Sheikhs of America

Think of this as Volume 14, Number 31 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

What may appear to journalists, or even historians, to be an ideological war usually turns out, in America, to be a choice between economic interests.

In our time the choice is on the title of this blog. It's a choice between energy defined by resources, which come out of the ground, or by devices that harness the energy all around us.

A new Thesis is born when the crisis leader turns definitively toward the new economy, explicitly rejecting the old. And it's brought on by the old economy seizing political power in an attempt to hang on against the new.

In other words the fight of our time is not between left and right, liberal and conservative, Democratic or Republican. It's between devices (the alternative energy of windmills, solar cells, tidal energy, and geothermal) and resources (coal, oil, natural gas). The former should define wealth, not the latter. And it's the climate bill that matters, nothing else. 

The current situation can be seen in the graph above from the Environmental Law Institute. We're subsidizing resources. We're choosing oil, coal and gas over other forms of energy, through the instrument of government. This is what the President must change if he is to seize the crisis of our time and put our economy on a sustainable path.

It's always been this way:

• 
  The Nixon crisis, at its heart, was a choice between Moore's Law (right) and the economics of manufacturing. TV and radio were our first high-tech goods. The development of transistors and integrated circuits would replace traditional manufacturing. Deflation had to replace inflation.
• The New Deal, at its heart, was a choice between production and consumption. All the "pro-labor" actions of the Roosevelt Administration actually created a consumer market for the goods new companies were creating. Without demand, supply can't clear the market. Roosevelt needed inflation, and delivered it, in the face of "progressive" policies that saw deflation as savings.
• The Progressive era, at its heart, was a choice between regulated utilities, which could provide steady and rising energy input to the economy, and monopolies which limited production to one unaccountable company. Teddy Roosevelt actually stood on the side of J.P. Morgan, his grand bargain being that you can control vast sectors of the economy but would have to commit to maximum supply and regulated prices.
• The Civil War era, at its heart, was a choice between man and machines. The Confederacy, and the artisans of the north, used labor as their input, and saw controlling its costs as essential. Lincoln was a Whig, who believed in "national improvements" like roads and canals, which would benefit manufacturers who produced goods with machines. 

The nature of each generation's economic crisis has been increasingly cloaked in what appear to be political battles between right and wrong. This is just a cloak. The choice is really between economic progress and stagnation.

America could not have become an industrial power in the 19th century until it chose policies designed to encourage industry. It couldn't become a world power in the early 20th century until it chose policies under which manufacturers could set long-term plans. We couldn't become a consumer society in the mid-20th century without policies which put money in consumers' pockets. And we didn't become a high-tech society until mass market education gave us the trained minds needed to turn chips into products and services. 

What is most interesting to me, looking at our economic history, is how each crisis leader came to power reluctant to confront the real problems of his time, but finally succeeded by acting decisively against those interests.

• Nixon instituted wage and price controls which, while they didn't stop price rises, did endorse deflation over inflation for the first time in a generation.
• FDR signed the National Labor Relations Act (right), assuring workers could become consumers. Conservatives still misunderstand these laws.  Mass production means nothing without mass consumption, and that rides on a rising tide of consumer wealth.
• Theodore Roosevelt called what he did trust-busting, and made it popular. But his Administration also endorsed regulated monopolies, electrical and phone monopolies promising universal service, and regulated rates. This let manufacturers like Henry Ford make long term plans.
• Lincoln faced the real problem of his time when he signed the Emancipation Proclamation. While seen by history as a great act for human rights, he saw it, and southerners saw it, as an economic act of aggression, meant to destroy forced, controlled labor and favor manufacturers.

The reason President Obama's work seems half-finished is because it is barely begun. Health care and financial regulation, stimulus and capital formation, are all big liberal victories, but they don't create and drive economic change. They don't endorse the new market, the new opportunities, the new industries that will unlock trillions of dollars in capital now on corporate balance sheets and create new jobs.

What this means is that the 2010 campaign needs to make this explicit. The President should run on the climate bill. But he needs to emphasize that it's not a climate bill. It is, in fact, a jobs bill. When economic incentives move from what is failing to what can grow, millions of jobs will be created. Good jobs, American jobs. Sustainable jobs. And the world will be transformed by that.

It's such a no-brainer you may wonder why the Senate is stalled. That's where the Sheikhs of America come into the picture. 

Every crisis that seems political is triggered by the old economic order seizing political power on behalf of its own interests. The example you'll remember from school books is the slave power of the 1850s, which paralyzed Washington, standing behind northern-born Presidents Pierce and Buchanan whose policies endorsed Fugitive Slave Laws and the Dred Scott decision.

In our time these are the oil men, the people surrounding Bush and Cheney with money, the same small group of oil and mining owners and executives backing the whole "right-wing" conspiracy now arrayed against the President. It's centered in Texas and Louisiana because that's where the money is, and while it cries "freedom" in fact it's a cry for self-interest over national interest.

Follow the money. Look at the people who give money to Karl Rove and Dick Armey. Not the small fry, the big bucks. The people who write the multi-million dollar checks aren't really interested in what happens to the followers they stir up. It's their ownership of resources, the valuation they want to keep rising on those resources, that is at issue. Nothing else really matters.

By stepping up to the plate on behalf of economic change, by fighting the war against oil, Barack Obama can use this campaign to break the back of the far right, which is not based on any coherent set of ideas but the economic interests of a few oil and coal billionaires.

The choice of whether to do this, and how to do this, will define Barack Obama's legacy, and our future. Take the economic incentives now going to Don Massey and Tony Heyward, give them to John Doerr and Al Gore.

We are not in an ideological war. We are only facing the same economic choice we have always faced as Americans, between the past and the future, between the industries of yesterday and those of tomorrow.

Until now we have always made the right choice.