Putin, Ukraine and Japan

Photo credit: NBC News

Photo credit: NBC News

Just as the world’s attention was nearly fully and completely drawn into the ISIL/Turkey crisis and the good word that both Nigeria and Senegal are Ebola free, Vladimir Putin had to stick his nose back into world affairs and remind everyone that the mad Russian is still around and has some 5000 nuclear weapons. Trying to ascertain Putin’s foreign policy is akin to attempting to drive cross country blind. However, there are a few historical precedents that we can use to predict possible future outcomes.

There are parallels between modern Russia and its former satellite states and the pre-1941 Japanese empire. They share a similar–though not exact–economic philosophy, both nations worked toward a politically stable region based not solely on politics but also on culture, and each nation was pushed into a corner by aggressive economic policies of Western nations.

Economic Liberalism

Japan burst onto the new world economy in the early 20th Century. The Meiji Era turned Japan into a modern industrialized nation. Unfortunately for Japan, the modern world had already co-opted Asia, specifically China, into powerful spheres of influence which favored Europe and the United States. Early in Japan’s economic growth they experienced a very mercantile system where they provided goods–chiefly textiles–to Asian markets. the primary motive in mercantilism is to better the home state. This mercantilistic nature would eventually mold into the nationalistic identity of Japan pre-WWII where the state ruled and the individual served the state. However, no matter how hard the Japanese leadership tried to integrate into the Asian sphere of influence they found themselves on the outside looking in. To compound their troubles, the Great Depression of the 1930s found the rest of the world insulating themselves and placing economic barriers on Japan in order to protect their colonial markets. So, in the 1930s, a new economic philosophy merged with Japan’s economic liberalism. One that would pit it squarely against the Western world.

After the fall of the Berlin Wall and the break up of the former Soviet Union, Russians werecartoon_1862a thrust into a world of crass consumer capitalism. They were sheep without a shepherd only to find themselves flocking to the siren call of oligarchs disguised as wolves. As with Japan, Russia found itself surrounded by pro-Western nations whose ambitions lay not with the betterment of a whole but the betterment of themselves. Under the leadership of Boris Yeltsin those powerful oligarchs gained both political and economic power in Russia. In light of this and Putin’s own limited experience with capitalism as deputy mayor of St. Petersburg, Russian economic liberalism still has the individual as its focus, but is skewed from the winners in the system being those who provided the best goods and services to those who are able to take advantage of the vulnerabilities of the competition. When you take into context Putin’s “Millennium Message” of December 29, 1999, the individual serves the state and it is those individuals who take the advantage of vulnerabilities who serve the state best.

For both Japan and Russia, economic liberalism had, at it’s heart, the needs of the state and that need would be viewed by Western powers as a threat.

Pan-Asian Society and Russian Hegemony

For both the Meiji and Putin their success was one of their greatest defeats. Both, through widely divergent means, brought about a modern nation that embraced Western culture and “civilization”. A rising middle class began to make demands on a political structure that was uncertain where it should go. For Japan, it meant Pan-Asian brotherhood. For Putin, it means a domestic stability fashioned around concepts from the former Soviet Union.

Faced with restriction on trade, shipping, and immigration, a nationalistic and eventually asian_monroe_doctrinemilitaristic view of a Pan-Asian brotherhood–later called hakko ichiu (“eight crown cords, one roof”)—emerged. It was a cry for “Asians for Asians” and would lead to Japan’s invasions of Korea–then a puppet state of China–and Manchuria. The rise of Pan-Asianism is a complicated story, but it has at its roots a conflict of interests between conservative and military elitists and a liberal base comprised of the new middle class who were, for the first time, finding a voice in political discourse. One thing these two groups shared was the idea that there was a distinction between the “civilizations” of Eastern (Asian) and Western (European) societies. The liberals studied the colonialism of Europe in Asia and viewed Japan’s place in Asia through the adaptation of Western practices into a Japanese sphere. Western hegemony would be replaced by a true Asian hegemony with Japan at its head. The militarists saw Pan-Asianism as a means to further a conquest mentality of Asia. But both groups sought to protect Japan’s domestic politics through a form of Asian hegemony. Japan understood that the only way to wrest political and economic power in Asia from Western nations was to control the Asian market and continent.

In April 2005, Putin said that “the collapse of the Soviet Union was the greatest geopolitical  catastrophe of the century.” While some analysts have viewed this as Putin’s secret longing from his KGB days of a Soviet Union that expanded into the Balkans, Eastern Europe and the northern Middle East, what Putin is lamenting in his statement is quite the opposite. Often, he has chastised the West, and the United States primarily, for violating the sovereignty of the state (for example, his March 2003 condemnation of the UN ruling allowing for force in Iraq). Like the Japanese, Putin–a keen student of history himself–watches as Western hegemony increasingly disrupts the fabric of Russian life and the fragile tapestry of the “civilizations” that border his nation–especially Islamic nations. What countries like the United States saw as a pro-Democracy revolt in the 1990s, Putin knows was a revolution of ethnic, religious, and economic ideals that released an “epidemic of disintegration that spread to Russia itself.” Russian statehood stands to collapse. It was this ideal that drove Russia into Georgia and again into Crimea. While Putin doesn’t have a “Pan-Russianism” in his mind and nor could he since the break-up of the former Soviet Union was strongly along ethnic lines, there is an economic hegemony to his goals. Putin understands that Russia straddles the bridge between Asia and Europe and to control that power controls the much of the world. However, he can only do this if he has his borders under control.

Economic Sanctions

In 1899, the United States issued the “Open Door Notes” which outlined the U.S.’s economic and political agenda in China. Through these, the U.S. sought to protect trade in China gained after the Spanish-American War. Though the policy intended to protect China’s political structure, the United States would only tacitly act upon the ideals set for in the notes. This was especially true after Japan levied their 21 Demands on China in 1915. The U.S. gave into Japanese “special interests” in Chinese Manchuria, Mongolia and Shandong. As the Japanese continued to expand–militaristically after the 1931 invasion of Manchuria–the U.S. adopted a policy of economic sanctions and verbal rebukes of Japanese territorial gains. The sanctions had little impact on Japan’s desire to grow its Pan-Asian “civilization”, and as the U.S. continued to place embargoes on Japan and then ignore its own sanctions, Japan realized that the only thing stopping them from achieving their goals was the United States and they were showing a weak hand. Coupled with the coups in the mid-30s that brought the hardline military back into power, the liberal cabinet groups and the Prime Minister had to walk a delicate balance of moderate political-economic reform with a growing tide of militaristic nationalism. That the United States hardly aided China when Japan invaded province after province only served to bolster Japan’s motivation. While the economic embargoes and lack of military aid to China may not have wholly brought on World War II, the decisions made by the United States during these years were a decisive factor.

And now, the United States has resorted to imposing economic sanctions on a nation once again. It is possible that these sanctions will either back Russia into a corner that it cannot, without losing face, retreat from or illustrate a general weakness in the United States’ ideal of “global leadership.” Either way, Russia and Putin will continue to operate as a regional hegemon. But why?

406301One of Putin’s greatest skills is that he is a man of history. Both Soviet history and the history of the world. He knows the past. And he is watching it being played out all over again on his doorstep. No matter how hard Ukraine’s President Poroshenko lobbies for stronger economic sanctions against Russia, the West has been reluctant to impose further sanctions, and in the case of Germany grudgingly to do so in the first place. Ukraine is today’s China of the 1930s. A nation toyed with by the West, but when push comes to shove will be left to deal with Russia on its own. And Putin is counting on this politically learned behavior. If Putin can discredit the West’s actions he could force the Ukraine into a closer relationship thus securing a Russian hegemony in an Eastern European space.

Beyond any sanctions, Putin also knows how the West tacitly allowed Japan into Manchuria in 1915 and again in the 1930s. Putin’s Manchuria was the 2008 Russo-Georgian War. When the dust settled the United States never sent direct military aid to Georgia and George Bush imposed limited economic sanctions which would eventually be lifted by President Obama in 2012. Germany remained an intermediary never taking sides. Italy actually sided with Russia in its territorial gains. The West could not allow relations with Russia to be undermined by a conflict in “tiny and insignificant Georgia.”

As both nations, Japan and Russia, stepped up their need to protect their state, both politically and economically, the United States levied what they viewed as the strongest sanctions upon each nation: Oil embargoes. On July 26th, 1941, four months ahead of the Pearl Harbor attacks, FDR, in reaction to the Japanese occupation of French Indo-China, froze all Japanese assets in America and forced Japan to lose 88 percent of all its oil imports. The hope was to cripple Japan into submission. Though Japan had a three year reserve, Japanese leadership realized war with the United States was inevitable. The militaristic leadership in Japan had been pushed into a corner. Instead of backing down, Japan just reached out for more territory and eventually attacked the United States at Pearl Harbor.

Putin and his close associate Igor Sechin--head of Rosneft

Putin and his close associate Igor Sechin–head of Rosneft

The Obama Administration is trying the exact same policy. In March 2014, the U.S. froze the assets of a number of Russian businessmen who are believed to have close ties to Putin. Recently, the United States brought to bear additional pressures on the two largest banks in Russia by not allowing them raise long-term loans. Bank Rossiya is widely considered the “personal bank” for major Russian officials who are also closely tied to Putin. Also, the United States, along with the EU, placed export restrictions on oil from Russia’s Gazprom (the EU also placed restrictions on Rosneft and Transneft). However, there were no restrictions placed on natural gas output. All this in the hope that Putin will back down from his firm Ukraine stance. All the U.S. and the EU got in return was an import ban from Russia on fresh fruit, meat, vegetables, and dairy products. Food exporters are already facing large losses.

The Future Viewed From The Past

While these restrictions may hurt Russia in the short-term, a devaluation of the Rubble to dirt status is inevitable, Russia–and its people– can weather this storm. Russia will still have trade partners with China. Oil will still get to market. Gas is still getting to market. EU nations like Germany depend on Russian oil and gas. A large portion of Germany’s exports go into Russia, especially luxury goods. The EU’s trade with Russia is worth nearly 300 billion euros. There will come a breaking point, and I’m not sure that Russia will break. Putin knows that no European nation will come to the Ukraine’s defense at the risk of an economic blackout. The United States has shown that it is nearly indifferent to giving direct aid to the Ukraine, not unlike we did with Georgia and with China.

In the end, history has taught us that economic sanctions may weaken the Russian economy at the cost of many Western industries, but it will only strengthen Putin’s resolve to expand Russia’s political and economical hegemony. Will Russia unleash another “Pearl Harbor”? Unlikely. But will Putin back down? Also, unlikely.

On Doublespeak: Words Are Our New Great Divider

What ever words we utter should be chosen with care for people will hear them and be influenced by them for good or ill.– Buddha

It is just a word. A simple one really. It comes from the old French word destreit meaning “straits.” And at one point in time it was synonymous with American ingenuity and prosperity. Now, it has become a strange focal point for two political camps who have now taken semantics into the dark, vile recesses of American political discourse.



How can one word invoke such confusion? Well, if you read all the comments of posters on the left and the right, it is really all about doublespeak. You know, “downsizing” not firing. “Gone to meet their maker” not died. “Detroit” is now in the lexicon of what is is.

On the one hand, the right argues that when Obama said, on 13 October 2012, that “We refused to let Detroit go bankrupt” he meant the city of Detroit. Seems logical to assume that since he did mention Toledo and Chicago later in the address. Here’s a link to some funny right wing comments from The Blaze the home of some right-wing thinking.

However, the left is claiming that the word “Detroit” was a metaphor? parallel? simile? for the auto industry. When the President said “We refused to let Detroit go bankrupt” he meant GM and Chrysler. Here’s a link to Media Matters (“A non-profit progressive research and information center dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the media”) on the subject.

So, which is it? Did Obama mean Detroit the city or Detroit the automaker? Well, this is where our media, our politicians, and our own handlers (those people we chose to follow in the media be they movie stars, musicians, athletes, bloggers [yep, like me], or journalists) prefer us to remain, stuck on one word.

Honestly, I can see it both ways. Like I said in my intro, Detroit was synonymous with the auto industry. No, Detroit itself didn’t build cars, but our largest manufactures called it home. And, Detroit is a city. It is a city facing and urban blight, mass-emmigration, and now bankruptcy. I also think this was a clever way for the President to handle the situation. If he came out and said “We will not let GM and Chrysler go bankrupt” he has put the onus on his administration to see to it that those two companies succeed. If they fail, then his opposition has words to damage him with. But by saying “Detroit” he’s created a cleaver doublespeak that leaves him relatively undamaged in the eyes of his constituents (go the to Media Matters link to see that evidence), and gives him leverage in any assault from the opposition.

However, there was a flaw in his speech; a flaw that seems to be going unnoticed by all the message board hounds, bloggers, journalists, and talking heads. If you go back to his speech, it would appear that the President did mean the city of Detroit, and for that matter, every city in America.

More than a million jobs across the country were on the line – and not just auto jobs, but the jobs of teachers, small business owners, and everyone in communities that depend on this great American industry.

“And everyone in communities that depend on this great American industry.” By saving the auto industry with his bailouts, the President was, in turn, saving our communities, our cities, our jobs. Without these secondary jobs where would the tax support for our communities come from? Our communities would go be the way of Stockton, CA, San Bernadino, CA, and now Detroit, MI. Obama wasn’t going to let either GM or Detroit go bankrupt.

This is not to cast Detroit’s bankruptcy at Obama’s doorstep. Detroit needs to own its bankruptcy like it owned being the center of American auto-making for decades. But, the President needs to own his own words, also. Detroit is Detroit. It was an auto-manufacturing city, but it is still just a city. A broke one. (See… more doublespeak!).

No matter. The left will say that Obama meant GM and the right will try to lay Detroit’s bankruptcy at the President’s doorstep. Either way, words are becoming more and more politically divisive each day.

The language of friendship is not words but meanings. –Henry David Thoreau

Open Letter To All Political Candidates

Dear Current And Future Candidates,

I applaud you for putting yourself out into the public eye for intense scrutiny, chastisement, and eventual demonization.

As you run your campaign, I’d like to offer you a piece of advice:

Accept your party’s skeletons. Acknowledge your party’s past. Don’t hide the facts; don’t skirt them, or misrepresent them.

To help you with this task, I have compiled a list of facets of your party that you have either forgotten about, or hope that the electorate is too ignorant to remember.

If you are going to pander for votes, at least be reticent of the fact that some of the groups you are pandering to weren’t always at the forefront of your party’s agenda.


War–You’ve got quite a bit to learn from your Democrat partners. Instead of grand wars you are the party of proxy wars. Instead of getting your hands dirty, your party opts to manipulate others to do your fighting. Nicaragua: Reagan and the Contra/Sandinista fight. Afghanistan: Reagan and funding a new group called al-Qaeda to fight the Soviets. Invasion of Grenada: Reagan again. Since Reagan, Republicans have tried hard to find a new bad guy in the world. You have settled on terrorists and have invaded two nations on the premise to keep the world safe from terrorism.

Socialism–Though the current party line is that Obama is dragging America into the dark abyss of Socialism, Republicans haven’t done much to stop it either. In fact, many Republicans actually accept many socialist programs. The first chance Republicans had at dismantling socialism, you didn’t. Eisenhower was the first Republican President post-FDR, and instead of ending many of his programs, he grew them. Hey Republicans, if you are so anti-Socialism, stop collecting Medicare/Medicaid, give your Social Security to your neighbor, and end Freddie Mac and Fannie Mae.

Civil Rights–As the Party of Lincoln you can be proud of the work your Party did at the onset of the Civil Rights tussle. However, as the years progressed, legislation passed by Republicans was more just an acknowledgement of the handwriting on the wall. Civil Rights legislation was more a tool to meet an end. That tool–making minorities happy, the end–re-election. The longer Democrats stonewalled on Civil Rights, the more it pushed minorities into the camp of Republicans. Oddly, Republicans lost out on the “popularity vote” in the 1960s when Johnson got his Civil Rights Act passed (with your help). It’s not that Republicans “care” about minorities, it’s that you need their votes. Let’s not forget that though the Party of Lincoln, your namesake was a supporter of the American Colonization Society founded by Henry Clay, and whose mission was to recolonize blacks to Africa.

Big Business–It should be pretty obvious that you are the Party of Big Business. Since the Gilded Age (1865-1900), Republicans have supported corporate America to the detriment of the worker. Harding, Coolidge, and Hoover’s policies during the 1920s benefited tycoons like Henry Ford, and the largest banks, but their deregulated policies also allowed a Great Depression to occur. Speaking of the Gilded Age, Reagan was quick to resurrect Andrew Carnegie’s “Gospel of Wealth” when he instituted Reaganomics. Top-down is the mantra of big business. Don’t forget President Jacobo Arbenz Guzman and his squabble with the United Fruit Company (UFC). Eisenhower was willing to allow UFC to operate a CIA program to overthrow Arbenz’s government in Guatemala. Read Biter Fruit.

Corruption–Why don’t American’s trust the Office of President? Richard Nixon. Republicans have long been a manipulative party. Republican political corruption begins with Warren Harding. From 1922-23, the Harding Administration was embroiled in bribery and kickbacks from sales of Naval Oil Reserves at Teapot Dome, Wyoming. Albert Fall, Harding’s Secretary of the Interior, was found guilty of bribery in 1929 becoming the first Presidential Cabinet member to go to prison for his actions during a Presidency. Not sure I need to go into great detail about Watergate, but suffice it to say that Nixon’s corruption knew no bounds. The Reagan years brought us Iran-Contra, the HUD rigging scandal, and  the Savings and Loan debacle. You might say that all these men learned from Ulysses S. Grant. His administration almost single-handedly invented the Republican scandals with Credit Mobilier.

Immigration–Let’s face it, Republicans, you’ve never really liked immigrants. It’s not that you have anything against immigrants, per se, but rather, lots of them coming in at the same time. Just look at the birth of your party. Aside from Free Soilers (people who wanted lands in the West devoid of blacks), the Republicans absorbed many anti-slavery Know-Nothings in 1860. The Know-Nothings, or American Party, was an anti-Catholic/anti-immigrant party. In 1882, fellow Republican Chester A. Arthur signed into law the Chinese Exclusion Act. In 1909, as a reaction to the growing wave of immigration from Southern and Eastern Europe, three Republicans–Henry Cabot Lodge, Albert Johnson, and David Reed–sought to restrict immigration. Their plan wouldn’t come to fruition until 1924 with the Johnson-Reed Act (otherwise known as the Immigration Act of 1924). After World War II, the need for Mexican-migrant labor ceased and Eisenhower appointed a former general to run the INS. Their plan, called Operation Wetback, went into affect in 1954 and within months 80,000 Mexicans were arrested.


War–Admit it. You are the party of War. You can spin it however you’d like, Noble War, Necessity, whatever. A Democrat hasn’t been introduced to a war they didn’t like in some fashion or at one point at time. World War I: Woodrow Wilson; ran on the campaign slogan “He kept us out of war” but months after election had U.S. soldiers on the fields of France. World War II: FDR. There are even documents that suggest that members of FDR’s cabinet, and possibly Roosevelt himself, knew at least eleven months in advance of the attack on Pearl Harbor and did nothing to prevent the loss of life. (Letters from U.S. Ambassador to Japan Joseph Grew, for example) Korea: Truman; “I will not let Korea go the way China went.” A silly little police action to prevent supposed dominos from falling. Vietnam: Kennedy; Johnson will escalate the numbers in 1965. More dominos. More blood loss. The four largest wars of the 20th Century–Democrats. You’ve got your proxy wars, too. Bay of Pigs anyone? And don’t forget who started the Civil War….

Women’s Rights–I’ll give you Roe v. Wade to remind everyone, but in this category your Party has two-face syndrome. While you support the right for women to achieve and be independent, you also have a litany of cheaters and adulterers. FDR: Lucy Mercer was his mistress for nearly thirty years and was by his side when he died; Missy LeHand served as FDR’s own private secretary. JFK: “used” whatever woman he came into contact with… White House staffers, movie stars, or reporters. He even had a suite on the 8th floor of Washington’s Mayflower Hotel for his “rendezvous”. Some we know of–Mimi Beardsley, Jill Cowen, and possibly Angie Dickinson and Marilyn Monroe. LBJ: well… let’s just call him the “Spanish Porn Star.” According to his former press secretary, LBJ “had the instincts of a Turkish sultan in Instanbul.” It is rumored that LBJ instructed his mistress to have an abortion even though it was illegal in the state of Texas. Clinton: two words–Monica Lewinsky. Both the “Spanish Porn Star” and Clinton had their dalliances prior to office, but we’ll leave those alone. Then there’s the saddest of them all. Rielle Hunter. She worked for John Edwards’ campaign, was his mistress while his wife was ill with cancer, and is the alleged mother of Edwards’ love kid.

Civil Rights–With all the hullabaloo the Democrats are making over voter identification, in-state tuition for illegal immigrants, and easing immigration laws, remember it was the Democrat that was doing what they could to keep minorities down. Look at one of the largest pre-Civil War Supreme Court Cases: Dred Scott v. Sandford, 1857. Chief Justice? Roger Taney. Party? Democrat. Sorry to remind you, but your are the party of the KKK. During the Great Depression, many New Deal programs ignored minorities, and some even made it illegal for minorities to get aid. In the 1950s, Governors Orval Faubus (Arkansas) and George Wallace (Alabama) did what they could to maintain segregation in their states. While it is true that it was a Democrat, Lyndon Johnson, who signed the 1964 Civil Rights Act, Democrats have to call a spade a spade. The Senate, Democrat controlled, attempted a filibuster to prevent the passage of the Act… oh, and Sen. Al Gore, Sr. was one of the “segregationists” opposed to the Act. If it weren’t for the Republicans, Johnson’s landmark Act would not have been passed. In fact, the majority of early Civil Rights programs were initiated by Eisenhower and later imitated by the Democrats to curry favor with minority voters.

Big Business–While Democrats often demonize Corporate America, the party depends upon its survival for their very own survival. Since the Great Depression and the legislation that brought FDR and unions into bed together, Democrats and Unions go hand in hand. What is not understood, is that without big business, unions don’t exist. Without the jobs big businesses provide, workers would be unemployed, and there would be no need for massive, cumbersome unions to protect them. Case in point: Obama’s bailout of GM. Without GM’s survival, unions would collapse. There is too much money at stake for this to happen. Like it or not, Democrats, you need big business. If you still don’t accept this fact: Look at the list of corporate sponsors for the 2012 DNC in Charlotte–At&T, Bank of America, Wells Fargo, Duke Energy, Time Warner Cable, US Airways, United Health Group, and The Coca Cola Company.

Wealth–In case you’ve been living under a rock these past few months, there’s been some chatter about Mitt Romney’s wealth and taxes coming from the Democratic Party. There’s a bit of irony in this, isn’t there, Mr./Mrs. Democrat? Some of the wealthiest presidents have come from the Democratic Party. Franklin D. Roosevelt: inherited parts of the Roosevelt fortunes. His net worth was around $60 million. John F. Kennedy: married Jacqueline Onassis of oil riches, and his own family was worth over $1 billion. His father was the first chair of the SEC. JFK’s share? All from trusts. Not a dime “earned,” though his death prevented him from collecting. LBJ owned a television and radio station in Austin Texas, and between that and other investments his net worth soared to near $90 million. More recently, John Kerry and the Democrats went after John McCain for not knowing how many homes he owned. Well Mr. Kerry, you and your wife own five homes with a net assessed value around $29 million. Seven of the top ten wealthiest Congressmen and women are Democrats (evens out in top twenty at ten apiece), with an estimated combined net worth of over $790,770,000. Oh, and the “first” Democrat, Thomas Jefferson, his net worth is estimated at $212 million.

Flashback Friday: Too Big To Fail

Denver International Airport

Denver International Airport (Photo credit: Wikipedia)

No doubt I am an airline/airplane aficionado. I listen to air traffic control while writing, plane spot as air traffic maneuvers over my house for approach to Denver (DIA/KDEN), can tell if it is an Airbus or Boeing on approach just by engine noise (that distinct whine of the Rolls Royce engines gets me every time), and get restless before flights like a child trying to fall asleep on Christmas Eve. I rue the fact that I do not have the money to be on the inaugural Boeing 787 United Airlines flight from DIA to Narita, Tokyo.

I fondly remember traversing through international airports, boarding gleaming white and red TWA L1011s for the long trip over the Atlantic. In the terminals, I looked with awe at the 747s of KLM, British Airways, and Pan Am as they were prepped for flights. I remember dressing up for trips, TWA flight attendants in their smart, crisp, blue suits and ties, and captains who greeted passengers at the door with a smile and wings for the kids. And I still have my collection of little plastic wings.

And then the airlines started to crumble.

The largest of these was America’s carrier–Pan Am.

Two oil crises (1970s and 90s), mismanagement, a terrorist attack, and competition along it’s once impenetrable foreign routes eventually brought Pan Am down in 1991.

Once America’s principal international carrier and undisputed largest air travel provider, Pan Am fell by the wayside along with other carriers like Eastern and PSA.

But how could such an iconic airline be allowed to fail?

After all, Pan Am was the airline that inaugurated the era of wide-body air travel when they introduced the world to the 747. Pan Am was at the forefront of supersonic air travel; they were one of few airlines that signed options for the Concorde (though they didn’t take delivery) and for the Boeing 2707, though they didn’t receive their fifteen ordered after Congress voted against additional SST funding in 1971. Pan Am was one of the first to use a computerized system to aid bookings in hotels and travel (the PANAMAC computer was so large that it occupied the entire fourth floor of what is now the Met Life building in New York). For many people, Pan Am is known as the airline that brought The Beatles to New York in 1964 (Pan Am B707-321, Clipper Defiance).

So, why did the government allow Pan Am to fail? Where was the support for Pan Am as it failed? Shouldn’t Pan Am have been “too big to fail”? Pan Am had once flown to every continent on the planet except Antarctica.

Ultimately, Pan Am collapsed because that’s just the nature of things. It’s the Second Law of Thermodynamics–Entropy. All things flow from order to chaos. Look at it this way: You can clean your kid’s room, but eventually it will become a mess again. No matter how hard CEOs or Governing Boards work to maintain structure and order within a company, eventually it is doomed. Either due to mismanagement, competition, or the fact that a different, better product/service has come available. Pan Am was doomed the first day it’s planes flew around Panama in the 1920s.

All businesses need to understand that fact of nature. Some, like the Packard Motor Company, Studebaker Motor Company, and Atari, Inc. learned this the hard way. Companies like Playboy, Inc. struggle to reinvent themselves as technology passes them by. And current industry giants like GM, Ford, BofA, and Citigroup try hard to ignore this facet of nature.

It doesn’t serve us any good to continually prop up dinosaurs. They either evolve or they die. Pan Am died. The airline industry moved on (though, some with the help of the government post 9/11). With the FDIC protecting customers, some banks should be allowed to move into chaos. GM? Maybe it is time to see it move to the Studebaker list of automakers.

And, just so you know. I can hear an Airbus A319 or 320 on final approach to DIA’s runway 7 right now.

Looking At The Ads… Okay, Just One.

Don’t get me wrong.

I like some of what Bill Clinton did as President. But then again, I like some of Reagan too. However, there’s a slight issue I have with Mr. Clinton’s latest Obama ad.

In the ad, you can watch here courtesy of YouTube, the former President talks about how Romney’s plan is to go back to deregulation. Here’s a quote:

This election, to me, is about which candidate is more likely to return us to full employment. This is a clear choice. The Republican plan is to cut more taxes on upper-income people and go back to deregulation. That’s what got us in trouble in the first place.

Okay, Mr. former President Clinton. Let’s look at the deregulation that “got us in trouble in the first place.”

First of all, be it known that in my world neither the Democrats or Republicans are blameless. Both screwed the situation up badly and left us in the mess we find ourselves in right now.

Quick history:

  • 1920s: In a nutshell, people were going to the bank to take out a loan to go gamble in Las Vegas. In a stock market craze, American’s bought stocks on “margin.” Loans were given based on the idea that the stock would rise beyond the loan value and everyone would make money. Along came 1929.
  • As a part of FDR’s First Hundred Days, the Banking Act of 1932 and 1933 were passed. These “reform” acts were designed to prevent a future Depression from ever happening again. Beside creating a FDIC, the Banking Acts (later known as the Glass-Steagall Act after the two Congressmen who authored the bills), separated commercial banking from investment banking.
  • 1977. The Carter Admin authors the Community Reinvestment Act (CRA). The CRA, vaguely written and hardly enforced, authorized banking regulators to ensure that insured banks were serving the “whole” community.

1993. The incoming Clinton Administration, working on a 1992 Boston Federal Reserve Study on home loans, encouraged lending institutions to revisit their loan policies. At the behest of Clinton Regulators, banks had to prove that they were meeting a quota of loans made to low- and moderate-income borrowers. In other words, banks were encouraged to create innovative and flexible loan policies to get people who would otherwise be unable to get a home loan. A 1994 HUD National Homeownership Strategy, promoted by Clinton, called for

“financing strategies, fueled by the creativity and resources of the private and public sectors, to help homeowners that lack cash to buy a home or to make the payments.”

On top of this, Freddie Mac and Fannie Mae were also encouraged to open up the purse strings so that everyone could be homeowners.

Not to be out played in the “we-like-the-little-people” game, Republicans pushed through the Gramm-Leach-Bliley Act which undid all things Glass-Steagall. After nearly twenty-five years of lobbying from the banks, Wall Street and Main Street Banks were once again able to merge policies, institutions, and lending practices. The reform effort of FDR to prevent another Great Depression went by the wayside. What we had was a massive housing speculation (more commonly called “flipping”) and eventually a collapse of the value of middle-class family home prices.

This brings us back to “…deregulation. That’s what got us in trouble in the first place.”

By encouraging banks to be “creative” and flexible in their lending policies, Clinton dismantled every oversight that the banks had establish for themselves in their lending programs. If that’s not deregulation, then maybe I don’t understand the term.

Deregulation. It’s not just something the Republicans are good at.

It’s time we put on our thinking caps as we listen to these campaign ads.