Friedman, Plato & Trump vs. Think Tanks, Richard Haass, Macron & Bloomberg?


Richard Haass tweeted the following on Friday:

  • Richard N. Haass ‏Verified account @RichardHaass Dec 7In an instant Europe has gone from being the most stable region in the world to anything but. Paris is burning, the Merkel era is ending, Italy is playing a dangerous game of chicken with the EU, Russia is carving up Ukraine, and the UK is consumed by Brexit. History is resuming.

Who is Richard Haass, you ask? Richard Haass is elite of the elite in US foreign policy. He has been president of the Council on Foreign Relations since July 2003 prior to which he was Director of Policy Planning for the US State Department.

1.Dirge of the “Expert” Foreign Policy Elite

What you hear in his tweet is a dirge of the elite. The world as Richard Haass & his cohort knew & loved is crashing before their eyes. Haass is probably feeling what the elite bureaucrats in European kingdoms felt when they saw French commoners storming the Bastille in 1789.

Now look at this week’s video:


Now look at how students in a school were treated via a 17 second clip:


We can understand the lament of Mr. Haass. Just as his aristocratic predecessors of the 18th century felt their world was ending, Mr. Haass is lamenting an end of his world. Needless to say, Richard Haass was  distraught  at the election of President Trump by ordinary Americans from “fly-over” blue collar states. And he has still found nothing he likes about President Trump’s foreign policy, his proclaimed area of expertise.

So for him & his Think Tank cohort, Europe was the promised land & salvation rolled into one. The European Union was a dream creation of the foreign policy elite, a project in which elite “expert” bureaucrats in Brussels would slowly strangle the democratic rights of commoner Europeans and create an expertise based central body to control virtually all activities in Europe. German Chancellor Angela Merkel, with Germany’s money & currency, was its foundational rock.  

In his tweet, Mr. Haass also displays the characteristic myopia of the elite, especially the foreign policy “expert” elite. Europe has not gone from stable to unstable “in an instant” as he tweeted. Greece became unstable at 6-7 years ago; Catalonia became unstable after that;then it was Poland & Hungary’s turn. But elites like Mr. Haass dismissed them as they had dismissed blue collar Americans for the past 24 years.

But they took notice when Italy began its own managed separation from EU. Still they were reassured partly due to the power of the elite bureaucracy of EU and the rise of Macron to support Merkel. The rise of Macron & his devotion to the elite causes like climate control gave them comfort as signs of Merkelexit emerged. Now Paris burning & Macron is in deep trouble. That is why you hear Richard Haass singing the dirge in his tweet.

2. Idolization of Expertise vs. Friedman & Plato

Watch Richard Haass on TV and you will notice a sense of arrogance about him, an arrogance that we believe stems from his conviction about his expertise. We don’t blame him personally for that. After all “expertise” is quasi-idolized in today’s elite world just as aristocracy was quasi-idolized in the pre-Bastille old world. Look what George Friedman, founder of Stratfor & now Geopolitical Futures, wrote about the “cult” of expertise in May 2017:

  • “Experts dismiss the citizenry as a poor source of wisdom, hold Congress as a nuisance, and even treat the president with condescension, although not to his face. Expertise moves from being a tool of real, if limited, value to being a cult into which admission requires mastery of an art. In Washington, that cult rules. The deeper you go in the ranks, the more it demands conformity to the methodological idols that are worshiped.”

In that article, Dr. Friedman goes back to Plato:

  • “Plato asked if a physician who does not cure his patient ought to be considered a physician. His answer was no. Plato’s point was that the test of an expert is achieving the end to which expertise is intended. If he fails, he is no expert.”

Dr. Friedman borrowed this concept to highlight a major weakness of being an “expert” – focus & localization. He wrote:

  • “To become an expert, one must become focused [narrowly slow, we would add]. Expertise consists of detailed knowledge and experience in a field that permits you to undertake successful actions. An air conditioner repairman, a surgeon and a financial engineer are all examples of expertise, along with endless others. No reasonable person would argue against the need for expertise in the world.”

3. Complexity, Fed & Wisdom

To us this is best explained by the difference between “complicated” and “complex”. The theory of Complex systems can be said to have begun with a weather experiment by Edward Lorenz at MIT in 1961. He presented a paper a few years later titled “Does the Flap of a Butterfly’s Wings in Brazil Set Off a Tornado in Texas?“. With that paper, the phrase “the butterfly effect” entered our lexicon. 

Complicated systems require high level of “expertise”, like say Aircraft Engines. Only USA & Russia have mastered the design & manufacture of aircraft engines. But such systems are “simple” because their many many components interact with each other in fixed ways. That is why systems like IBM’s Watson can be used in aircraft maintenance.

In contrast, as science historian James Gleick has written:

  • “Even if we covered the Earth in a lattice of sensors spaced one foot apart, and even if every one of these sensors provided flawless readings, we would still not know whether it would rain in one month.”

In complex systems, interactions between their individual components are unpredictable. Weather is a highly complex system in which the number of interactions increases dramatically and in utterly unpredictable ways. That is why experts, with their definitionally narrow focus. have usually failed in managing complex systems.

Look at the pattern of failure of the Federal Reserve in recognizing & managing turning points in the US economy, a highly complex system. And no one can question the mass of “expertise” assembled at the Federal Reserve with over 100 Ph.D. economists on Fed’s staff pouring over tons of economic data every day. But their collective track record is abysmal. In 2000, 2007-2008 & possibly in 2018, the Fed kept raising interest rates until they broke the US Economy.  

Look how difficult it is to understand what is happening in the US Economy. On October 3, 2018, Fed Chairman Powell said about their rate hike campaign “we’re a long way from neutral at this point, probably“. Famed economist David Rosenberg tweeted that day:

  • Oct 3 –  Really strong data today ends a series of prior disappointments. Upside risk for payrolls, not to mention the dollar and rates. The Fed has work to do. [meaning Fed has to raise interest rates higher & for longer].

In less than two months, Fed Chairman Powell reversed himself and said in his speech on November 28 – current interest rate is  “just below the broad range of estimates of the level that would be neutral for the economy“.

Look at the drastic change from “long way from neutral” on October 3 to “just below … neutral” on November 28. The turn by David Rosenberg has been greater. Look what he tweeted this past Friday:

  • Housing is in contraction mode. Core capex orders in decline. Banks shedding assets. Jobless claims on the rise. Payroll data reveal a soft income underbelly. Recession coming next year and it’s too late for the Fed to prevent it.

From “really strong data” on October 3 to “recession coming next year” on December 7! What happened? Markets happened, People happened. All hell broke loose in US financial markets after the “long way from neutral” comment of Fed Chairman Powell on October 3. That carnage actually caused the US economy to slow down. Why? The US economy is not an aircraft engine; it is impacted by people & their behavior. And what is more complex than behavior of people?

Fortunately, despite being an “expert”, Fed Chairman Powell is neither arrogant nor adamant. When faced with changed facts, he changed his mind. In doing so, he demonstrated his wisdom.

In stark contrast, Richard Haass & his elite expert think tankers remain arrogantly unwise. They have been consistently wrong for the last few years, wrong about Brexit, wrong about Trump, wrong about the 2016 election, wrong about migration in Europe, wrong about Macron. Yet they remain singularly convinced of their “expertise”.

4. Presidents vs. “Expert” Advisers, Trump vs. Bloomberg

Notice the “Russia is carving up Ukraine” in the above tweet by Richard Haass as well as the lack of mention of China. Here we have begun a quasi-existential conflict with China about Chinese pursuit of hegemony in Pacific and in Asia and the “expert” foreign policy elites keep encouraging conflict with Russia. These “experts” have no desire for military conflict with China in the South China sea, but they all are gung ho about military challenge to Russia in Ukraine. 

Dr. Friedman discussed influence of “expert” advisers issue on going to war in his article in May 2017:

  • “The decisions to go to war in those 32 years have been made primarily by the president surrounded by his advisers ­– his experts. The experts know many things, but their knowledge of the “big thing” – the price to be paid and the consequences of defeat – is no more than what you or I know. Most importantly, they do not know the American people as a president, senator or congressman does. They do not know their limits, their needs, or above all, their will.”
  • “The decision to go to war does not require expertise, but wisdom. It requires a deep understanding of the American people, which is more likely to come from a politician who attended a thousand barbecues than someone who attended a thousand seminars at Harvard’s JFK School of Government. Presidents who have clawed their way to the presidency and senators and congressmen who have held their seats for decades know far more about human nature than most experts. Therefore, they also know far more about how the enemy might behave if we wage war and how the American people might behave if we lose.”

That brings us to comments Michael Bloomberg made in an interview with Bloomberg Television a few weeks ago. He said Presidents should not make policy; Advisers to the President should make policy and suggested that President Trump should act mainly as a manager of the tens of thousands of Federal employees. 

Not only is this advice totally opposite of what President Trump is doing & wants to do, but it is also totally opposite to how Presidents Reagan, FDR and even Lincoln acted. These three transformational Presidents knew what they wanted to do; they made the big policy decisions and they also made sure their advisers followed their wishes & commands.

Actually Mr. Bloomberg’s advice to act like a corporate manager also flies in the face of “progressive” Democrat candidates he will face in Democrat primaries. If it sticks to his definition of how a President should act, the debates between him & the “progressive” candidates should prove interesting.

On the other hand, Richard Haass and his elite “expert” foreign policy tankers might now be dreaming of advising and influencing President Bloomberg. Singing that song of desire might be much much sweeter than the dirge in his tweet.


Send your feedback to [email protected] Or @MacroViewpoints on Twitter