Wednesday, February 3, 2010

Festina Lente

Years ago I was doing some research and came across this Latin phrase: “festina lente”. In English it means something like “make haste slowly.” Erasmus (1731 – 1802) has given us an interesting history of the slogan:

Speude bradeos, i.e. festina lente “Make haste slowly." This charming proverb appears at first glance a riddle, because it is made up of words which contradict each other. It is therefore to be classed with those which express their meaning through enantiosin, that is, contrariety,…. Of this genus is the saying dusdaimon eudaimonia, unfortunate good fortune. Nor does it seem a groundless conjecture that our present proverb was created from a phrase which appears in Aristophanes' Knights: speude tacheos, hasten hastily, so that the person who made the allusion, whoever he was, converted the anadiaplosin, or doubling, into contrariety, enantiosin. The apt and absolute brevity of the phrase gives a superlative grace to the rhetorical figuration and to the humor of the allusion, a gem-like grace that seems to me to be especially beautiful in proverbs, and to make them gem-like marvels of price.

If you weigh carefully the force and the sentiment of our proverb, its succinct brevity, how fertile it is, how serious, how beneficial, how applicable to every activity of life, you will easily come to the opinion that among the huge number of sayings you will find none of greater dignity. Speude bradeos (festina lente) ought to be carved on columns. It ought to be written on the archways of churches, and indeed in letters of gold. It ought to be painted on the gates of great men's palaces, engraved on the rings of cardinals and primates, and chased on the scepters of kings. To go further, it ought to be seen on all monuments everywhere, published abroad and multiplied so that everyone will know it and it will be before every mortal eye, and there will be no one who doesn't hold it of greatest use — especially princes, and to those to whom, to quote Homer.

Laoi t' epitetraphatai kai tossa memele
["The people are entrusted, and the care of much."]”

And Erasmus gives the leaders of the world this advice:

“People of private station, if they have omitted something by laziness, or committed something through rashness, face lighter consequences, for the damage that is done can be remedied by smaller means. But princes... A single instance of neglect, or one counsel too hastily put into effect, dear God! what hurricanes have they not often excited, what huge disasters have they not let loose upon humanity? But, if our speudein bradeos (festina lente) were there to help — that is, a certain ripening of action and moderation blended together from both wakefulness and gentleness — so that kings would commit nothing through rashness they would regret, nor pass over through laziness anything that would tend to the well-being of the state, I ask you, what could be more prosperous, better grounded, and more stable than this kind of rule? The happiness of such a government would hardly be contained by the boundaries of a country, but would extend far and wide to neighboring peoples, nor could the line of Hesiod be better applied than here:

Pema kakos geiton, hosson t' eus meg' oneiar.
["An evil neighbor is a curse, as much as a good one is a benefit."]”

I find it interesting that our Founding Fathers sought to install this principle into our very government. In America, gridlock is normal. The bodies of government, with their checks and balances, are designed in such a way that no one can move quickly with poorly conceived ideas. Advocates of new programs and laws must convince their fellow politicians of the wisdom of each proposal and there are protections that keep hasty decisions and laws from being put into effect. A minority can hold up a bad law almost indefinitely in committee so it cannot be voted upon. And finally, the Supreme Court, mindful of the individual rights recognized in the Constitution, can strike down a bad law and destroy the plans of those interested in corrupting our freedoms.

In fact, a valuable principle of our government is festina lente; we want our politicians to be thoughtful about what they pass so they can avoid any “hurricanes” that the laws might create. In America, politicians must put their ideas down in writing so they can be analyzed by others, so facts can be checked and the causes of problems accurately identified; and the "solutions" carefully planned; they should make the text of bills available for everyone, even the citizens, to read and understand; they should get input from their peers, lawyers, businesspeople and the citizenry before they put something out there that violates the principles of the Constitution. This is one way that the government protects our individual rights.

At least that was the intent.

Today, I smile when I hear people say that politicians should work together in a bi-partisan fashion in order to accomplish the peoples’ business. I think the reverse is true. If we make it hard for politicians to get anything done, we protect our freedoms. We don’t want these idiots ginning up the dangers of the very problems they have created in order to precipitously change something that should be left alone.

For instance, in 2008, we were told that banks weren’t lending, that credit was not flowing because of bad investments by financial institutions (a problem caused by the Community Reinvestment Act and government mandates that banks were required to lend to people with poor credit ratings). The solution offered by the government (mostly made up of former Goldman Sachs executives) was for the government to inject about 800 billion dollars into banks and financial institutions that were holding this worthless debt. Presumabley, this would enable those institutions to temporarily re-capitalize so they could resume lending. We were told this would save the economy.

Today, in February of 2010, the money has been paid back to the government and loans from banks are still essentially frozen. The TARP Bill did not work. Even now, banks are leery of lending. The only thing we “gained” is government ownership of the banks; proposed new huge new taxes on the banks and criticism of bonuses to the most productive employees. Even now there are criminal investigations of these banks so the government can prosecute and jail people who were forced against their will to take the money.

The government now wants to give some of the paid-back money to more banks that aren’t lending. One can only assume that the TARP money is really just a slush fund to be used in whatever way the government decides. The result will be that the government will own a bigger part of the banking industry and control wages and other decisions of those banks…which will not solve the problem (of banks not lending - if TARP 1 did not work, how can TARP 2 work?).

Why won’t the banks lend? My suggestion is that banks need to increase their capital bases in order to ensure that they will be able to survive any future economic decline and runs on the banks. One new government proposal, regulation or just a thoughtless statement made by President Obama or Vice-president Biden could destroy a bank today. When you have a government with a penchant for picking winners and losers, you have to ensure you can survive if you are chosen to be a loser. Better to hold on to capital reserves than to later pay a bribe.

After Obama was elected, he started attacking ‘greed’ and ‘rash’ investments made by “Fat Cats”, accusing them of not being self-sacrificial enough, ignoring the fact that policies he advocated while a lawyer in the '90s and as a Senator, were creating, and are still creating, our economic decline. Ignoring reality and making rash criticisms of business people is no way to spur economic growth.

The result is that businesses refuse to hire, refuse to make capital expenditures and they hold any capital they are able to accrue. As the negative consequences of Obama's actions cause more unemployment and economic stagnation, the President tells Wall Street that it just doesn’t get it, exhorts the banks to lend money and rails against huge bonuses that were promised to the most productive employees of these institutions(even though they’ve paid back the TARP money).

One of his first acts as President was to create a “Stimulus Bill” that had to be voted upon quickly in order to address our high unemployment. If we didn’t act immediately, the argument went, things would spiral out of control and we’d have a depression on our hands. What was our incentive for acting quickly? Obama and his Keynesian economists promised we’d stay under 8% unemployment.

The first thing we learned after passage of the bill was that much of the money was held onto so it could be spent in 2010 - they assumed the money would actually stimulate the economy so they wanted the stimulus to happen right before the mid-term elections - the Stimulus Bill was another slush fund to buy votes. So what was the hurry in 2009? What about the economic emergency? Is the suffering of people less important than winning an election?

Then as we saw unemployment rise above 10%, the administration claimed that it did not know how bad the situation was when they proposed the bill. Are we to assume that these economists are not as competent as they are pretending to be? How could they get this wrong?

Then we learned that there were few “shovel-ready projects” shovel ready, that much of the money went to increasing the coffers of leftist-oriented government programs and departments, not to create new jobs. Now we're asked to replenish the slush fund in the name of a second Stimulus Plan re-named as a jobs bill.

Many classical economists have shown that money taken from the private economy and spent by government is not stimulative. It is nothing more than re-distribution of money that has been produced in the private economy. A re-distribution program does not create new wealth. Yet, apparently, President Obama was too hasty when he studied economics in college. He swallowed the Keynesian line that government spending stimulates the economy without reading the more prescient arguments that Keynes' ideas were wrong.

The truth is that the money spent in this Stimulus Bill will not stimulate the economy. Only newly-produced money can stimulate the economy. New money can only be produced by people who think and work, not by the government printing press. The government can take money from people and spend it; but that's what the people who earned it would have done. The net benefit to the economy is a negative (the real damage is the destruction of individual and property rights). When the election comes in November, there will be little impact on the economy by this spending. You’ll have an electorate that asks the question: “Where are the jobs, Mr. President?”

A little more wisdom from Erasmus:

“I consider this proverb (festina lente) has better right to be called basilikon, i.e. royal, than any other, not so much because royalty could best use it, but because the minds of princes seem to be peculiarly prone to the two vices of sloth and hotheadedness. Fortune's favor, the abundance of wealth, the ready allurements to amusements, the ability to do whatever one pleases, and finally that most pestilent euge!, "bravo!", of yes-men, and the everlastingly ready smiles, applause, and congratulations for a king, whatever he does or says in any way — it's no wonder if all these things, and others of the same nature, persuade many princes to laziness, especially if the person exposed to these temptations is young and inexperienced. Yet on the contrary, it often happens that the natural and "lion-like" — I might call it — vigor of some princes' minds, when inflated by limitless wealth, whipped up by the prospects of great things, inflammed with anger, ambition or other desires of that type, and egged on by flattering counsels, first charges out in one wrong direction, then in another, and then carries the whole state with it into the abyss.”(3)

I couldn’t have said it better. Festina lente, Mr. President.

(1)Desiderius Erasmus : Adagia II, 1, 1: Festina Lente

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