The New Empire of Debt: The Rise and Fall of an Epic Financial Bubble (15 page)

Even in 2001, on the matter of war, the United States Constitution was the same as it had been since 1789. “The Congress shall have the power to declare war,” it still says. It does not say the president has the power. Nor the Secretary of the Treasury or the Postmaster General. It says “Congress.” We cannot imagine a graver, more serious act than a declaration of war.We assume that it is just that sort of weight on his shoulders and his conscience that a member of Congress is paid to carry. But when the time came to consider a declaration of war against the lawful government of Afghanistan and then Iraq, out of 98 members of the Senate, not a single one voted against the use of military force in Iraq, and none asked for a declaration of war.

Similarly in matters of domestic policy, Congress becomes more and more marginalized as the work of empire goes forward. Not that it particularly matters. There is nothing necessarily better about a decision made by an elected group of hacks than one made by a dictator, an appointee, or a monarch.We only point out that as empires develop, power develops at the center, around the executive, and radiates outward. The preempire forms are still there. But they become meaningless.The executive can do what he likes, for he controls the business end of the state: the military.

To the extent that it promoted economic progress and prosperity, the Roman Empire did so by establishing public order and otherwise letting people get on with their business. Tax rates probably averaged only about 5 percent of GDP, even lower than the tribute demanded by the Mongols. But as the imperial bureaucracy develops, it has a tendency to clog up the plumbing of commerce with increasingly detailed controls. One measure causes a backup, which, in turn, provokes remediation by functionaries. Another measure is laid on, which causes even a worse backup. Eventually, people are up to their knees.

This is what happened in Rome. After clipping the coins in the period from Nero to Diocletian, inflation seemed out of control.There were more and more coins. It took more of them to buy the same things every year. Finally, Emperor Diocletian announced his Edict of Prices to stop inflation. Prices for everything—including wages—were controlled. The result, as can be imagined, was even worse disaster.

By the time of the Nixon administration, the water was rising in America, too. We mention it here not to explore the plumbing but the constitutional system. There is nothing in the United States Constitution allowing a president to fix prices as though he were a Roman emperor. But that is exactly what Richard Nixon did.The measure was desperate, illegal, and so ill-advised as to be financially suicidal. But who opposed it? A few old fuddy-duddies in his own party put up a fight, but most members of Congress seemed not to care.

The road to Hell is paved with good intentions.

—Anonymous

5

The Road to Hell

We are dogged by dead men. Down the street from our old office in Paris was the site of the world’s first central bank, put up by John Law, before he was forced to hightail it out of town. Around the corner from our new office is the Crillon Hotel, where Franklin Roosevelt, then an assistant secretary of the U.S. Navy, dined in high style while pretending to get the lowdown on the doughboys in the trenches. In the next war, Ernest Hemingway claimed to have liberated the bar at the Crillon from the Nazis as they left for the Rhine.

But it is back in Baltimore, Maryland, where the ghosts haunt us most. In our very own office, according to the local history buffs,Woodrow Wilson got together with the U.S. ambassador to Belgium,Theodore Marburg, and ginned up one of the grandest wish lists of all time—the League of Nations.

An honest, upright man has no place in national politics. A man with his wits about him is too modest for the role. He suffers greatness as a sort of hypocrisy. He has no better idea of how the nation should be led than anyone else—and he knows it.

Dissembling wears him down until he is shouldered out of the way by bolder liars and abject stoneheads.The former will say whatever the voters want to hear—and then go on with disastrous projects. The latter have no plans or fixed ideas of any sort; they merely shake hands and blabber whatever cockamamy nonsense comes into their heads.The former never make good presidents.The latter often do.

Many of the best American presidents—such as Garfield, Harding, and Arthur—are rarely even mentioned. Lincoln, Wilson, and Theodore Roosevelt, on the other hand, are routinely described as national heroes. Nobody really knows which president was good for the nation and which was bad. We would have to know what would have happened if the man in the Oval Office had done something different.Would the nation be better off if Lincoln had not slaughtered so many Southerners? Would world history have been worse if Wilson had not meddled in World War I? We can’t know the answers; we can only guess. But the historians who guess about such matters have a disturbing tilt—not toward mediocrity, but toward imbecility. Like crooked butchers, they advertise our biggest mutton-brains as prime beef—and push their thumbs down on the scales of history to give them extra weight.Those they select as great are merely those who have given them the most meat—those who have made the biggest public spectacles of themselves.

Most historians rate Lincoln, Wilson, and Franklin Roosevelt as our greatest presidents. But all of them might just as well have been charged with dereliction, gross incompetence, and treason. For at one time or another, each of them betrayed the Constitution, got the country into a war that probably could have been avoided, and practically bankrupted the nation.

The presumption that underlies the popular opinion is that a president faces challenges. He is rated on how well he faces up to them. But the biggest challenge a president will face is no different from that faced by a Louis or a Charles—merely staying out of the way. People have their own challenges, their own plans, and their own private lives to lead. The last thing they need is a president who wants to improve the world. Every supposed improvement costs citizens dearly. If it is a bridge, it is they who must pay for it, whether it is needed or not. If it is a law forbidding this or regulating that, it is their activities that are interdicted. If it is a war, it is they who must die. Every step toward phony public do-goodism comes at the expense of genuine private improvements.

That is why a president who does nothing is a treasure.William Henry Harrison was a model national leader. Rare in a president, he did what he promised to do. He told voters that he would “under no circumstances” serve more than a single term. He made good on his promise in the most conclusive way. The poor man caught pneumonia giving his inaugural address. He was dead within 31 days of taking the oath of office.

James A. Garfield was another great leader. He took office in March 1881. The man was a marvel who could write Latin with one hand and Greek with the other—at the same time. He was shot in July and died three months later.“He didn’t have time to accomplish his plans,” say the standard histories.Thank God.

Millard Fillmore was one of America’s greatest presidents. He did little—other than try to preserve peace in the period leading up to the War between the States. Preserving peace was an achievement, but instead of giving the man credit, historians hold up the humbug, Abraham Lincoln, for praise.The United States has never suffered more harm than on Lincoln’s watch. Still, it is the Lincoln Memorial to which crowds of agitators and malcontents repair, not the Fillmore Memorial. As far as we know, no monument exists to Fillmore, who not only kept the peace, but also installed the first system of running water in the White House—giving the place its first bathtub. Fillmore was a modest man. Oxford University offered him an honorary degree. But Fillmore couldn’t read Latin. He refused the diploma, saying he didn’t want a degree he couldn’t read.

If Fillmore couldn’t read Latin, Andrew Johnson was lucky to be able to read at all. He never went to any kind of school; his wife taught him to read. He is often held up as an example of a failed presidency. Instead, he seems to have made one of the best deals for the American people ever—buying Alaska from Russia for $7.2 million. Who has added so much since? Who has actually made the nation richer, rather than poorer? Johnson did the nation a great service. Still, he gets little respect and practically no thanks.

But our favorite president is Warren Gamaliel Harding.

In his hit book,
Blink,
¹
Malcolm Gladwell tells how Harry Daugherty (a leader of the Republican Party in Ohio) met Warren Harding in 1899 in the back garden of the Globe Hotel in Richwood, Ohio, where both were having their shoes shined.

Daugherty blinked and thought he saw a man who could be president.

Journalist Mark Sullivan described the moment:

Harding was worth looking at. He was at the time about 35 years old. His head, features, shoulders and torso had a size that attracted attention, their proportions to each other made an effect, which in any male at any place would justify more than the term handsome. In later years, when he came to be known beyond his local world, the word “Roman” was occasionally used in descriptions of him. As he stepped down from the stand, his legs bore out the striking and agreeable proportions of his body; and his lightness on his feet, his erectness, his easy bearing, added to the impression of physical grace and virility. His suppleness, combined with his bigness of frame, and his large, wide-set rather glowing eyes, his very black hair, and bronze complexion gave him some of the handsomeness of an Indian. His courtesy as he surrendered his seat to the other customer suggested genuine friendliness toward all mankind. His voice was noticeably resonant, masculine, and warm. His pleasure in the attentions of the bootblack’s whisk reflected a consciousness about clothes unusual in a small-town man. His manner as he bestowed a tip suggested generous good-nature, a wish to give pleasure, based on physical well-being and sincere kindliness of heart.
²

Not only did Harding have the looks and the presence, he also had the bad-boy image. Gladwell writes, “Not especially intelligent. Liked to play poker and to drink . . . and most of all, chase women; his sexual appetites were the stuff of legend.”
³

As he rose from one office to the next, he “never distinguished himself.” His speeches were vacuous. He had few ideas, and those that he had were probably bad ones. Still, when Daugherty arranged for Harding to speak to the 1916 Republican National Convention, he guessed what might happen.

“There is a man who looks like he should be president,” the onlookers would say. Later that day, in the smoke-filled rooms of the Blackstone Hotel in Chicago, the power brokers realized they had a problem. Whom could they find that none of them would object to? Well, there was Harding!

“Harding became President Harding [in 1921],” writes Gladwell. “He served two years before dying unexpectedly of a stroke. He was, most historians agree, one of the worst presidents in American history.”
⁴

On the surface, he sounds like one of the best. We have never heard of anyone being arrested and charged under the “Harding Act.” We have never seen a building in Washington, or anywhere else, named the
Harding Building.
We know of no wars the man caused. We recall no government programs he set in motion.

As far as we know, the nation and everyone in it were no better off the day Warren Harding stepped into office than they were the day he was carried out of it.

Harding was a decent man of reasonable talents. He held poker games in the White House twice a week. And whenever he got a chance, he sneaked away to a burlesque show.These pastimes seemed enough for the man; they helped him bear up in his eminent role and kept him from wanting to do anything. Another saving grace was that the president neither thought nor spoke clearly enough for anyone to figure out what he was talking about. He couldn’t rally the troops and get them behind his ideas; he had none. And even if he tried, they wouldn’t understand him.

H. L. Mencken preserved a bit of what he called
Gamalielese,
just to hold it up to ridicule:

I would like government to do all it can to mitigate, then, in understanding in mutuality of interest, in concern for the common good, our tasks will be solved.
⁵

The sentence is so idiotic and meaningless, it could have come from the mouth of George W. Bush. But the crowds seemed to like the way he delivered it. He said it with such solid conviction, it “was like a blacksmith bringing down a hammer on an egg,”
⁶
says Mencken.

Harding was so full of such thunderous twaddle that he stormed into office . . . and then drizzled away until he died. Bravo! Well done.

Harding, Arthur, Fillmore—unlike the clumsy giants who left their deep footprints in the earth along Pennsylvania Avenue and trod on practically everyone who got in their way—these midgets managed to make their way through the nation’s highest office leaving hardly a trace. That is, they left the country alone.

You will find their pictures on no “dead presidents,” that is, on none of the nation’s currency. Nor will you find their profiles chiseled on the towering rocks of the Dakota hills. Instead, there you find blowhards such as Theodore Roosevelt and saintly frauds such as Abraham Lincoln. But in the crowded field of contestants for America’s worst president, one man stands out. As a world improver, his stature is world class. He was humorless, immodest, and self-righteous.