In his essay on Philip Roth’s body of work (“Roth v. Roth v. Roth,” April), Joseph O’Neill noted: “Roth, though evidently blessed with decent health, has not enjoyed immunity from life’s distressing hazards, which in his case include a ‘crack-up’ in his mid-50s.”
There is an unfortunate biographical error in Joseph O’Neill’s essay about my work. He writes of my having “a crack-up.” The statement is not true, nor is there reliable biographical evidence to support it.
After knee surgery in March 1987, when I was 54, I was prescribed the sleeping pill Halcion, a sedative hypnotic in the benzodiazepine class of medications that can induce a debilitating cluster of adverse effects, sometimes called “Halcion madness.” At the time it was prescribed post-operatively for me by the orthopedic surgeon, Halcion had already been taken off the market in Holland, Germany, and elsewhere because of extreme psychological side effects leading even to suicide.
My own adverse reaction to Halcion, which corresponded to a clinically well-defined adverse reaction, one that has been exhaustively documented in the medical literature, started when I began taking the drug and resolved promptly when, with the helpful intervention of my family doctor, I stopped.
In a front-page story in The New York Times in January 1992, under the headline “Maker of Sleeping Pill Hid Data on Side Effects,” Halcion was characterized as “more dangerous than other sleeping pills and”—as I had discovered during the three months that I unsuspectingly took the drug—“more likely to cause symptoms like amnesia, paranoia, depression and hallucinations.”
New York, N.Y.
In April, Roger Lowenstein wrote about how widespread and vitriolic the criticism of Ben Bernanke has been, even though he saved the global economy—a point illustrated by the conflicting headlines on the article (“The Villain”) and on the magazine’s cover (“The Hero”).
Bernanke isn’t a villain; he’s not a hero. He’s just a guy trying to do a complicated, high-pressure job the best he can, making plenty of mistakes along the way. The Fed is attracting lots of criticism from both sides because it’s trying to play things down the middle … The Fed is the only major Washington institution that seems to be doing anything other than jockeying for position in the November elections. It’s actually trying to do something, with no help from the other major players.
Excerpt from a Fortune article
Bernanke may or may not have saved the global economy. However, one can see reasons to doubt he is a hero, without signing up for Rick Perry’s lynch party. When Bernanke became the Federal Reserve chairman in 2006, Alan Greenspan and Fannie/Freddie had already lined up the dominoes for the housing crash and financial crisis of 2008. I won’t second-guess Bernanke’s immediate actions in response to those events, taken under incredible pressure.
But we are now six years into the Bernanke era. We have learned that quantitative easing is Ph.D.-speak for “currency devaluation.” How you feel about that depends on which side of the game you are playing. If you are a retiree with a defined-benefit pension, or a saver with dollar-denominated assets, you don’t feel good. If you are a debtor with dollar-denominated obligations, you feel great. And who is the biggest debtor of all? The U.S. government. In 2011, the Fed purchased 60 percent of new Treasury issuance, while private and foreign purchases shrank. Bernanke’s policies have increased the federal deficit by propping up the market for Treasury debt.
Instead of an independent Federal Reserve Bank, we now have a central bank that operates like a branch of Treasury. To be a hero, Bernanke would need to restore the Fed’s independence, unwind its $1.6 trillion position in Treasury debt, and stabilize the dollar. If he did those things, he could be reappointed by a Republican president.
I think vilification of Bernanke by the right is based not on perceived harm to the U.S., but on unwanted benefit to Obama. Vilification by the left, I don’t understand.
The big end of finance, having won decisively in the global financial crisis, is in the process of rewriting history to suit its liking. The cover story in the current Atlantic… is a classic example of this type of revisionist history.
Excerpt from a Naked Capitalism blog post
The grim reality is that future generations will face escalating commodity prices and falling real incomes due to rising environmental and resource costs, especially energy. The solution is obvious: intensive government investment to prepare for a declining fossil-fuel economy, financed by high taxes or restrictions on the most affluent and on luxuries. You could have it all—productive work for everyone and a vast reduction in wasteful consumption. Of course the political resistance will be fierce from wealthy special interests, yet the opposition to plutocratic greed is growing.
The Fed could buy government bonds at zero percent interest to help jump-start public investment, while raising interest rates for private finance and refusing to participate in more Wall Street bailouts.
Lowenstein writes, “In the time of Nicholas Biddle, and even during the formative years of the Fed, banknotes, being liabilities, could be redeemed for something of value, usually gold. Now our dollars are exchangeable only for more dollars.”
This perpetuates a falsehood. The monetary value of any commodity is arbitrary. Gold has no more intrinsic worth than a pocketful of any sort of paper, except for its ability to be forged into something useful or decorative, and even those artifacts are worth only what someone is willing to pay for them. At this moment, in this country, an ounce of gold is worth a great big pile of dollars just because we have agreed that it is. When I was a child it was worth $35. Tomorrow it could be worth nothing; all we have to do is change our minds.
The invention of fiat currency was certainly based to some extent on understanding this, plus the fact that by concentrating upon this agreement itself, instead of upon some fictitious “real” value, the currency gains the ability to expand or contract as it needs to without any reference to such a base. Fiat currency has become as important to modern economics as Darwin’s work is to modern biology, or Einstein’s to modern physics. In practice, it runs into trouble only when the underlying agreement is stressed beyond its comfort zone and the currency becomes either overvalued (as in a recession) or undervalued (inflation). However, I think we can agree that reestablishing confidence in a currency, however difficult, is always easier than increasing the amount of gold on hand.
William D. Owen
Whatever your opinion of Bernanke, your opinion of The Atlantic should decline after reading this puff piece.
In her April column (“Europe’s Real Crisis”), Megan McArdle outlined how achieving economic growth will be tough, because no European country has a fertility rate high enough to replace its current population.
Megan McArdle clearly lays out demographics as one reason that economic growth is unsustainable. She then drops the ball magnificently when she asks, “Is strong growth still possible once the demographic dividend has been paid out?” Rather than run with the hard truth, she cops out with an unsubstantiated “Of course it is, at least in theory.”
Perpetual “strong” economic growth is not possible, not even in theory, unless you perform the contortionist groupthink of the policy makers who have brought us the current mess. Continual growth relies on a growing population, as Ms. McArdle adroitly explains. But it also depends on unlimited and cheap resources, free waste disposal into our air and water, relentlessly longer hours at work (paid or unpaid) at the expense of leisure time, and ever greater waste. Inefficient and obsolescent products drive growth, as do canny marketers who persuade people to borrow money to buy ever more unnecessary crap. Continued growth depends on borrowing, both as formal loans, and through a plethora of investment and bond mechanisms. Most individuals, businesses, and governments within mature economies are now growing only thanks to borrowed money.
To an ecologist like myself, trained to understand what brings stability to ecosystems, it is apparent the model of continued growth in economic systems is inherently unstable. What we are seeing in southern Europe, in the U.S. recession, and in cycles of banking and market failures of increasing severity and frequency are the unavoidable consequences of a system chasing the myth of perpetual growth. Until the global economy can more closely mimic a steady-state system similar to a stable ecosystem, the world will continue to see more problems as described by Ms. McArdle.
Andrew L. Mack, Ph.D.
New Florence, Pa.
Megan McArdle replies:
Whether or not continuous economic growth is possible, or desirable, the fact remains that modern economies are predicated on the assumption that it will happen. Both individuals and governments have planned for a future in which incomes steadily rise, allowing people to enjoy lengthy retirements, advanced health care, independent living, and of course, repayment of the massive debts that almost everyone has accumulated over the past few decades.
If that growth doesn’t materialize, the shock will be enormous. Generational battles over things like pensions have occurred in the context of rising incomes; they will become bitter indeed if young and old are fighting over a shrinking economic pie. The most brutal shock will of course be over debt. If incomes fall, debt will become an ever larger burden. But if countries default, they will merely shift the shock to someone else—too often, to pensioners at home or abroad.
However laudable Europe’s demographic decline may be from an environmental point of view, it will be an economic disaster for many who expected a stable, prosperous future.
The notion that “heavy debt and a shrinking population are a very bad combination” led to a discussion about immigration among online readers and the author (“McMegan”).
The obvious answer is for European countries (and Japan) to greatly increase their immigration, especially of young people. A huge number of people would love to become new citizens, so demand isn’t the problem. Of course, it simply delays the long-term problem. But having a delay should be enough to help solve the problem. Pensions should be lower, because future growth is probably going to be lower. But pension systems like Social Security should provide enough for a person to live, even if they don’t provide enough to live well. If you want to live well, then you will need to save a lot more money.
It depends on the kind of immigration you are exposed to. If you are far from the borders of a particular country, immigrants from that country tend to be well educated and ambitious. In Ireland, generally speaking, you are not getting the beggars from Pakistan, you are getting the doctors, and they come into your country speaking English and emphasizing education to their children. Of course this helps an economy.
However, if you are very close to a country with a porous border and a ridiculous immigration policy, you get large numbers of desperate, mainly uneducated workers. Many such people don’t speak the native language and therefore have a very hard time helping their children in school. Furthermore, they, as families, often have a survival mentality rather than an education mentality, and since the parents have little education, both have to work long hours to provide for their families. This further impedes their children’s ability to perform well academically and take advantage of opportunities in their new country. The result is several generations of poverty and lack of education (and hence lack of productivity), which can be made up only partially by working very long hours at menial tasks. This is not the ideal situation for long-term growth.
There are legitimate questions about how many people a country can assimilate into the cultural and economic framework that supports its economy. I think the answer is “more than anyone is currently importing,” but a 50 percent replacement rate probably strains that pretty badly. And the few societies which are that dependent on guest workers are not, mostly, attractive places.
I think it is not so simple as how many you can import at any given time. It is a complex function which also varies with how many you can assimilate at any given time, including how much and how fast their children assimilate (or are allowed to assimilate, which is the same problem).
We Americans completely fail to appreciate the cultural and racial homogeneity that defines virtually every other extant nation-state. We think that everywhere else can and should be an American melting pot.
Anyone who has spent more than a few days in Japan (for example) should know that the introduction of a significant immigrant population would turn that nation into something that is no longer Japan. Indeed, it would likely destroy the nation.
In “They Kill Horses, Don’t They?” (March), Darcy Courteau provided a firsthand account of the fraught state of horse ownership in America today.
What do you do with a 1,200-pound animal when you can’t afford the feed, the range is overgrazed, and euthanasia is beyond your means? No one breeds a mare with the intention of sending the foal to slaughter, should it become “excess inventory.” But banning slaughter in the U.S. doesn’t stop it. And we can’t do anything about conditions in Mexico. Let’s regulate horse slaughter here, where we have a say in the matter.
Slaughter is not a humane option for combatting equine abuse and neglect—these would cease with responsible horse breeding and ownership. When California passed a strict anti–horse slaughter law in 1998, there was no increase in horse neglect and abuse cases, but there was a drop in horse theft. Being killed in a slaughterhouse in the U.S. might be marginally preferable to being killed in a slaughterhouse in Mexico or Canada, but from a horse’s perspective, it is all pretty much the same horror show. It is time for the “agrarian holdouts” who raise horses for profit to stop. For now, in this economy, the days of making money by breeding horses are over. To compound that mistake by bringing back the inhumane practice of slaughter lacks all integrity.
Darcy Courteau replies:
I’m heartened to see so many champion the horse. All animals deserve better ends than they’ll find in most slaughterhouses—so far, my parents have been able to put down aged equines themselves, and over the years they informally adopted several unwanted animals, until recent circumstances made this impossible. My sketch of a country auction was no ringing endorsement of industrial slaughter, but instead described the plight of horse owners facing difficult times. Like the de facto slaughter ban, whose unhappy consequences have been thoroughly documented by the Government Accountability Office, having horse people give up the life they know is a seductively simple but flawed solution.
We can do better by horses—responsible breeding is the first place to start—but let it be said that the horse owners I’ve known work around the clock to keep their stock fed. Whether urbanites and hobbyists like it or not, in some American enclaves, people and horses still share a fragile interdependence. Efforts to improve the lives of one group will have to address the needs of the other.
In “Night Owls” (April), Bernard Freyberg’s last name was misspelled. “The Royal Me” (April) stated that Western Australia first tried to secede from Australia in the late 1820s; however, the Australian colonies did not federate until 1901.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.