Saturday, September 21, 2013

Today in the Financial Crisis, Sunday September 21, 2008: Hank Paulson, George Washington and Benito Mussolini Walk Into a Bar: Part I

Yes, in the office on a Sunday. I was already friends with the cleaning people, now I was getting to know the security folks.

Only one post that day, a Machiavellian riff on the oversight proposal by the former Goldman honcho now occupying the Secretary of the Treasury's office.

Although we had caught a thousand point updraft in the DJIA Thursday and Friday there was work to be done, not blogging. Hank Paulson wanted to be dictator and I didn't think he'd do the Cincinnatus thing that Washington emulated but rather that Paulson would be more of an Il Duce kind of guy.

Hank Paulson, George Washington and Benito Mussolini Walk Into a Bar: Part I
UPDATE: I am not going to get to part II today, reality keeps intruding. Let's see what tomorrow brings.
Original post:
Back in high school, it was in either a civics or history class, we had a two week module on Machiavelli's The Prince. I asked the teacher if I could spend the time reading Niccolò 's Discourses on the first Ten Books of Titus Livy instead. I did this for a couple reasons:
a) I knew where I could buy a paperback copy for a quarter.
b) I had to do something about the 'D' I was achieving to that point in the class.
The downsides were:
a) It was written at a level above my head.
b) It is a much longer book than The Prince.
(ask any teenager how important this consideration is)...

...So I had Mussolini wafting up from the reptile brain when I read, in the New York Times:
...Sec. 8. Review
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
-Text of Draft Proposal for Bailout Plan, NYT 20Sep08
I had a very negative first reaction to this hand over of so much power to an unelected administrator. Basically a Dictator. Then I remembered The Discourses, specifically Book I, ch. 34.
(I really did remember the exact chapter. Psychologists tell us that a memory imprints most strongly when it has an emotional context, whether positive or negative. I got an A+ for that module, a B+ for the class and went on to fame, fortune and blogging)*
From Machiavelli's Discourses...:



Those Romans who introduced into that City the method of creating a Dictator have been condemned by some writers, as something that was in time the cause of tyranny in Rome; alleging that the first tyrant who existed in that City commanded her under this title of Dictator, saying if it had not been for this, Caesar could not under any public (title) have imposed his tyranny.
Which thing was not well examined by those who held this opinion and was believed beyond all reason. For it was not the name or the rank of Dictator that placed Rome in servitude, but it was the authority taken by the Citizens to perpetuate themselves in the Empire (government): and if the title of Dictator did not exist in Rome, they would have taken another; for it is power that easily acquires a name, not a name power. And it is seen that the Dictatorship while it was given according to public orders and not by individual authority, always did good to the City. For it is the Magistrates who are made and the authority that is given by irregular means that do injury to Republics, not those that come in the regular way....MORE
... Here's the 1772 translation I copied here.
Here's a more recent (1996 ) translation via Google books (ch. 34 is on page 73)
Part II in a bit.
*One lesson from this is, if you are being graded on a curve and realize you won't end up on the right-hand side , get on a different curve.
Another lesson might be to go against the herd if you want to stand out.