"Leadership: Six Studies in World Leadership," Henry Kaufman

 At a time when the world sits precariously, in an apparent Thucydides Trap, between a self-indulgent West and an assertive China, this book has relevance.

 

Sydney M. Williams

 

Burrowing into Books

“Leadership: Six Studies in World Strategy,” Henry Kissinger

February 18, 2023

 

“For a nation to pretend to total autonomy is a form of nostalgia;

reality dictates that every nation – even the most powerful – adapt its

conduct to the capability and purposes of its neighbors and rivals.”

                                                                                                                Henry Kissinger (1923-)

                                                                                                                Leadership: Six Studies in World Strategy 2022

 

The leaders Kissinger discusses were forged in the crucible of the Second World War, the three oldest as players, the three youngest as observers. They were all classically educated, at a time when character was emphasized; they were intelligent, aspirant, and advanced to positions of authority based on merit. They had a positive effect on the world they inherited. Kissinger writes: “…[In] the unending contest between the willed and the inevitable, [they] understood that what seems inevitable becomes so by human agency.”

 

Another author might have selected different leaders; this list comprises those whom Kissinger knew, worked with, and respected. The central foreign policy challenges of this period – the end of World War II through the collapse of the Soviet Union in 1991 – the rebuilding of Europe and Japan and the building of a world order; the Cold War; and the struggle between liberty and tyranny. While each was unique, these six had in common directness and boldness, and they were unafraid of offending entrenched interests.

 

Through biographical sketches, Kissinger presents a history of those forty-five years, which saw the economic and political revival of former Axis powers, the end of European imperialism, the birth and struggle of new nations, and the collapse of the Soviet Union:

 

           Konrad Adenauer (1876-1967): He served as Mayor of Cologne from 1917 until 1933. “As an adult,” Kissinger writes, “Adenauer had experienced the German state’s three post-Bismarck configurations…under the Kaiser…under the Weimar Republic…and under Hitler, culminating in self-destruction and disintegration.” He was elected the Federal Republic of Germany’s first post-War Chancellor. In ten years, his Country had become a full partner in Europe and the Atlantic Alliance.

 

            Charles de Gaulle (1890-1970): “A sensitive reader and author of poetry as a child…The virtue of self-mastery, sketched in his journal, was to become a central feature of his character.” During the War, he kept alive the concept of sovereign France, saying she must be on the side of victory. “If she is,” Kissinger quotes from de Gaulle’s journal, “she will become what she was before, a great and independent nation. That, and that alone, is my goal.” De Gaulle restored the dignity of France.

 

           Richard Nixon (1913-1994): Kissinger served as Nixon’s Secretary of State, so knew him well. He doesn’t shy from his faults. There was the decisive and thoughtful Nixon, the one he describes in this book. But there was also the insecure Nixon “uncertain of his authority and plagued by a nagging self-doubt.” We are told that Nixon’s foreign policy views were “more nuanced than his critics’ perception of them.” “The essence of Nixon’s diplomacy lay in his disciplined application of American power and national purpose…,” with the opening of China his principal accomplishment.

 

           Anwar Sadat (1918-1981): “Of the individuals profiled in this volume,” Kissinger writes, “Sadat was the one whose philosophical and moral vision constituted the greatest breakthrough for his time and context.” “His policies,” he adds, “flowed organically from his personal reflections and his own interior transformations.” He believed “that Egypt’s freedom would be achieved through independence…His aim was to resurrect an ancient dialogue between Jews and Arabs…their histories were meant to intertwine.” This he did, as Egypt’s President from October 1970, until he was assassinated on October 6, 1981. 

 

Lee Kuan Yew (1923-2015): The first Prime Minister of an independent Singapore, he served from 1959 until 1990. Singapore is an authoritarian state, but Lee’s rigorous enforcement of the city-state’s laws has made it one of the least corrupt nations in the world. In a world of relaxed Western morals, which Lee saw as “freedom run amok,” he was a pragmatist. He preferred a market economy to statism, because it produces higher growth rates. He sought talented foreigners and brought women into the workforce, because he could not achieve his goals without them. “I was never,” Kissinger quotes Lee, “a prisoner of any theory. What guided me were reasons of reality.”

 

Margaret Thatcher (1925-2013): She was brought up in rooms above her father’s store, “lacking hot water and an indoor bathroom.” A graduate of Oxford with a degree in chemistry, she was turned down for a research job at Imperial Chemical Industries (ICI): “This woman is headstrong, obstinate, and dangerously self-opinionated,” was ICI’s internal assessment. Ironically, those qualities led to her political success. Thatcher, Kissinger writes, “was an implacable advocate of self-determination…in the right of citizens to choose their own form of government…and in the responsibility of states to exercise sovereignty on their own behalf.” She restored England’s economy, her sense of dignity and self-respect, in a world where she was no longer hegemonic. 

 

The world in which these six leaders lived had changed from an hereditary-aristocratic model prior to World War I to a middleclass-meritocratic one in the post-World War II period. During that time, the sun set on the British Empire, affecting both Egypt and Singapore. World War II saw the collapse of France in 1940, the near collapse of England the same year, and the devastation of Germany by 1945. The United States emerged as the wealthiest and most powerful nation on Earth. None of the six profiled grew up privileged. Two of them – Adenauer and Sadat – spent time in prison. De Gaulle and Lee had to deal with enemy occupiers of their countries. All were students of history.

 

Henry Kissinger has provided an intimate and masterful history of that time, with an emphasis on six individuals who played out-sized roles. In his conclusion about Thatcher he writes, in words appropriate to all six: “But only love of country and her people can explain how she wielded power and all that she achieved with it.”

"Inflation"

                                                                   Sydney M. Williams 

Thought of the Day

“Inflation”

July 31, 2021

 

“The most important thing to remember is that inflation is not an act of God, that inflation is not

a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.”

                                                                                                        Ludwig von Mises (1881-1973)

                                                                                                        From a lecture, 1958

                                                                                                        Selected Writings of Ludwig von Mises, Chapter 9

 

Are we or are we not, in the early stages of an inflation surge? The question is important because the answer has consequences that affect us all – from the daily cost of bread and energy to investment and retirement accounts.

 

The President and the Federal Reserve claim inflation is not a problem. On July 19, Mr. Biden spoke at the White House: “Our experts believe and the data shows that most of the price increases we’ve seen are – were – expected and expected to be temporary.” In February, in testimony to Congress, Fed Chairman Jerome Powell said that the growth in money supply, specifically M2, “doesn’t really have important implications.” Upticks in inflation are “anomalous and transitory.” Nevertheless, one wonders. In a July 21 Wall Street Journal op-ed, John Greenwood, chief economist of Invesco and Steve Hanke, professor of applied economics at Johns Hopkins, wrote: “Since March 2020, M2 has been growing at an average annualized rate of 23.9% - the fastest rate since World War II.” The Fed’s target rate for inflation is two percent; however, for April, the CPI was 4.2%; for May, 5% and for June, 5.4%. The PCE (Personal Consumption Expenditures) price index – the index the Fed uses as their primary source for inflation – rose 6.4% in the second quarter versus 3.8% in the first quarter. If inflation is nothing to worry about, try telling that to families living on a median wage or to retirees on fixed incomes. Energy prices were up over 40% between December 31 and June 30, while food commodity prices were up close to 20 percent.

 

Since the start of the recession in February 2020 (which lasted only two months according to the National Bureau of Economic Research!), the Federal Reserve has retained a policy of near-zero interest rates and $120 billion in monthly bond purchases. When the Fed purchases Treasury’s they add to the money supply. Federal debt now amounts to 119% of GDP. The last time federal debt exceeded GDP was in 1946, in the aftermath of World War II, when it stood at 106% of GDP. The federal deficit for fiscal 2021 is expected to be $3 trillion, much of which will be financed by the Federal Reserve. As the Wall Street Journal noted in their lead editorial on July 29: “You don’t have to be a cynic to wonder if the Fed privately now wants more inflation to ease that rising debt burden.” Paying back borrowed dollars with cheaper ones is a policy decision. Five percent inflation means that $100.00 invested in a Thirty-Year Treasury would be worth $23.00 at maturity, while the interest payments (currently 1.93%) would amount to less than $60.00 (before reinvestment) of a depreciating currency – attractive to the borrower but not for the investor. In 1919 John Maynard Keynes, in an essay entitled “The Economic Consequences of the Peace,” wrote: “By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” Inflation is a tax that falls most heavily on retirees and the low income.

 

Fifty years ago (August 15, 1971), President Nixon ended the Bretton Woods Agreement, which called for the U.S. to redeem dollars presented by foreign governments at 1/35^th of an ounce of gold. Ending the agreement made it easier for the U.S. Government to finance social programs, without raising the necessary taxes, but making inflation more likely. The Dollar, thus, became a fiat currency, meaning it was backed by the credit worthiness of the issuing government, not a physical commodity, like gold or silver. Fiat currencies lose value during times of economic and political uncertainty. Their numbers can be increased, ad hoc, at the will of the government 

 

In a 1963 talk in India, Milton Friedman observed: “Inflation is always and everywhere a monetary phenomenon, in that it can be produced only by a more rapid increase in the quantity of money than in output.” His hypothesis is expressed in the equation MV = Py, where M is the supply of money, V is its velocity (the rate at which money is exchanged), P is the price level (using either PCE or CPI) and y is real gross domestic product (GDP). Thus, when V and y are constant, an increase in M means an increase in P. On the other hand, increased GDP growth may warrant an increase in the money supply, as well as its velocity. If price stability is the desired outcome, the Fed must carefully monitor the relationship between the supply of money, its velocity and GDP.

 

But are they, and will they? Over the past several years, the Fed has become politicized and less independent. Today, a former Fed Chairperson, Janet Yellen, serves as U.S. Secretary of the Treasury. Since the end of the last recession in 2009, the Fed, pressured by the Obama and Trump White Houses, kept interest rates at historically low levels. In the past two years, since the onset of the pandemic, the growth in money supply has been high, driven by increased government spending, much of which has been funded by the Federal Reserve’s bond purchases. However, velocity of M2 fell by 21% during 2020, reflecting declines in consumer and business spending caused by COVID. So, inflation was not a concern in 2020. However, with the economy picking up speed, the velocity of money has accelerated, and the money supply continues to expand, creating inflationary pressures. Will that trend continue?

 

The Federal Government’s proposed spending plans, especially the $3.5 trillion budget plan, will require the issuance of new bonds, along with new taxes that act as a retardant on GDP growth. While GDP is now above pre-pandemic levels, economic growth in second quarter was below expectations, perhaps a warning sign. Higher debt loads have a natural tendency to increase interest rates, something Washington does not want, so there will be pressure for the Fed to continue bond purchases. Using Friedman’s formula, can GDP growth equal the increase in money supply and velocity, without an increase in price (inflation)? The truth is we don’t know, or, at least, I don’t. But I worry.

 

Debt to GDP is at record levels for a peace time economy. Budget deficits are the highest since World War II. The fiscal 2021 federal budget outlays will represent about 29% of GDP, five percentage points higher than a year ago. Will higher government spending boost GDP growth, or will it impede the private economy? Near the conclusion of his lecture quoted in the rubric, Ludwig von Mises said, “One of the privileges of a rich man is that he can afford to be foolish much longer than a poor one.” The Federal Reserve has a challenge. It must navigate between the Charybdis of inflation and the Scylla of excessive federal spending and debt. Can they do that without debauching the currency? Let us hope so. In his 1919 speech quoted above, Keynes began: “Lenin is said to have declared the best way to destroy the capitalist system is to debauch the currency.” Is that what we are doing?

 

I am not predicting a return to the 1970s inflation or something worse. But I worry. As a country, we are that rich man to whom von Mises referred. Let us pray we will not be more foolish than we have been.

"Political Realignment and the 2020 Election"

 

Sydney M. Williams

30 Bokum Road – Apartment 314

Essex, CT 06426

 

Thought of the Day

“Political Realignment and the 2020 Election”

September 18, 2020

www.swtotd.blogspot.com

 

“I think it would be a great tragedy…if we had our two major political parties divide on what we would call a conservative-liberal line. I think one of the attributes of our political system has been that we have avoided, generally, violent swings in Administrations from one extreme to another. And the reason we have avoided that is that in both parties there has been a broad spectrum of opinion. 

Richard Nixon Speech, California Commonwealth Club June 11, 1959

 

There are roughly 250 million Americans of voting age, of which about 62%, or 155 million, actually vote.

Gallop, as of May 2020, showed 31% of Americans identify as Democrats, 25% as Republicans and 40% as Independents. Despite the growth in unaffiliated voters. the numbers lend credence to Nixon’s observation, quoted above, that both parties are “big tent” parties. It explains why neither Party has been extremist in governing…yet.

 

But will that happy situation continue? There is reason for concern. There has been an inexorable trend toward big government. Ninety years ago, Franklin Roosevelt’s New Deal expanded the role of government and he attempted to pack the Supreme Court. Lyndon Johnson’s Great Society further inflated government’s role, increasing dependency on “benevolent” government. George W. Bush introduced the concept of “compassionate” conservativism, a euphemism for a more dominant part to be played by government. Barack Obama, with his call for universal health care and his vision expressed in “The life of Julia” of cradle-to-grave government, wanted government yet more powerful. In 1930, government expenditures accounted for 11.1% of GDP. By 1960, that number was 15.1% and today spending by government approaches 40% of GDP – levels last seen during World War II. 

 

Today’s Democrats, a Party once comprised of urbanites, private sector union members and leaders, immigrants, the poor and Dixiecrat segregationists, now encompasses suburban and coastal elites, Wall Street titans, tech company CEOs, globalists, academicians, government bureaucrats, public sector union leaders, the media and those in the entertainment businesses. Republicans, once the Party of fiscal conservatives, country club types, suburbanites, big business, religious conservatives and Wall Street, have become the Party of small business owners, the military, social and religious conservatives, “deplorables” (a catch-all phrase for working men and women throughout the nation, including those who believe in God, honor, duty, family and country), and a small number, like me, who put common sense above ideology.

 

The battle for the Presidency has become nasty. Each Party seeks to hold onto existing members as they search for new ones. An east coast conservative is now persona non grata at her or his country club. A west coast unionized policeman, no matter his or her race, is seen as the enemy by urban rioters. Using Saul Alinsky’s Rules for Radicals, the Left has waged war against the Right since the 1960s, bringing, as President Obama said he would, a gun to a knife fight. They weaponized the IRS to go after opponents in 2012; they blamed the murder of Ambassador Chris Stevens on an innocent Coptic Christian Nakoula Basseley Nakoula, who was jailed. They weaponized the intelligence services in 2016, first in an attempt to destroy Mr. Trump’s candidacy and, when that failed, to impede his Presidency. Republicans tried statesmanship, in nominating John McCain in 2008; they tried propriety when Mitt Romney headed the ticket in 2012. Both lost. In 2016 they went with a man without dignity, statesmanship or propriety, but a man who would fight back. They nominated Donald Trump, and they won. 

 

If the DNC Platform is to be believed, a Biden-Harris (Harris-Biden?) administration would mark the end of free market capitalism, free speech and choice, all of which have led to the most successful republic the world has ever known.  The cynical, naïve and ill-educated who now control the Democrat Party are directing it toward Marxism and socialism. Leaders have sold followers a false promise of fairness, equal outcomes, free healthcare and education, a society where identity supersedes ideas. There are those who claim the goal is democratic socialism, as practiced in Scandinavia countries like Sweden. They misunderstand. While Sweden does have a robust welfare system, it is not socialist. The means of production are held privately; the government embraces free trade; there is no state-mandated minimum wage, and families are able to use public funds, in the form of vouchers, to finance their children’s education at private schools. As expressed by far-left Democrats, Socialism is authoritarian; it is McCarthyism; it suppresses individualism and free expression.

 

Socialism is a means to power for politicians and plutocrats who support them, like Michael Bloomberg who announced he will spend $100 million to help Joe Biden defeat Donald Trump in Florida. For the electorate, however, it is a trip into a dark and dystopian land. In her book Great Society, Amity Schlaes wrote about the siren call of socialism in the 1960s, a comment relevant today: “Socialism was so broad, vague and romantic that it was harder to discredit…So long as socialism was never complete, as long as socialists were still protesting and building, no one could dismiss socialism. That was the beauty of it.” Those who advocate socialism never identify it with the National Socialist German Workers’ Party (Nazis), Cuba, Venezuela, or Communists in China and the old Soviet Union. Besides backing genocide (Nazis, Soviets and the Chinese), Socialism opens a back door that lets in restrictions on liberty, innovation, aspiration and hope. It will result in higher taxes for everyone. Ultimately, it leads to totalitarianism.

 

Democrats have become the Party of elites, forgetful of past supporters and disdainful of plebian opponents. Fearful of a Trump victory, they and a few “never-Trumpers” recently formed the Transition Integrity Project, a deceptively grandiose name for an authoritarian plan that would ensure no peaceful transition of power takes place, should Mr. Trump win re-election. Many blacks and Hispanics, once taken for granted by Democrats who purchased their allegiance through government payments, now realize they have been duped. “What do have to lose?” is the way President Trump put it at the Republican Convention when asking for their support. Republicans offer opportunity to minorities, while Democrats offer bounty. Blacks and Hispanics recognize dependency on government does not lead to success and happiness, that jobs bring dignity and that the traditional family matters. Thus, they have been leaving the Democrat Party. Mr. Trump’s percentage of their votes in November is likely to be the highest for any Republican in more than half a century. As well, immigrants who have come legally to these shores from Eastern Europe and Latin America understand that Socialism is not the panacea claimed. Freedom remains a powerful lure.

 

The last major political realignment was in the 1960s, when President Johnson’s promise of “guns and butter” caused blacks to migrate to the Democrat Party, and Nixon’s Southern Strategy brought conservative Southern whites into the Republican fold. We are now witness to another change. Nixon’s words, in the rubric above, were spoken at the end of the Eisenhower era, a time long past. Extremists have taken control of the Democrat Party. With “cancel culture,” a “broad spectrum of opinion” no longer exists. Will it cost them the election? We better hope it does.