“In 1969, Peterson was invited by philanthropist John D. Rockefeller 3rd, Council of Foreign Relations Chairman John J. McCloy, and former Treasury Secretary Douglas Dillon to chair a Commission on Foundations and Private Philanthropy, which became known as the Peterson Commission. Among its recommendations adopted by the government were that foundations be required annually to disburse a minimum proportion of their funds.

In 1971, Peterson was named Assistant to the President for International Economic Affairs by U.S. President Richard Nixon. In 1972, he became the Secretary of Commerce, a position he held for one year. At that time he also assumed the Chairmanship of President Nixon’s National Commission on Productivity and was appointed U.S. Chairman of the U.S.–Soviet Commercial Commission.

Peterson was Chairman and CEO of Lehman Brothers (1973–1977) and Lehman Brothers, Kuhn, Loeb Inc. (1977–1984).

In 1985, he co-founded the prominent private equity and investment management firm, the Blackstone Group, for which his current position is Senior Chairman.

In 1992, Peterson was one of the co-founders of the Concord Coalition, a bipartisan citizens’ group that advocates reduction of the federal budget deficit. Following record deficits under President George W. Bush, Peterson commented in 2004: “I remain a Republican, but the Republicans have become a far more theological, faith-directed party, not troubling with evidence.”^[2]

In February 1994, President Bill Clinton named Peterson as a member of the Bi-Partisan Commission on Entitlement and Tax Reform co-chaired by Senators Bob Kerrey and John Danforth.Peterson also serves as Co-Chair of The Conference Board Commission on Public Trust and Private Enterprises (Co-Chaired by John Snow).

Peterson has been Chairman of the Council on Foreign Relations since 1985, when he took over from David Rockefeller. He also serves as Trustee of the Rockefeller family‘s Japan Society and the Museum of Modern Art, and was previously on the board of Rockefeller Center Properties, Inc..

He is founding Chairman of the Peterson Institute for International Economics (formerly the Institute for International Economics, renamed in his honour in 2006), and a Trustee of the Committee for Economic Development. He was also Chairman of the Federal Reserve Bank of New York between 2000 and 2004….”

So says wiki about Pete Peterson.

Comment:

And why am I interested in Pete Peterson? Because he’s the chief backer of the film IOUSA (directed by Patrick Creadon).  IOUSA is a spin-off of “Empire of Debt,” a book written in 2005 by my former boss/co-author, Bill Bonner (owner and President of the newsletter holding company, Agora Inc.), with Addison Wiggin, the financial director of Agora Financial, a partner and/or affiliate and/or subsidiary (?) of Agora Inc.

[Note: in some places the film is described as a spin-off of “Demise of the Dollar”(2005) by Addison Wiggin].

IOUSA was aired on CNN this weekend on Saturday and Sunday, hence this post. Now, I’m not comfortable, obviously, commenting on the work of former colleagues. It’s not appropriate… and I would not ordinarily.

But we live in extraordinary times. Then too, having written a book with Bonner, I now have a stake in clarifying that my own work and credibility isn’t compromised by this particular spin on his writing.

First, to do a documentary on US finances that gets a lot of people to discuss things they would otherwise consider insufferably arcane and dry is a good thing.  Second, it’s also a good thing to get people to consider the future, limit their consumption, and behave more soberly. I hope a lot of people watch the film and I hope it wins an Oscar, if for nothing more then its pioneering effort to bring a mass audience to the usually deadly dull topic of budgets.

Now for my caveat.

The book, as Lew Rockwell blog has noted, is quite different from the film. I did one of the edits of the book, so I know it well. It’s a convincing account of why empires are a bad idea. The analysis of  debt and deficits is  placed in a meaningful context that makes it genuinely libertarian.  That means the book has a point of view. A point of view is not partisanship. Both “Empire” (broader in scope and more entertaining) and “Demise” (narrower and less literary) are spot-on in their analysis and I would recommend them heartily to anyone interested in Austrian economics.

The film is a different creature. It features a road tour by David Walker ( Comptroller-General and Head of the General Accounting Office from 1998-2008, Walker left to chair the Peterson Commission – see above –  at Peterson’s request) and interviews with, among others, former Federal Reserve Chairman, Alan Greenspan; former US Treasury Secretary, Robert Rubin; former head of the Office of Management and Budget and former governor of the Federal Reserve, Alice Rivlin; Arthur Laffer of Laffer Curve fame; legendary investor and fund manager Warren Buffett; former Chairman of the Federal Reserve and current Obama economic advisor, Paul Volker; and former Treasury Secretary and current chairman of the Rand Corporation, Paul O’Neill.

Assembling this bipartisan group of  prominent enablers/theorists of  empire over the last twenty years lets IOUSA claim it goes beyond partisanship. In reality it does no such thing. Omitting a context for its arguments, the film actually lends itself to being interpreted in ways quite contradictory to the tenor of the original work. At times it even subverts the book thoroughly.

IOUSA lends itself to a very anti-libertarian, statist moralizing of the debt issue: thus, spendthrift population needs to be forced to save by government.  Now that really alarms me. Watch out – forced savings accounts ahead!

Dean Baker (co-director of the Center for Economic and Policy Research) makes a similar critique at Huffington Post,  only from a different angle.  He’s afraid the film  amounts to propaganda against Social Security and Medicare.

Well, as a libertarian, I am not a fan of any entitlements. Also, Baker’s Keynesianism is wrong-headed. (Correction – January 27, 2009: I shouldn’t say that. I dislike the vulgar version of Keynes that passes for Keynesianism, but to give him his due, Keynes never said you should spend money you don’t have, which is what we’re doing. He said you should spend the money you’d saved from the good times to reinvest in the bad times – to put it very roughly. Now, that’s quite a different kettle of fish… 

But that said, taking apart entitlements without considering everything else that is leeching from the body politic is unjust in my view.

And taking it apart without mentioning empire or war or the financialization of the economy or the activity of the Federal Reserve is dishonest.

Selective libertarianism is not libertarianism any more. It’s reactionary statism in the service of big business, big banks, and big financiers.

But once you see that you also begin to see why the Chairman of Blackstone Inc. and former Chairman of the New York Federal Reserve might have gotten interested in adopting a stray documentary…..

Drag your friends to see IOUSA, but keep the resume of the backer-in-chief in mind.

From the Baker-Rosnick critique:

” For example, former Federal Reserve Board Chairman Alan Greenspan allowed for the unchecked growth of a $10 trillion stock bubble in the 90s and an $8 trillion housing bubble in the current decade…..Former Treasury Secretary Robert Rubin was an active proponent of the high dollar policy in the late nineties that led to the record trade deficits that are highlighted as a serious danger in the film…..

Peter Peterson is a wealthy investment banker who made millions of dollars from the “fund managers’ tax break,” a clause in the tax code that allows some of the wealthiest people in the country to pay a lower tax rate than school teachers and fire fighters. He even lobbied Congress to
protect this tax break. If every person in the country benefited from government largess [sic] to the same extent as Mr. Peterson, the problem of the debt would be hundreds of times larger than that indicated in IOUSA.”

Here’s  what libertarian writer Doug French, a fan of the original book,  says:

“After I.O.U.S.A. concluded, CNBC’s Squawk Box honey Becky Quick moderated a panel of wise ones live from Omaha, led by Tout TV’s favorite guru, Buffett. The panel assured everyone that government Ponzi-scheme Social Security would be there when they retire. The Cato Institutes’ freedom-loving chairman William Niskanen even thinks people should be forced to save for retirement. Bill Novelli, CEO of AARP, believes the five guys on the panel could solve all of the country’s problems. And more than one panelist blamed everything on partisanship in Washington. If our representatives in this great republic could just learn to get along, everything will work out fine, was the claim. After all, America has faced greater challenges and triumphed.”

And here’s what Lew Rockwell had to say:

“The notion that government is the source of this problem and unlikely to be the solution was never raised. The book made this point clear, the movie carefully ignored it. The movie focussed exclusively on the problems of paying this government debt; the book explored other, more realistic options, such as repudiation and inflation. The book explored the enormous malinvestments, misallocation of resources, folly, and harm caused by the same policies that allow such a monstrous pyramid of debt and credit to be created in the first place. The movie studiously ignored any mention of the harm these policies have caused to civil society.”