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The Great American Housing Bubble

5/8/2021

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The Great American Housing Bubble: What Went Wrong and How We Can Protect Ourselves in the Future
By Adam Levitin and Susan Wachter


This is an explanation of the housing bubble and collapse from scholars highly influential among congressional Democrats, arguing in sum that the post-New Deal regulated housing market worked well and that the bubble resulted from the growth of unregulated private-label mortgage backed securities in the mid-2000s. 

Early in the book, they include a straightforward defense of homeownership, as opposed to renting, as a goal worth pursuing through government policy, an assumption that shapes a lot of their analysis and recommendations: “A nation of homeowners is a nation in which all households share in the prosperity that has generally gone with homeownership and in which all households are protected from the risk faced by renters -- the risk of being priced out of one’s own community by gentrification, inflation, and economic growth” -- thus a guard against inequality.

The first half of the book is a narrative of the mortgage market from its beginnings through the crisis. It starts with the pre-Depression housing market, which featured only short-term, interest-only “bullet loans,” continues through the New Deal and into the pre-bubble dominance of the Government-Sponsored Enterprises Fannie Mae and Freddie Mac, and ends with the bubble being created by the return of "nontraditional" mortgages. Briefly:
  1. In response to mass defaults at the outset of the Depression, the government created the Federal Home Loan Bank system to make loans against mortgage collateral and the HOLC, which directly purchased defaulted mortgages and packaged into marketable securities. The HOLC was temporary, but demonstrated that such a market was feasible (but its legacy was tarnished with association with redlining). 
    1. 1934: National Housing Act
      1. Federal Housing Administration created to directly encourage mortgage lending and homebuilding.
      2. Fannie Mae created to buy insured mortgages and create a secondary market
    2. Together, those defined the regulated secondary market.
  1. Note that the 30-year fixed rate mortgage had its origins in the war: In 1944, Congress authorized the VA to guarantee loans for soldiers returning from war. To make payments affordable, it eventually settled on 30 years. That was then adopted by the FHA as well, and became standard.
  2. 1970: Freddie Mac created to serve S&Ls, not to compete with Fannie 
  3. By the 1990s, the now-liberalized GSEs had about half the market, and S&Ls had faded. In Levitin and Wachter’s view, it was a time of market stability and rising homeownership. 
  4. But in the mid-2000s, the growth of the Private-Label Securities market allowed for nontraditional mortgages. 
    1. “Freed of its New Deal regulations, the U.S. mortgage market quickly reverted to Depression-era “bullet” loans, shifting interest rate and refinancing risk back to borrowers.” 
    2. “PLS made the expansion in the non-traditional mortgage market possible, and non-traditional mortgages made the expansion of the PLS market possible. Without PLS, most non-traditional mortgages would not have been originated because banks would simply have been unwilling to carry the risks from non-traditional mortgages on their balance sheets.”

The second half of the book is their analysis of the bubble and crisis. 

They start out by arguing that the bubble was a supply-side phenomenon: The risks of subprime mortgages rose while pricing (versus risk-free Treasurys) fell, even as volume increased, suggesting a rightward shift of supply curve. 
 
Then, they quickly address and dismiss (for the most part) other prevailing theories of the bubble: 
  1. Demand-side theories: 
    1. Shiller’s theory of irrational exuberance: Can’t explain pricing and quantity of mortgage lending.
    2. Glaeser-Gyourko-Saiz theory of supply constraints, emphasizing no bubble in Texas: Can’t explain why the bubble occurred when it did and why there was a collapse
  2. Supply-side theories: 
    1. The conservative theory that the Community Reinvestment Act was responsible: Can’t explain commercial real estate bubble, can’t explain foreign bubbles
      1. Timing isn’t right
    2. The conservative theory that the GSE affordable housing goals were responsible:
      1. GSE loans outperformed non-GSE in terms of defaults after the bubble burst
      2. Can’t explain commercial real estate bubble, can’t explain foreign bubbles
      3. No evidence of change in riskiness/performance at discontinuity of housing goal eligibility
      4. GSE purchases came after housing prices peaked
      5. They do, though, blame GSEs for contributing to the crisis by buying PLS and for standardizing automated underwriting in the 1990s
  3. Monetary theories
    1. John Taylor getting off track theory: can’t explain bubbles overseas
    2. Ben Bernanke’s global savings glut theory: does not explain demand for lower-grade PLS. Without demand for lower-graded tranches, securitization would not have happened. 
    3. Mian-Sufi theory that relaxation of credit terms led to inflation of bubble: doesn’t explain why it resulted in a price bubble. Also, the bubble was not merely a low-income phenomenon. 
  4. Note that they do not address the Kevin Erdmann “Shut Out” theory. 
 

Then, they lay out their own theory: “The bubble was caused by the underpricing of mortgage credit due to the shift in mortgage financing from quasi-regulated GSE securitization to unregulated private-label securitization by private investment banks. This shift occurred starting around 2003 and was facilitated by the emergence of collateralized debt obligations (CDOs), a new class of investment vehicles.”
  1. Parallel phenomenon in CMBS
  2. Same effect, through different channels, in European countries with bubbles
  3. Structured finance CDOs virtually nonexistent before 2000, but accounted for ⅔ of non-AAA PLS from 2004-2007
  4. CDO managers paid by deal flow, so lacked incentives to prevent blow-up.
  5. CDOs were the main source of demand for the lower grade PLS tranches, without which the PLS market wouldn’t have boomed

One objection to their theory is that the question arises why the market wouldn’t address the overpricing caused by the CDO-PLS nexus. They argue that problems in the legal and business systems underpinning the market made it impossible for the market to function properly. 

Specifically, they say that “the fundamental market failure that drove the housing bubble was the inability to short housing.”

They write that homeowners have an implicit “put” option in the form of default -- they can “sell” the asset to the lender for the outstanding amount of the loan by simply walking away. This option was mispriced by investors because: 
  1. It’s hard to observe
  2. Also a call option for further leverage: the 1982 Garn-St. Germain Depository Institutions Act prohibits lenders from preventing borrowers from adding junior mortgages. More leverage -- implicit put option better in terms of strike price. It limits investor ability to price adversely
 
In terms of reform proposals, Levitin and Wachter call for amending Garn-St. Germain to allow for lenders to prevent borrowers from adding junior mortgages. 
They also call for the creation of “Franny Meg,” a federal securitization utility, which would essentially mean codifying existing system with Fannie and Freddie (as of 2021, they’ve been technically private government-sponsored enterprises in federal conservatorship for going on 13 years). By returning to the regulated and standardized secondary market, it would prevent competition for market share via erosion of underwriting standards
 
One more note: Levitin and Wachter trace the financialization of housing to the dominance of the GSEs: 
 The financialization of housing: 
“The rise of securitization via the GSE’s had a critical secondary effect: the financial decision of housing, meaning that housing became a financial asset.” 
-- A single mortgage loan, by itself, is a relatively illiquid investment. It is a concentrated risk exposure on a single borrower that is also exposed to interest rate risk and geographically and Serially correlated asset prices movements. The single mortgage loan cannot readily be shorted, so there is no price discovery or market arbitrage.”
-- “yet when mortgage loans are bundled together in securitizations, they become financial instruments that can be traded, arbitraged, and speculated on, by both longs and shorts. Securitization turned housing into a financial asset. The implicit U.S. government guaranty of the GSEs added an imprimatur of safety to MBS as an asset class…. Housing debt became almost cash-like in its liquidity”

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D-Day, By Stephen Ambrose

1/26/2021

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Somehow I hadn’t been aware of this book before I espied it on my brother-in-law’s bookshelf over the holidays, even though I went through a monstrous WWII history phase in high school and read a lot of Ambrose’s other books. 

Ambrose never tried too hard to prevent his military histories from lapsing into pro-American propaganda, which is what makes them so enjoyable. 
Throughout the book, he emphasizes the heroism of individual U.S. soldiers, and makes the case that the U.S. enjoyed not just an advantage in material, but also decisive advantages in leadership down to the non-commissioned officer level and also in terms of the overall chain of command. 
“Every soldier, every airman, every sailor, every unit in the United Kingdom in the spring of 1944 took orders from Eisenhower,” he writes. “Thus did the democracies put the lie to the Nazi claim that democracies are inherently inefficient, dictatorships inherently efficient.“ 
He faults Hitler for failing to give Rommel full control of the Panzer units in France. He also claims that the Atlantic wall was one of the greatest military blunders in history, and argues that the Nazis would have been better off concentrating resources inland to prepare for a counterattack. 
One theme throughout the many stories of the battles that day is that Ost units comprising captured Russians, Poles, Koreans, etc., put up very little resistance in most cases, and were generally ready to surrender. (In the scene in Saving Private Ryan where the Americans shoot Nazis who are trying to surrender and then joke they couldn’t understand what they were saying — they were speaking Czech.)
In contrast, he depicts the allied forces as quick-thinking and ready to improvise to match the circumstances. And he highlights the bravery of, for instance, Theodore Roosevelt III, who insisted on being in the first wave on Utah Beach, at the age of 56. He notes that Eisenhower had to ask George VI to intervene to prevent Churchill from signing up to be on a British ship in the invasion. 
A few notes from the book: 
— It’s not the focus of the book, but it’s still amazing to consider the war industry ramp-up. Such a mobilization is unthinkable today: “in 1939, the United States produced 800 military airplanes. When President Franklin Roosevelt called for the production of 4000 airplanes per month, people thought he was crazy. But in 1942, the United States was producing 4000 a month, and by the end of 1943 8000 per month.” The nuclear bomb was developed in 3 years. 
— monetary note: On D-Day, Allied troops were carrying francs that had been printed over the protests of Charles de Gaulle
— journalism note: In its D-Day coverage, the WSJ covered the market implications of the invasion. It speculated about “reconversion” of war production to industry as soon as it was clear the invasion was successful — bullish. Ambrose points out that troops would pay for that optimism: orders for artillery shells were cut back, and then the army was short in December 1944 in Belgium during the Nazi counterattack. 
— Ambrose notes stories of Allied troops meeting French girls in Normandy and going on to get married to them. It’s interesting to think that the British and Americans and French had enough in common for this to happen on a non-trivial scale. 
— The average American conscript gained 7 pounds in basic training. The U.S. of the late 1930s/early 1940s was a much different place. ​

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A History of the English Speaking Peoples, by Winston Churchill

10/15/2020

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In writing this history of the U.K., U.S., Canada, Australia, and New Zealand, Winston Churchill made clear that he subscribes to the “Great Man” theory of history. 

“Here again we see the power of a great man to bring order out of ceaseless broils and command harmony and unity to be his servants, and how the lack of such men has to be paid for by the inestimable suffering of the many,” he writes of King Canute. 

He also notes a theme of great men having weak sons. 

It’s noteworthy because Churchill himself is the archetypal “Great Man” for all the people I’ve known who believe in Great Men (oddly, although I am not a huge Churchill fan, throughout my life people have assumed that I am a big admirer of his -- I’ve received a number of Churchill-themed gifts). His own view may have been shaped by the major role his ancestor, John Churchill, the first duke of Marlborough, played in British history. Perhaps another factor was his sense of his own place in history -- the (mostly apocryphal) “history will be kind to me, for I intend to write it.” 

Churchill’s history is basically one of Great Men and military events. The Industrial Revolution, for example, passes almost without comment, while the Battle of Blenheim and the Vicksburg Campaign get extensive treatment. 

Similarly, he doesn’t seem to dwell much on legal/constitutional/human rights developments, even though many today, especially in the U.S., would credit the British with our conceptions of liberty, starting with the Magna Carta. 

Other notes from this book: 

-- Churchill did credit St. Patrick for saving Christianity

--  Churchill argues that John losing Normandy was in the interest of England as it made the French rulers’ interests aligned with those of their English subjects. It “rid the island of a dangerous, costly distraction and entanglement, turned its thought and energies to its own affairs, and above all left a ruling class of alien origin with no interest henceforth that was not English or at least insular.“

-- A coincidence I hadn’t realized: 1453, same year as the fall of Constantinople, 20+ years after the death of Joan of Arc, the British lost the Battle of Castillon decisively, ending the 100 Years War and resulting in the British being swept off the continent, except for Calais. 

-- Also, I hadn’t realized the significance of the Battle of Bosworth Field, in 1485: Henry Tudor defeated Richard III, ending the line of the Plantagenets, the War of the Roses, and the Middle Ages all at once. Last kings to die in battle/win throne in battle.

-- The title of “prime minister” originated as term of abuse for Robert Walpole, who rose to prominence under the german George I

-- Edmund Burke was “perhaps the greatest man that Ireland has produced”

-- He notes that free trade was given a major boost when Prime Minister Robert Peel reformed the Corn Laws to address the Irish famine in 1846

-- He notes that population growth in the US 1790-1820 had never been seen before in history

-- He calls Robert E. Lee “One of the noblest Americans who ever lived, and one of the greatest captains known to the annals of war.“

-- Benjamin Disraeli had an “oriental, almost mystical, approach to empire… An emphasis on imperial symbols, his belief in the importance of outward display"
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Elizabeth Edwards, RIP

10/15/2020

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“Habou,” December 11, 1936 - October 7, 2020
Artist, small businesswoman, and mother, grandmother, and great-grandmother
Picture
Habou (short for “Habouba,” an Egyptian term of endearment) came to live with my parents as I entered the world, and lived with them until she died peacefully at home last week. I wanted to write down just a few thoughts and memories about her life.

I idolized her as a young kid. Some of my earliest memories are of playing secretary, because I wanted to be like her when I grew up. At the time, she was running a secretarial services business on Washington Street in Dedham. I created my own mini-secretary services office at home and played secretary, even though I had no idea what the job entailed. 

Habou taught my siblings and me how to gamble and how to swear. She taught us how to play cards and board games. As we grew up and we got better, she transitioned seamlessly from cheating to lose to cheating to win. 

Habou spent countless hours gardening, both at our house in Dedham, where passersby would frequently complement the bursting flowerbeds, and in Lancaster, where she toiled in the hot sun into her old age, even after she suffered heart problems. Often she’d rope me in to weeding or mulching. Thanks to her, I appreciate good gardens and the value of having home-grown herbs for cooking. 

I believe that Habou considered herself an artist before anything else. Throughout my life, she moved from medium to medium: Watercolors, mosaics, woodcuts, oil paintings, etc. At Easter each year, she would lead all us kids in decorating pysanky -- that is, traditional Ukrainian Easter eggs designed using water-based paints and wax, an artform that my sister Deirdre latched on to, eventually eclipsing Habou in proficiency and becoming a top-notch pysanky artist. At one point, Habou became very engaged in buying old furniture, redecorating it, and selling it. It became a side hustle, and she employed me in stripping the varnish off old pieces she found at yard sales. 

I was probably one of her worst students, but I gained a life-long appreciation for art from Habou, as well as some rudimentary sketching skills. She had many students at her art studio in Sterling who were more successful. But the most important lesson I learned from her was the importance of beauty in day-to-day life, in the home -- a lesson she taught by example. She left me enough original artwork to help make that a reality in my own home.

In many ways, Habou was more like a big sister to me than a grandmother. She certainly was not a second mom to us -- in fact, she was much less controlling than some of my actual siblings. Nevertheless, I’m sure that I caused her enormous stress at times, for instance when I took a chunk out of my hip bodysurfing in Gloucester on her watch, or when we kids, waiting for her to get out of church, put her car in neutral and rolled it down a hill out of the parking lot. I can only imagine how little fun it was to explain that one to my parents.

Life with Habou was a little bit funnier. She had a great sense of humor and zero pretentiousness. I teased her constantly, even as she became bedridden in her last months, and she always took it as all good fun and gave it right back. As much as she presented a sweet and friendly face to the outside world, she was not at all above a crack or a sarcastic comment about someone who deserved it. 

Although she had a very close-up view of all of the dumb stuff I did, especially in high school, Habou never once criticized me, as far as I can remember. Instead, she was unfailingly supportive and understanding. 

One thing about living with Habou -- she was often clumsy. She could hardly get through a room without bashing a knee or a foot on something and then theatrically clutching it in pain. If I were nearby and trying to read a book, I’d get annoyed. Then I’d get annoyed at myself for losing patience with her -- double annoyance. Of course, I mention this not as criticism, but as a reminder to myself of what life with her was like, and of the kind of irritating characteristics of loved ones that you will miss when they are gone. 

It’s incredible to think what Habou lived through. On the street where she lived as a child, some households didn’t have electricity or plumbing. She lived to have an Instagram account and a Pinterest board and was active in group texts. 
She was born in the ‘30s and had memories of the Great Depression and World War II as a child. She said that her family lived surprisingly well during times of rationing. She had a parachute and a 50 cal ammo can brought back from war by one of her brothers, objects that couldn’t have seemed cooler to me as a kid. 

I wish I knew more about her life as a young adult. The snippets I heard here and there, though, were often Forrest Gump-like. For instance, her time at art school in New York City allowed her to see some of the most famous musicians, such as Ella Fitzgerald, live in small venues.

She grew up in a time and place, especially in upstate New York, where serious anti-Catholicism was common. Yet she became a convert. Her faith defined her worldview and her week-to-week life for as long as I can remember. 

Nothing could have been more gratifying to her than to know of all the people who have reached out in recent days to say that they are praying for her.
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The Attention Merchants, by Tim Wu

8/16/2020

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The Attention Merchants is mostly a history of the practice of commoditizing attention and selling it to advertisers, starting as far back as the dawn of the sensationalist New York City press and the rise of snake oil salesmen, continuing through the rise of fascism and postwar conformity, and ending with social media. It’s mostly the story of humanity losing a battle for our own attention to businesses, completed by a tacked-on last section that is a highly polemical call for new forms of media regulation. 

Two overarching themes of the history stuck out to me. One is that the early “attention merchants” tended to view women as suggestible and weak-willed, more susceptible to advertising than men. 

The other was the incredible uncontested power that the mass media had through the mid-60s to shape opinion and impose conformity -- and the corporate co-opting of the revolt that ensued. Wu notes that, by sponsoring Amos 'n' Andy, in 1929 Pepsodent was able to reach the equivalent of today’s Super Bowl audience -- every night. It’s worth noting that Amos ‘n’ Andy was a blackface comedy, and was criticized by African-Americans at the time as racist stereotyping, but was mainstreamed into the culture to a degree that would be impossible today. 

When a counterculture arose in the 1960s, Wu notes, advertisers were, to the surprise of their critics, able to monetize counterculture just as well as they did the monoculture of the earlier decades. “what had been uncorked was powerful individual desires and the will to express them,” Wu writes. “Above all, most simply wanted to feel more like an individual, and that was the desire industry could cater to, just like any other.”

In Wu’s eyes, that era represents, basically, a political-cultural wrong turn, a missed opportunity that we now have to backtrack and get right. 

I’m not so sure that’s an option. But it’s interesting to me that so many elements of the previous monoculture have featured in my life as part of the cultural landscape, so ingrained that it would be weird merely to question their existence -- even though I was born roughly a full generation after the monoculture ended. 

For example: A Charlie Brown Christmas. I’ve actually never seen it, but it’s unthinkable that someone my age wouldn’t be aware of it. Sponsored by Coca-Cola, it aired on CBS in 1965 and has been re-aired every year since. Three generations now have had it become part of their lives, thanks to Coke. 

Another example: The Flintstones aired for only six seasons, and the Jetsons only for three. Yet, because they debuted at a time when broadcast television was utterly dominant, they’ve had a tremendously disproportionate cultural impact. I and my friends grew up with Flintstones push-pops a general familiarity with both shows, even though they’d ended when our parents were kids. Nothing today has that kind of staying power. 

In Wu’s reckoning, our ability to control our attention only got worse after the late ‘60s/70s counterculture failed to weaken advertisers’ grasp on media. Cable TV: “faced with a new abundance of choice and a frictionless system of choosing, we individuals, in our natural weak mindedness, could not resist frittering away our attention, which once had been harvested from us so ceremoniously.”

Social media, in his view, is an intensification of the trend toward greater control by “attention merchants.” He argues that social media is effectively conspiring against us in that apps target, as a key metric, the amount of our time they take up, and try to maximize it. 

Interestingly, Wu sees the advent of streaming as a potential relief from the trend toward greater commodification of attention. He argues that, for instance, HBO rewards viewers’ attention, rather than abusing it, by asking them to watch, commercial-free, immersive shows like Game of Thrones. 

At some points, Wu sounds like Ross Douthat. For instance, when he identifies Oprah, an attention merchant par excellence, as a religious figure: She “adopted an increasingly spiritual tone promoting itself as a place for public confession of sin, the witnessing of suffering, and promising audiences redemption in this life. In short, Winfrey began borrowing heavily from the most successful methods of organized religion, feeding a hunger for spiritual fulfillment in her core demographic“ 

Or, when he says that Trump is in it more for attention than for power: “If politicians have been accused of seeking attention for the sake of politics, Trump has been the practice of politics for the sake of attention.”

Other notes from my copy:

— Lucky Strikes promoted as “torches of freedom” for women 
— video games were outgrossing films as early as the early ‘80s
— Steve Case on the first banner ad placed on AOL: “what really bothers me is the ads are in a place the members will see them"
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Napoleon Bonaparte and the Legacy of the French Revolution, by Martin Lyons

5/13/2020

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The thesis of Lyons, a professor at the University of New South Wales, in brief: Napoleon cemented the Revolution’s gains in rationalizing and modernizing civil policy in France and throughout Europe, diverted its economic equality/class struggle (at least before his exile), and compromised with the Catholic Church. 

Lyons claims that Napoleon, born to an Italian family in Corsica, was in fact born on French soil, as he was born the year after Bourbon France annexed the island. 

A few other notes about Napoleon’s personality from Lyons: 
  • Napoleon crowned himself but did not take the crown from pope Pius VII, as some have said.
  • He was unbelievably cold in ending his relationship with Josephine. After 8 years with her, on determining she was past childbearing age (46), he told her he was divorcing her on New Year’s Eve, 1809. He then married the 18 year-old Marie Louis of Austria, a Habsburg, in 1810 and had a son born within a year. 
  • In invading Russia he “trusted to fervently in his own destiny and in his private vision of power in the east.”
In Lyons’s reckoning, Napoleon’s reconciliation with the church was not necessarily due, as some have argued, to the public pressure that followed the revival of Catholicism prompted by the publication of Chateaubriand’s Genie du Christianisme. Instead, his motives were “political and pragmatic” -- Napoleon: “By turning Catholic I ended the war in the Vendee, by becoming a Moslem I established myself in Egypt, by becoming an ultramontane I won over the Italians. If I was governing a people of Jews, I would rebuild the temple of Solomon.”

By striking the Concordat with Pius VII, who he viewed as a minor political rival and nothing more, he looked to defuse the opposition of the counterrevolutionary bishops. After, “the clergy could once more be regarded as allies of political order and obedience,” per Lyons.

Note, though, that the Church did not get back its pre-Revolution wealth or privileges, an exception to the fact identified by Lyons that capital ended up mostly in the same hands as it was pre-Revolution. 

As an aside, it’s interesting to note the interaction between Napoleon’s attitude toward religion and his war in subjugated Spain. “The guerrilla [this is where the term came from] war against the French was a struggle between the counter reformation and the French revolution.” The war, the “Spanish ulcer,” sapped Napoleon of money and manpower needed in his Russia campaign.

More broadly, Napoleon’s reign meant a break with the past role of the Church in France and elsewhere. The Napoleonic code “was instrumental in the spread of revolutionary ideas; it preserved the essential social gains of the revolution, abolishing privilege, recognizing equality and individualism, and completely extracting the legal system from its old religious framework.“

A key theme of the book is that Napoleon solidified certain changes of the Revolution by guaranteeing the gains made by the bourgeoisie and the new bureaucratic class. 

“Under Bonaparte, fortified by his revolutionary legacy, the privileged orders had permanently lost their grip on the state. Instead, social and political institutions were increasingly shaped by the revolutionary bourgeoisie, made up of administrators, lawyers and landowners, together with commercial interests.”

“The progressive satisfaction of bourgeois self interest meant that the role of ideologies in politics was thereby weakened.”

“The Napoleonic empire was a modern technocracy dressed in the garb of Charlemagne.”

Napoleon also maintained support in rural areas by several means. One was effectively restoring Catholic worship and the religious calendar. Another was guaranteeing the end of seigneurialism, the system of land ownership/rent that was the cause of much of the peasantry’s complaints. Lyons also suggests that a key source of support was veterans returning from foreign wars came back to their villages with expanded horizons -- Egypt, Italy, Spain Russia -- and telling tales of Napoleonic glory to people who never left their hometowns.

He was also aggressive about censoring the press and putting out propaganda. In fact, his dictatorship was not a military dictatorship but a civil one, according to Lyons, based on the fact that he won via plebiscite. 

Napoleon brought the rationalizing spirit of the Revolution to other parts of Europe via conquest. Napoleon shaped the secular state. Corruption and favoritism were officially outlawed. Bringing that to other countries often entailed social upheaval, especially in terms of instituting civil marriage and allowing divorce. 

“Abolition of privilege, Jewish emancipation, the end of primogeniture and the entailing of aristocratic estates suddenly overturned some of the basic certainties of old regime society.”

French rule “impose[d] a uniform system of values on a very wide variety of European cultures and traditions…. Local customs were here identified with feudal obscurantism.” Note the parallel with James C. Scott: Local customs viewed as an obstacle to legibility. Taxation became much more efficient, according to Lyons, including in Italy, as huge sums were raised for war. 

Of note, Napoleon banned political economy -- that is, economics, then taught in most German universities -- “as a subversive discipline.”

By eroding the particularism of city-states, Napoleon did help develop the nation-state, Lyons concludes. 
Napoleon gradually distanced himself from his revolutionary past when he became a hereditary emperor in 1804, married a Hapsburg in 1810, and invaded Russia in 1812.

“The decision to invade Russia was Napoleon’s alone; he ignored… In terms of the defense of the revolution, or of France’s interests, the invasion of Russia was completely unnecessary; its logic lay in the relentless impetus of the war as Napoleon had pursued it, and in the obsessive Fantasy of power which gripped him.” 

After Metternich was able to align all the powers against Napoleon, Napoleon, no longer able to pursue a “divide and conquer” strategy, saw the Grande Armee defeated at the Battle of Leipzig in 1813, and had no choice in 1814 but to exile himself to Elba. 

When the Coalition, by propping up as king Louis XVIII, who then had no popular mandate and aligned with reactionary forces, created an opening, Napoleon “returned to the true origins of his power, which lay in the Revolution of 1789. The events of 1814-15 presented France with the stark truth that Napoleon was the only alternative to monarchy and aristocratic reaction”

After Napoleon’s defeat at Waterloo, it was Lafayette who persuaded parliament to demand abdication. 
One other note from the book: Napoleon’s economic war against the British caused the rise of the Luddites, as the “continental system” blockade induced a severe recession and high unemployment in 1809, and helped lead to the War of 1812, as the British naval blockade caught up neutral American ships.
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The Age of Entitlement, by Christopher Caldwell

2/28/2020

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The simplistic version of the thesis of the Age of Entitlement is that the Civil Rights Act had the unintended consequence of limiting freedom of association, a problem that was then magnified when the civil rights framework was extended to other categories of protection, such as disability and sexual orientation, to the the point that those rights constituted an alternative...constitution. 

The loss of freedom of association became so acute, over time, that the people not benefiting from the new protections one way or another ended up voting for Trump as an act of rebellion. 

Author Christopher Caldwell argues that those people, meaning white non-southerners, voted for the Civil Rights Act as a one-time measure to address the problems with institutionalized/government racism in the South. Instead, the logic of the law ended up being applied for more broadly, and in more domains, permanently. The new rights eventually pitted groups against groups. “A measure that had been intended to normalize American culture and cure the Gothic paranoia of the southern racial imagination had instead wound up nationalizing southerners’ obsession with race and violence quotes,” he writes of the negative white reactions to the race riots of the 1960s. 

The Age of Entitlement is written like a book-length op-ed: Caldwell gestures at sweeping claims, but stops short of stating them outright, instead relying on implication or innuendo. Characterizations of mass movements or decadelong trends are substantiated with only one anecdote or not at all. 

Oftentimes, the style of rhetoric is not convincing. For instance, when Caldwell touches on a topic of which I have some knowledge, the history of the financial crisis, he endorses a narrative of the housing bubble and collapse — that government regulations and programs steered millions of people into unsustainable loans to meet affordable housing mandates — that is hotly contested, to say the least. Congressional Republicans, who generally subscribe to that line of argument, advanced most prominently in Peter Wallison’s dissenting view to Financial Crisis Inquiry Commission report, have gone approximately 1 million rounds debating congressional Democrats about its merits. Certainly any author is welcome to contribute to the debate, but I am skeptical of the idea that it could be settled, or even given its due, in passing.

I suspect that Caldwell’s impressionistic style, leaving it to the reader to connect the dots in key passages, is what has spared him from harsher criticism. The book implies that the Civil Rights Act should be reversed. I can remember a time when the suggestion that the Civil Rights Act was a mistake was enough to get Rand Paul condemned by many who’d been his allies up to that point. 

But that is the conclusion that flows from Caldwell’s history, which ends with Trump rising to power as a reaction to the Obama years. The Obama era, in his view, ended the “illusion” that the tools used to secure civil rights would be temporary, and whites came to like Obama less as that happened. He notes that Obama’s second inaugural was meant as a constitutional address but identified Seneca Falls, Selma, and Stonewall, civil rights watersheds, as the basis of constitutional rights -- an implicit acknowledgment that the Constitution had been supplanted by civil rights law. 
Three decades before Obama, the 1978 Supreme Court decision Regents of the Univ. of Cal. v. Bakke validated affirmative action as a diversity mandate rather than as a measures of redressing past discrimination, in Caldwell’s view. “Now the government got into the business of promulgating attitudes about race,” he writes. 

And, in his view, the culture changed along with law. The establishment and observance of Martin Luther King Day, he writes, for many white people “marked not the end at the beginning of shame, of an official culture that cast their country‘s history as one of oppression, and its ideals of liberty as hypocrisies.” 

Eventually the civil rights project, as it advanced an understanding of citizenship based on race, sex, etc., led a critical mass of whites to think of themselves as a race, Caldwell writes. “When race rather than citizenship becomes the structure through which people accede to their rights, one must have a race… And under the law, whites were ‘raceless,’” he says, invoking Hannah Arendt’s concept of the “stateless.”  
A few notes from the book: 

-- Caldwell accuses the Greatest Generation of extreme thoughtlessness in domestic affairs, citing the built environment. He quotes Harry Truman saying “Go right to it -- that’s the way I feel about it,” referring to 1952 plans by D.C. authorities to demolish the downtown rowhouses in which 25,000 people lived, including Marvin Gaye, and replacing them with concrete towers. 

-- Sees the Vietnam War as of a piece with the liberal planning agenda that was behind the civil rights project: “it was the war itself, and not the protests against it, that was the sister movement to the CIvil Rights Act and the Great Society.”
-- His encapsulation of the civil rights constitution as he sees it:“the voice of the people is sovereign, once it has been cleared of the suspicion of bias. If people are blocked by bias from understanding the ‘true’ nature of human relations, authorities have the license, even the obligation, to overrule them. Civil rights thus does not temper popular sovereignty, it replaces it.”
​
-- Caldwell is extremely skeptical of foundations, seeing them as akin to an extra layer of government as described by Daniel Patrick Moynihan, to the point that he writes approvingly of FDR’s preference for broad government programs over private charity and disapprovingly of the tax deduction for charitable giving -- the exact opposite stances of most conservatives.     
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Things Hidden Since the Foundation of the World, by Rene Girard

11/18/2019

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Rene Girard warns in the first page of foreword to this book that he “deliberately left out all concessions to the reader.”

Even before I reached that disclaimer, though, I encountered an obstacle, in the first sentence of the foreword, where he writes that the work is based on research undertaken at Cheektowaga University in the mid-’70s. It struck me as odd that such an eminent academic would have spent time at such an obscure school, so I looked it up — and there is no trace of it. Mystified, I asked the town clerk and historical society in Cheektowaga, New York, about Cheektowaga University, and they told me there’d never been a Cheektowaga University. The Cheektowaga University referred to in Things Hidden Since the Foundation of the World is a mystery... 

Onto the book:

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"Joker" review, with spoilers

10/27/2019

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SPOILER ALERT

Maybe I’m getting old and turning into one of the scolds I detested when I was younger, but I was appalled by Joker. As I watched I could not help but think that the movie crossed some ethical line by taking the viewer inside the mind of a maniac and then graphically depicting the brutal violence he commits.

Yet perhaps Joker is thought-provoking enough to justify the brutality it depicts.

At first blush, the plot is straightforward. Arthur Fleck, played by Joaquin Phoenix, is a mentally ill guy who wants to be good but is led by circumstances to embrace evil. He is failed by the institutions and people around him: If only the city government doesn’t cut mental health services, if only the women he’s infatuated with gives him the time of day, if only the smiling TV host really is fatherly and kind, if only his employer treats him fairly, if only other passengers on public transportation behave with decency — if any one of those “ifs” had become a reality, he might have been OK and functioned at some level of society.

Instead, when the injuries and insults compound and events conspire to present Fleck with the possibility of taking a darker path, he eventually cannot resist taking 

Of all the misfortunes that befall Fleck, though, the biggest is the mistreatment he receives from Thomas Wayne. 

Wayne, in Joker, is the obverse of what he is in Batman canon. Usually, he’s a uncomplicatedly good character: The benevolent magnate who feels personal responsibility for the welfare of Gotham. 

But in Fleck’s deranged point of view — which is also the viewer’s in Joker, as every scene has Fleck in it -- Wayne’s civic-mindedness is transmuted into cynical ambition and self-regard. When, at last, Wayne decisively rejects Fleck, it’s proof of the fundamental uncaringness of the city and the world, demonstrating to Fleck that he will never be accepted as a good person and that the city deserves not redemption but a violent reckoning and chaos. 

For Bruce Wayne (as we know him from all the other Batman comics and movies), of course, it’s just the opposite. The memory of the love that his parents had for him, the love of two good people who were trying to bring him up well and care for others, and the pain of their loss are what motivate him to try to save Gotham even when others believe that it is beyond saving. 

Both Bruce and Arthur grow up without fathers. Arthur believes that Thomas, or at least a grim caricature of Thomas, is his dad, but he’s not. He really is Bruce’s, though. 

The conflict between what Arthur believes (or appears to believe) and reality is what makes Joker difficult to interpret an worth thinking about.

It’s been suggested that the Batman of the Dark Knight trilogy is right-wing. After all, he’s a billionaire vigilante who arrogates himself vast emergency powers to put down a populist uprising. 

Through the same lens, Joker would be a left-wing critique, as some left-wingers have suggested. Fleck’s descent into evil is guided along by austerity, a power structure that is coordinated to hurt poor people like him, and the lack of a safety net. 

The problem with interpreting what happened to Fleck, though, is that he is an unreliable narrator at best. His interpretation of events is as distorted as if he were perceiving everything through the kind of funhouse mirror that would go along with his clown makeup. 

And the very worst is a distortion of the best. Perhaps that explains why Fleck experiences Thomas Wayne’s rejection as the ultimate affront. 

Joker shows a city and a world so depraved and so irredeemable that it’s almost understandable that you’d turn it over to anarchist clowns — but it does so through a lens that, as the viewer progressively learns — is badly out of focus. By the end of the movie, we’re left wondering if maybe reality is the exact opposite of what it seems. 

“I used to think that my life was a tragedy, but now I realize, it's a comedy,” Fleck says at one point. Maybe his supposedly uncontrollable laugh, which chokes him at his worst moments of humiliation and frustration, isn’t as involuntary as he claims. Maybe it’s not the spontaneous laugh of a man who’s suffered terrible neurological damage from abuse, but rather that of a monster who was determined to embrace evil all along.

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My Father Left Me Ireland, by Michael Brendan Dougherty

6/10/2019

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I began reading My Father Left Me Ireland with apprehension. I’ve spent much of my life surrounded by Irish-American culture, and am acutely aware of the dangers of Irish-Americans projecting their desires or psychic needs onto Ireland and its history, and of the resentment that many Irish people feel toward members of the diaspora who romanticize modern-day Ireland.

But this book isn’t about that at all. It’s about the struggle of someone who grew up in a broken home and characterless place trying to find an identity for himself that makes sense of his background and the hardships and unfulfilled desires it imposed on him. That struggle is closely bound up in his relationship with his absent father, who happens to be Irish.

What Dougherty finds — a discovery narrated through letters to his father — is that identity and a sense of belonging, and the freedom that comes with them, are not things that are found or learned, are not the products of self-discovery.

Instead, Dougherty writes, “the only liberation worth having is one accomplished in sacrifice.”

That lesson is one that he learned through his own fatherhood. When he and his wife had a baby girl, he writes, it lent perspective to his hopes and desires for himself and his family. His beautiful description of the changes that his relationship with his daughter entailed for his overall worldview cannot be excerpted for a review. They have to be read in context.

“[W]hen we are forced to act on behalf of the future, the past can be given back to us as a gift,” Dougherty writes. That’s true of his relationship with his children, which makes sense of his background as a boy who grew up without his dad in the picture. It’s also true, he suggests, of the Irish nationalists, who, in effect, sacrificed the Irish identity into existence.

This short but powerful book isn’t about Ireland per se. It’s about identity, and how it is not given but bought.

One small note, particularly relevant to my interests: Dougherty says that the exurbs of Putnam County, where he grew up, was a James Howard Kunstler-style “nowhere,” featuring lawns but not real neighborhoods, many broken families, and car-only landscapes. He calls it an “architecture of fatherlessness.”
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