t referred to as spray and pray for nothing. Although the first models of the M-16 had a fully automatic selection, later models eliminated it. This was in large part due to the fact that the military learned that aimed single-shot fire is more accurate and more deadly than rocking and rolling on full auto.

In Iraq and Afghanistan, it is easy to distinguish fire from American troops from that of jihadis: the Americans fire single rounds, the jihadis blaze away on automatic. Those fighting Americans often find this disconcerting, in part because it communicates discipline and control and training. This can be unnerving. In contrast, firing on automatic often mainly provides a psychological boost to a shaky amateur, or serves to keep an enemy’s head down while other elements of a fire team maneuver to close with the enemy.

Automatic fire–and bump stock quasi-automatic fire–also increases the risks of jamming. Apparently several of Paddock’s weapons were found jammed.

So ban bump stocks, but realize that it is a ritualistic act not one that will make would-be mass shooters less lethal.

Other proposals are even more asinine. Hillary–you’re shocked, I’m sure–was first to the post in asininity, tweeting that just think how much worse things would have been if Paddock’s weapons been equipped with “silencers” (currently heavily regulated, but which some Republicans have proposed making easier to obtain). After all, if his guns been “silenced,” the no one would have heard the shooting and Paddock would have had more stationary targets!

Nice of Hillary to attempt to score political points against Republicans while the bodies were still warm.

Where to begin? This is stupid beyond words. Many have pointed out that even a suppressor (a more accurate term than “silencer”) merely reduces the noise caused by the explosive release of gases from the muzzle of a weapon when it is fired. But that’s not even the most ludicrous thing. A high powered rifle firing a standard cartridge shoots bullets traveling faster than the speed of sound. So the bullet creates a sonic boom–heard as a cracking sound: a suppressor does nothing to reduce the intensity of this sound. A suppressed gun still makes a big noise. Further, downrange, the bullet is still moving through the air, and creates a ripping sound as it passes. Which means that if you are downrange you will hear the bullet passing by before you hear the report of the weapon.

Suppressors can reduce the sound of pistols noticeably–because they fire subsonic rounds. But you ain’t going to shoot people 1000+ feet away with a pistol.  Similarly, if you fire special subsonic ammunition from a suppressed rifle, the report can be substantially reduced. But again, because of the lower power of these rounds, you won’t hit anything beyond 70 yards or so (i.e., smoothbore musket range). (US special operators have sought subsonic rounds for use on raids to enhance stealth, but they would be using this ammunition at close quarters.)

Here are a few videos that illustrate these points. Note to Hillary: 30 seconds on YouTube are all that you’d need to find this information, and loads more. But why let facts get in the way of a good narrative to score some political points, right?

So every one of Paddock’s weapons could have had a suppressor, and it wouldn’t have made a damn bit of difference. (I’d also note that because he was firing in an urban environment with lots of hard surfaces at various angles, the sound would have bounced around so much that pinpointing his location based on sound would have been nearly impossible.)

This all means that the “common sense” gun control proposals are totally senseless, if the goal is to reduce, let alone eliminate, mass shootings, or to reduce the lethality of people like Stephen Paddock.

Thus, more draconian measures–likely including mass confiscation–would be required. And this is something that a large majority of Americans have made it clear that they will not condone. In essence, for most Americans, periodic mass shooting is something that they are willing to accept in order to retain their ready access to guns of pretty much all types.

This the American left, and most of the rest of the world, finds utterly inexplicable, and downright horrifying. The defiant embrace of firearms by a large portion of the American populace, and the tolerance of this embrace by another large portion, is shocking to them.

The embrace, and the understanding even by many of those who do not embrace, reflects the strong connection in the American mind between ownership of guns and individual liberty. In Europe, long before the US was formed, bearing arms was emblematic of autonomy and status. That connection was even more pronounced in America. Free men can bear arms: slaves, serfs, and the otherwise subservient cannot.

An expression, of which there are several variants, expresses this: “God made men, Samuel Colt made them equal.” (The Colt website, perhaps respecting religious sensitivities, has it “Abraham Lincoln freed all men, but Samuel Colt made them equal.”) When armed, in other words, I am equal before all men. Since, as de Tocqueville noted, liberty and equality are paramount to Americans to a degree unparalleled in the rest of the world, restrictions on firearms are deemed a dangerous encroachment on fundamental freedom. It’s not just about guns qua guns. It’s about what guns mean for freedom.

In the American mind, the right to bear arms is fundamental precisely because it is viewed as the thing that makes Americans a uniquely free people: the very horror with which other nationalities view American gun culture in fact reinforces the American attachment. This demonstrates the uniquely robust nature of American freedoms, as opposed to those enjoyed by the citizens of other nations. Similarly, the fact that gun sales actually tend to increase in the aftermath of mass shootings is likely due to a belief that it is at precisely these times that this symbolically potent liberty will be restrained.

Law abiding gun owners are also deeply incensed, and take it quite personally, when their responsible possession of guns is threatened as a means of reducing murder or suicide or even mass shootings because this lumps them with street thugs, drug dealers, the emotionally troubled, and the psychopathic.

Thus, the left is actually acting against its own policy preferences when it ratchets up the rhetoric in the aftermath of a Las Vegas or a Sandy Hook. That rhetoric triggers (yes, pun intended) a passionate reaction against additional controls on guns because many perceive this to be a blow against personal freedom generally, and an attack on their characters.

It is fascinating to note that American support for gun control–any gun control, including measures far less draconian than in place in most of the rest of the world–has decreased in recent decades. I don’t think this is accidental. This has also been a period of increased government power, and increasing encroachments of the state on individual liberty. My argument about the liberty-gun connection predicts exactly such a relationship. Similarly, in the United States, those who are most supportive of an expansive government are most supportive of gun control: those most hostile to or suspicious of the government are most opposed.

To which a good German (or a good liberal) is likely to reply: but look at the carnage that such a sentimental attachment to liberty–and guns-causes! Well, when I look at the carnage that good German subservience to the state causes (world wars, mass murder), I know which is the much lesser of two evils.

By its nature, America always attracted the most independent, most rebellious, and most recalcitrant of the people of Europe. They were attracted by the greater personal liberty, and this in turn generated a kind of turbulence that was and is the source of great creativity and energy, but which had as one of its downsides a greater propensity for personal violence. Life is about trade-offs, and this is a fundamental trade off that has characterized America since even before its founding as a nation.

Thus, to many Americans, guns and liberty are a package deal: you can have both, or you can have neither. Yes, like all things, guns have their cost. But despite this cost, to many the package of both is still vastly preferable, given the value of liberty.

You may find this incomprehensible. You may find this stupid. You may even find this evil. I don’t, but I understand there are those who do. But I believe it is a reality, and in a democracy, you have to deal with the people as they are. And a lot of people–perhaps not a majority, but a strong minority at least–believe in the package deal. Those who do, believe in it passionately, intensely. So if progressives want to change fundamentally the laws on guns, they have to change fundamentally the people–or act in highly undemocratic ways.

The left is of course totally cool with trying to change the people: it is one of their abiding passions. They are also not averse to undemocratic means to achieve their objectives–that was understatement there, folks. But ironically, the harder they push, the greater the pushback. The Trump presidency is probably the most notable result of that pushback.

This is why even horrors like Las Vegas do not lead to major shifts in public opinion, and if anything, lead to a hardening of that opinion. In the United States, for deep historical and cultural reasons, there is a strong nexus between personal liberty and firearms. A threat to the latter is deemed a threat to the former. And since personal liberty is so fundamental to many Americans, a threat to the former is an existential one, or close to it. This is not conducive to compromise: to the contrary.  So the not-so-passionate-about-liberty left will push, and the passionate-about-liberty non-left will push back, leaving us in exactly the same place, but only more hostile and bitter in our division.



October 4, 2017

The Identity Politics Left is Now Devouring the Traditional Left That Fed It

Filed under: Politics — The Professor @ 7:43 pm

It is a common for conservatives to be shouted down–or rioted down–on college campuses. But we are now seeing that traditional rights-liberals are also under threat. The ideal of free speech is rejected by the identity politics left as being a form of oppression, a cover behind which whites (and especially white, heterosexual, males) exercise dominance over marginalized groups.

Case in point: on Monday, a speaker from the ACLU who had intended to speak on “Students and the First Amendment” was shut down by Black Lives Matter protestors at William & Mary University:

It was the last remark she was able to make before protesters drowned her out with cries of, “ACLU, you protect Hitler, too.” They also chanted, “the oppressed are not impressed,” “shame, shame, shame, shame,” (an ode to the Faith Militant’s treatment of Cersei Lannister in Game of Thrones, though why anyone would want to be associated with the religious fanatics in that particular conflict is beyond me), “blood on your hands,” “the revolution will not uphold the Constitution,” and, uh, “liberalism is white supremacy.”

Liberalism is white supremacy. Got that? In other words, the ACLU are the new Nazis, the new Klan. For all of you who are petrified at the thought of being called racist, see what little space you now have to operate in: it’s kowtow to the identity politics left of which BLM is an exemplar, or be considered no different than Bull Connor.

On the one hand this is deeply disturbing. On the other, it is quite clarifying, and I hope (but doubt) that it will get traditional liberals to open their eyes to the monster they have unleashed. For the traditional left (the New Deal, Great Society, civil libertarian left) has fed the identity politics beast that is now devouring them.

They were warned, early and often, but they ignored. Why? Partly out of naivety, I’d guess. But that’s the most charitable explanation. Less creditable, but more important explanations include: (1) “no enemies on the left,” (2) a cynical political calculation that identity politics were a useful battering ram in their battle against conservatives, classical liberals, and libertarians, and (3) a long-ago category error that the best way to achieve equal rights for minorities was to grant them special rights based on their race, origin, sexual orientation, or gender. Underlying all this was–is–the belief that America is a fundamentally flawed society and polity founded on racism and class oppression. BLM and Antifa and the like are the inevitable consequence of that belief.

Will this be the traditional left’s come to Jesus moment? I doubt it. They are too far down the road to turn back. Perhaps they will try to go AWOL, but their inveterate hatred of the right and their fear of the more militant on their left will in the end, I fear, lead them to fall in behind the revolutionary vanguards of identity politics. College administrators are already doing that, and I think they are just a leading indicator of how the broader left will behave. This does not bode well for politics, or for civil society, in America’s future.


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