Category Archives: American Thought

‘On the Beach, I Bring von Mises’ – M Bachmann

The Weekend Interview with Michele Bachmann: ‘On the Beach, I Bring von Mises’ – WSJ.com.

Wow. I am interested.

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“If I’m in, I’ll be all in,” says Rep. Michele Bachmann of Minnesota, artfully dodging my question of whether she’s running for president. Given that she just hired campaign strategist Ed Rollins, whose past clients include Ross Perot and Mike Huckabee, rumors abound. “We’re getting close,” she says, “and if I do run, like all my races, I will work like a maniac.”

That’s pretty much how she does everything, and it helps explain how the relatively junior congresswoman has become a tea party superstar—and uniquely adept at driving liberals bonkers.

Terry Shoffner

After spending a good part of two days with her in Washington as she scurries from one appointment to another, I have no doubt that Ms. Bachmann will announce her presidential bid soon. And it would be a mistake to count her out: She’s defied the prognosticators in nearly every race she’s run since thrashing an 18-year incumbent in the Minnesota Senate by 20 points in 2000. Says Iowa Congressman Steve King, “No one has electrified Iowa crowds like Michelle has.”

Ms. Bachmann is best known for her conservative activism on issues like abortion, but what I want to talk about today is economics. When I ask who she reads on the subject, she responds that she admires the late Milton Friedman as well as Thomas Sowell and Walter Williams. “I’m also an Art Laffer fiend—we’re very close,” she adds. “And [Ludwig] von Mises. I love von Mises,” getting excited and rattling off some of his classics like “Human Action” and “Bureaucracy.” “When I go on vacation and I lay on the beach, I bring von Mises.”

As we rush from her first-floor digs in the Cannon House Office Building to the House floor so she can vote, I ask for her explanation of the 2008 financial meltdown. “There were a lot of bad actors involved, but it started with the Community Reinvestment Act under Jimmy Carter and then the enhanced amendments that Bill Clinton made to force, in effect, banks to make loans to people who lacked creditworthiness. If you want to come down to a bottom line of ‘How did we get in the mess?’ I think it was a reduction in standards.”

She continues: “Nobody wanted to say, ‘No.’ The implicit and then the explicit guarantees of Fannie Mae and Freddie Mac were sopping up the losses. Being on the Financial Services Committee, I can assure you, all roads lead to Freddie and Fannie.”

Ms. Bachmann voted against the Troubled Asset Relief Program (TARP) “both times,” she boasts, and she has no regrets since Congress “just gave the Treasury a $700 billion blank check.” She complains that no one bothered to ask about the constitutionality of these extraordinary interventions into the financial markets. “During a recent hearing I asked Secretary [Timothy] Geithner three times where the constitution authorized the Treasury’s actions, and his response was, ‘Well, Congress passed the law.'”

Insufficient focus on constitutional limits to federal power is a Bachmann pet peeve. “It’s like when you come up to a stop sign and you’re driving. Some people have it in their mind that the stop sign is optional. The Constitution is government’s stop sign. It says, you—the three branches of government—can go so far and no farther. With TARP, the government blew through the Constitutional stop sign and decided ‘Whatever it takes, that’s what we’re going to do.'”

Does this mean she would have favored allowing the banks to fail? “I would have. People think when you have a, quote, ‘bank failure,’ that that is the end of the bank. And it isn’t necessarily. A normal way that the American free market system has worked is that we have a process of unwinding. It’s called bankruptcy. It doesn’t mean, necessarily, that the industry is eclipsed or that it’s gone. Often times, the phoenix rises out of the ashes.”

She also bristles at the idea, pushed of late by the White House, that the auto bailouts were a big success for workers and taxpayers. “We’ll probably be out $15 billion. What was galling to so many investors was that Chrysler’s secured creditors were supposed to receive 100% payout of the first money. We essentially watched over 100 years of bankruptcy law thrown out the window and President Obama eviscerated the private property interests of the secured creditors. He called them ‘greedy’ for enforcing their own legal rights.”

So what would she have done? “For one, I believe my policies prior to ’08 would have been much different from [President Bush’s]. I wouldn’t have spent so much money,” she says, pointing in particular at the Department of Education and the Medicare prescription drug bill. “I would have advocated for greater reductions in the corporate tax rate and reductions in the capital gains rate—even more so than what the president did.” Mr. Bush cut the capital gains rate to 15% from 20% in 2003.

She’s also no fan of the Federal Reserve’s decade-long policy of flooding the U.S. economy with cheap money. “I love a lowered interest rate like anyone else. But clearly the Fed has had competing goals and objectives. One is the soundness of money and then the other is jobs. The two different objectives are hard to reconcile. What has gotten us into deep trouble and has people so perturbed is the debasing of the currency.”

That’s why, if she were president, she wouldn’t renominate Ben Bernanke as Fed chairman: “I think that it’s very important to demonstrate to the American people that the Federal Reserve will have a new sheriff” to keep the dollar strong and stable.

As for foreign policy, she joined 86 other House Republicans last week in voting for the resolution sponsored by antiwar Democrat Dennis Kucinich to stop U.S. military action in Libya within 15 days. Is she a Midwestern isolationist? “I was opposed to the U.S. involvement in Libya from the very start,” she says. “President Obama has never made a compelling national security case on Libya.”

Even more striking, she says the 1973 War Powers Resolution, requiring congressional approval for military action after 60 days, is “the law of the land” and must be obeyed. That’s a notable difference from every recent president of either party, including Ronald Reagan.

Ms. Bachmann attributes many of her views, especially on economics, to her middle-class upbringing in 1960s Iowa and Minnesota. She talks with almost religious fervor about the virtues of living frugally, working hard and long hours, and avoiding debt. When she was growing up, she recalls admiringly, Iowa dairy farmers worked from 5 a.m. to 10 p.m.

Her political opponents on the left portray her as a “she-devil,” in her words, a caricature at odds with her life accomplishments. She’s a mother of five, and she and her husband helped raise 23 teenage foster children in their home, as many as four at a time. They succeeded in getting all 23 through high school and later founded a charter school.

She got started in politics after seeing the failures in public schooling. “The kids were coloring posters in 11th grade algebra class,” she says. “I decided to do my duty, go to the Republican convention. I had on jeans, a sweatshirt with a hole in it, white moccasins, and I showed up in this auditorium and everyone said, ‘Why are we nominating this guy [Gary] Laidig every four years?'”

“I thought, ‘I’m nobody from nowhere but maybe if I challenge the guy, he’ll shape up a little bit.’ So I gave a five-minute speech on freedom, economic liberty and all the rest. And no one could believe it, but I won a supermajority on the first ballot and he was out on his keister.”

She ran for Congress in 2006, the worst year for Republicans in two decades. “Nancy Pelosi and all her horses spent $9.6 million to defeat me in that race”—almost three times what Ms. Bachmann had raised. She won 50% to 42%. In 2010, the Democrats and their union allies raised more than $10 million to try to defeat her. “My adversaries have certainly been highly motivated,” she says.

But her adversaries—or, at least, rivals—aren’t limited to the left. There’s Sarah Palin, with whom journalists are convinced she has frosty relations, and fellow Minnesotan Tim Pawlenty, now running for president. About Ms. Palin the congresswoman shrugs, “People want to see a mud-wrestling fight. They won’t get it from me because I like Sarah Palin and I respect her.” As for whether Mr. Pawlenty was a good governor, “I really don’t want to comment.”

Ever ready to cite stories from American history, Ms. Bachmann notes with a grin that the last House member to be elected president was James Garfield in 1880. If she were to take her shot, she’d run on an economic package reminiscent of Jack Kemp, the late congressman who championed supply-side economics and was the GOP vice presidential nominee in 1996. “In my perfect world,” she explains, “we’d take the 35% corporate tax rate down to nine so that we’re the most competitive in the industrialized world. Zero out capital gains. Zero out the alternative minimum tax. Zero out the death tax.”

The 3.8 million-word U.S. tax code may be irreparable, she says, a view she’s held since working as a tax attorney at the IRS 20 years ago. “I love the FAIR tax. If we were starting over from scratch, I would favor a national sales tax.” But she’s not a sponsor of the FAIR tax bill because she fears that enacting it won’t end the income tax, and “we would end up with a dual tax, a national sales tax and an income tax.”

Her main goal is to get tax rates down with a broad-based income tax that everyone pays and that “gets rid of all the deductions.” A system in which 47% of Americans don’t pay any tax is ruinous for a democracy, she says, “because there is no tie to the government benefits that people demand. I think everyone should have to pay something.”

On the stump she emphasizes an “America-centered energy policy” based on “drilling and mining for our rich resources here.” And she believes that repealing ObamaCare is a precondition to restoring a prosperous economy. “You cannot have a pro-growth economy and advise, simultaneously, socialized medicine.”

Her big challenge is whether the country is ready to support deep spending cuts. On this issue, she carries a sharper blade than everyone except Ron Paul. She voted for the Paul Ryan budget—but “with an asterisk.” Why? “The asterisk is that we’ve got a huge messaging problem [on Medicare]. It needs to be called the 55-and-Under Plan. I can’t tell you the number of 78-year-old women who think we’re going to pull the rug out from under them.”

Ms. Bachmann also voted for the Republican Study Committee budget that cuts deeper and faster than even Mr. Ryan would. “We do have an obligation with Social Security and Medicare, and we have to recognize that” for those who are already retired, she says. But after that, it’s Katy bar the door: “Everything else is expendable to bring spending down,” and she’d ax “whole departments” including the Department of Education.

“I think people realize the crisis we face isn’t in 25 years or even 10 years off. It is right now. And people want it solved now—especially Republican primary voters.”

Mr. Moore is a member of The Journal’s editorial board.

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The Gates Farewell Warning

Review & Outlook: The Gates Farewell Warning – WSJ.com.

Very good…

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Robert Gates, who steps down next month after four-plus years at the Pentagon, is making his retirement lap a tutorial on America’s defense spending and security needs. His message is welcome, especially on Memorial Day, and even if he couldn’t always heed it in his time as Secretary of Defense.

In a series of farewell speeches, Mr. Gates has warned against cuts to weapon programs and troop levels that would make America vulnerable in “a complex and unpredictable security environment,” as he said Sunday at Notre Dame. On Tuesday at the American Enterprise Institute, Mr. Gates noted that the U.S. went on “a procurement holiday” in the 1990s, when the Clinton Administration decided to cash in the Cold War peace dividend. The past decade showed that history (and war) didn’t end in 1989.

“It is vitally important to protect the military modernization accounts,” he said, and push ahead with new capabilities, from an air refueling tanker fleet to ballistic missile submarines.

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America’s role as a global leader depends on its ability to project power. In historical terms, the U.S. spends relatively little on defense today, even after the post-9/11 buildup. This year’s $530 billion budget accounts for 3.5% of GDP, 4.5% when the costs of the Afghan and Iraq wars are included. The U.S. spent, on average, 7.5% of GDP on defense throughout the Cold War, and 6.2% at the height of the Reagan buildup in 1986.
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But on coming into office, the Obama Administration put the Pentagon on a fiscal diet—even as it foisted new European-sized entitlements on America, starting with $2.6 trillion for ObamaCare. The White House proposed a $553 billion defense budget for 2012, $13 billion below what it projected last year. Through 2016, the Pentagon will see virtually zero growth in spending and will have to whittle down the Army and Marine Corps by 47,000 troops. The White House originally wanted deeper savings of up to $150 billion.

Mr. Gates deserves credit for fighting off the worst White House instincts, but his biggest defeat was not getting a share of the stimulus. Instead he has cut or killed some $350 billion worth of weapon programs. He told his four service chiefs last August to find $100 billion in savings. The White House pocketed that and asked for another $78 billion. Last year, Mr. Gates said that the Pentagon needs 2%-3% real budget growth merely to sustain what it’s doing now, but it could make do with 1%. The White House gave him 0%.

In the Gates term, resources were focused on the demands of today’s wars over hypothetical conflicts of tomorrow. This approach made sense at the start of his tenure in 2007, when the U.S. was in a hard fight in Iraq. Yet this has distracted from budgeting to address the rise of China and perhaps of regional powers like a nuclear Iran that will shape the security future. The decision to stop producing the F-22 fighter and to kill several promising missile defense programs may come back to haunt the U.S.

Mr. Gates knows well that America won’t balance its budget by squeezing the Pentagon. “If you cut the defense budget by 10%, which would be catastrophic in terms of force structure, that’s $55 billion out of a $1.4 trillion deficit,” he told the Journal’s CEO Council conference last November. “We are not the problem.”

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So what is? Mr. Gates acknowledged it only in passing this week, but the reality is that the entitlement state is crowding out national defense. Over two decades ago, liberal historian Paul Kennedy claimed that “imperial overstretch” had brought first the Romans, then the British and now Americans down to size. He was wrong then, but what’s really happening now is “entitlement overstretch,” to quote military analyst Andrew Krepinevich.

The American entitlement state was born with the New Deal, got fat with the Great Society of the 1960s and hit another growth spurt in the first two years of the Obama era. The big three entitlements—Social Security, Medicaid and Medicare, plus other retirement and disability expenses—accounted for 4.9% of GDP by 1970, eclipsed defense spending in 1976 and stood at 9.8% as of last year. Under current projections, entitlements will eat up 10.8% of GDP by 2020, while defense spending goes down to 2.7%. On current trends, those entitlements will consume all tax revenues by 2052, estimates Mackenzie Eaglen of the Heritage Foundation.

Europe went down this yellow brick road decades ago and today spends just 1.7% of GDP on defense. The Europeans get a free security ride from America, but who will the U.S. turn to for protection—China?

As Reagan knew, America’s global power begins at home, with a strong economy able to generate wealth. The push for defense cuts reflects the reality of a weak recovery and a national debt that has doubled in the last two years. But the Obama Administration made a conscious decision to squeeze defense while pouring money on everything else. [And where it the liberal press…?]

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“More perhaps than any other Secretary of Defense, I have been a strong advocate of soft power—of the critical importance of diplomacy and development as fundamental components of our foreign policy and national security,” Mr. Gates said at Notre Dame. “But make no mistake, the ultimate guarantee against the success of aggressors, dictators and terrorists in the 21st century, as in the 20th, is hard power—the size, strength and global reach of the United States military.”

That’s a crucial message for Republican deficit hawks, and especially for a Commander in Chief who inherited the capability to capture Osama bin Laden half way around the world but is on track to leave America militarily weaker than he found it.

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David Mamet’s Coming Out Party

Bari Weiss: David Mamet’s Coming Out Party – WSJ.com.

In March 2008, David Mamet was outed in the Village Voice. The Pulitzer Prize-winning playwright had a comedy about an American president running on Broadway, and—perhaps to help with ticket sales—decided to write an article about the election season. The headline was subtle: “Why I Am No Longer a ‘Brain-Dead Liberal.'”

“They mistitled it,” he insists. Mr. Mamet had given the piece the far more staid title, “Political Civility.” But the Voice’s headline was truth in advertising. “I took the liberal view for many decades, but I believe I have changed my mind,” Mr. Mamet wrote, referring to his prior self as, yes, a “brain-dead liberal.”

The article was the most popular ever published on the Voice’s website. But was the acclaimed Mr. Mamet really a conservative?

winterweiss

For a few years, he played it coy. In a 2008 interview with New York Magazine, he sloughed off a question about who he was voting for: “I’m not the guy to ask about politics. I’m a gag writer.” In 2010, he told PBS’s Charlie Rose he’d only offer his opinion about President Obama off-camera.

But spend five minutes with Mr. Mamet and you realize that coy can only last so long. “Being a rather pugnacious sort of fellow I thought, as Albert Finney says in ‘Two for the Road’: ‘As I said to the duchess, ‘If you want to be a duchess, be a duchess. If you want to make love, it’s hats off.'”

Hats off, indeed. Now Mr. Mamet has written a book-length, raucous coming-out party: “The Secret Knowledge: On the Dismantling of American Culture.” (If only the Voice editors had been around to supply a snappier title.)

Hear him take on the left’s sacred cows. Diversity is a “commodity.” College is nothing more than “Socialist Camp.” Liberalism is like roulette addiction. Toyota’s Prius, he tells me, is an “anti-chick magnet” and “ugly as a dogcatcher’s butt.” Hollywood liberals—his former crowd—once embraced Communism “because they hadn’t invented Pilates yet.” Oh, and good radio isn’t NPR (“National Palestinian Radio”) but Dennis Prager, Michael Medved and Hugh Hewitt.

The book is blunt, at times funny, and often over the top. When I meet the apostate in a loft in Manhattan’s Greenwich Village, he’s wrapping up a production meeting. “Bye, bye, Bette!” he calls to the actress walking toward the elevator. That’d be Bette Midler. Al Pacino gets a bear hug. The two are starring in an upcoming HBO film about Phil Spector’s murder trial. Mr. Mamet is directing and he looks the part in a scarf, black beret and round yellow-framed glasses. Looking out the window at NYU film school, where he used to teach, I ask him to tell me his conversion story.

He starts, naturally, with the most famous political convert in modern American history: Whittaker Chambers, whose 1952 book, “Witness,” documented his turn from Communism. “I read it. It was miraculous. Extraordinary hero-journey of this fellow that had to examine everything he believed in at the great, great cost—which is a cost I’m not subject to—of abandoning his life, his sustenance, his friends, his associations, and his past. And I said, ‘Oh my God. . . . Perhaps it might be incumbent upon me to see if I could get my thought and my actions into line too.

There were other books. Most were given to him by his rabbi in L.A., Mordecai Finley. Mr. Mamet rattles off the works that affected him most: “White Guilt” by Shelby Steele, “Ethnic America” by Thomas Sowell, “The Instincts of the Herd in Peace and War” by Wilfred Trotter, “The Road to Serfdom” by Friedrich Hayek, “Capitalism and Freedom” by Milton Friedman, and “On Liberty” by John Stuart Mill.

Before he moved to California, Mr. Mamet had never met a self-described conservative or read one’s writings. He’d never heard of Messrs. Sowell or Steele. “No one on the left has,” he tells me. “I realized I lived in this bubble.”

When it popped, it was rough. “I did what I thought was, if not a legitimate, then at least a usual, thing—I took it out on those around me,” Mr. Mamet says wryly. It took “a long, long, long time and a lot of difficult thinking first to analyze, then change, some of my ideas.”

Then comes one of Mr. Mamet’s many Hollywood fables. “It’s like Orson Welles,” he begins.

“It’s his first day on the set of Citizen Kane, and he’s never directed a movie, he’s the greatest stage director of his time. Gregg Toland is his cinematographer, and Toland’s the greatest cinematographer of his day. And Orson says, ‘Ok, this next shot we’re gonna put the camera over here. And Gregg says, ‘You can’t put the camera there, Orson.’ So Orson says, ‘Well why not? The director can put it wherever.’ Gregg says, ‘No. Because you’re crossing the line.’ So Orson says, ‘What does it mean crossing the line? So Gregg explains to him that there’s a line of action.” (Mr. Mamet attempts to demonstrate the principle to me by indicating the line of sight between our noses.)

“Orson says, ‘I don’t understand.'” (Neither did I.) “So Gregg explains it again. And Orson says, ‘I still don’t understand’—’cause sometimes it can get very, very complicated. So Orson says, ‘Stop! Stop filming! I have to go home.’ He went home and he stayed up all night with sheets of paper and a ruler and he came back next day and said: ‘Now I understand, now we can go on.'”

And so it was with Mr. Mamet and politics. He couldn’t move on, so to speak, before he understood “what the nature of government is, just sufficient so that I as a citizen can actually vote without being a member of a herd.” Same for taxes: “I pay them, so I think I should be responsible for what actually happens to them.” As for the history of the country itself, he wanted to understand “the vision of the Founding Fathers. . . . How does holding to it keep people safe and prosperous?”

Reading and reflecting got him to some basics. Real diversity is intellectual. Whatever its flaws, America is the greatest country in the history of the world. The free market always solves problems better than government. It’s the job of the state to be just, not to render social justice. And, most sobering, Mr. Mamet writes in “The Secret Knowledge,” there are no perfect solutions to inequality, only trade-offs.

It’s a wonder he didn’t explicitly adopt this tragic view of reality earlier on. The play “Glengarry Glen Ross,” for example, for which Mr. Mamet won the 1984 Pulitzer Prize, is about a group of desperate men competing with each other in a Chicago real estate office. At stake: a Cadillac for the top seller. Second place: a set of steak knives. Third prize: you’re fired.

Needless to say, no one ends up getting the Caddie. “That’s the essence of drama,” Mr. Mamet says. “Anyone can write: And then we realized that Lithuanians are people too and we’re all happier now. Who cares?” Tragedy is devastating, he says, precisely because it’s about “people trying to do the best they can and ending up destroying each other.

“So it wasn’t a great shift to adopt the tragic view, and it’s much healthier,” he says. “Rather than saying, as the liberals do, ‘Everything’s always wrong, there’s nothing that’s not wrong, there’s something bad bad bad—there’s a bad thing in the world and it’s probably called the Jews,'” he says sardonically. “And if it’s not called the Jews for the moment, it’s their fiendish slave second-hand smoke. Or transfats. Or global warming. Or the Y2K. Or partially hydrogenated vegetable oil. And something must be done!'”

It’s the last part—the temptation to believe that everything can be fixed—that Mr. Mamet thinks is the fatal error. “That’s such a f— bore,” he says. “I mean, have you ever tried to get a pipe fixed in your bathroom on a Saturday? It’s not going to happen. It’s gonna happen wrong, and the guy’s gonna be late because his dog got run over, and he’s going to fix the wrong pipe, and when he takes it apart he’s gonna say, ‘Oops, the whole plumbing system’s gonna have to go and dah dah dah and etc. etc. etc. And your daughter’s Bat Mitzvah’s gonna be ruined. It’s interesting—it’s the tragic view of life.”

As Mr. Mamet quotes his son, Noah, in “The Secret Knowledge,” “it’s the difference between the Heavenly Dream and the God-Awful Reality.”

On the left, Mr. Mamet is accused of having ulterior motives for his political shift. The New Republic’s Jonathan Chait writes that the story is a familiar, Zionist one: “An increasingly religious Jew with strong loyalty to Israel, he became aware of a tension between the illiberal nationalism of his right-wing views on the Middle East and the liberalism of his views on everything else, and resolved the tension by abandoning the latter.” Mr. Mamet calls this a “crock of s—.”

The Slate website has run with the “Rich Person Discovers He Is a Republican” narrative. And then there’s the jiu-jitsu theory offered by a film blogger: “Mamet’s escalating interest in martial arts—traditionally the domain of right-wing nutjobs like Chuck Norris—has pointed toward this new stance for some time.” Obviously.

None of these responses comes as a surprise. And, being a contrarian and a dramatist, Mr. Mamet doubtless relishes the attention for his heresy. What will be more interesting is to see how critics respond to his two new plays.

The first, playing now in Manhattan, is called “The Linguistics Class.” Only 10 minutes long, it’s part of a festival of 25 short plays at the Atlantic Theater Company, running alongside works by Ethan Coen and Sam Shepard. It’s a coming home for Mr. Mamet: He founded the company with his friend, the actor William H. Macey, 25 years ago.

The play is about a teacher and a student who don’t see eye to eye, and Mr. Mamet assures me “it has nothing to do with Noam Chomsky.”

“The Anarchist,” on the other hand, sounds like it will be red meat for conservatives. The two-woman show, which opens this fall in London, is about a prisoner, a former member of a Weather Underground-type group, and her parole officer. The play’s themes have been developing since Sept. 11, 2001.

Mr. Mamet was in Toronto that day for a film festival. “I read an article, I think it was in that day’s Toronto Star, that had been a reprint from the Chicago Tribune,” he says. It was an interview with Bill Ayers and his wife Bernardine Dorne, two former leaders of the Weather Underground. “They were talking about the bombings in the ’60s. And the guy says to Bill Ayers: ‘Are you regretful?’ And he said: ‘No, no, no.’ . . . And I read it, and I thought, this is appalling and immoral,” recalls Mr. Mamet.

“Then I got on a plane. And while I was on the plane they blew up New York City. The combination of the two things just started me thinking what have we—meaning my generation—done?” Mr. Mamet knows these characters intimately. They went to school with him at Goddard College in Vermont, or they passed through. “Some of the people I knew actually were involved in blowing up the building on 11th Street [in Manhattan by members of the Weather Underground in 1970]. . . . And I thought: how does this happen?”

Is it a coincidence that this play is arriving at the same time as Mr. Mamet’s public conservatism? Does he worry that critics will see it as polemical? “I don’t know,” he contends, insistent that his job as a writer is not to worry about politics but to entertain and surprise his audience. “The question is can you put the asses in the seats and can you keep the asses in the seats. That’s not me, that’s Aristotle. I’ve forgotten the Greek for it.”

Ms. Weiss is an assistant editorial features editor at the Journal. A review of Mr. Mamet’s book, “The Secret Knowledge,” can be found on page C13 in today’s Review section.

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The Strauss-Kahn Standard

Review & Outlook: The Strauss-Kahn Standard – WSJ.com.

The liberal press is again, AWOL…

So now we know what a real scandal atop a leading international organization looks like.

Whatever becomes of the sexual assault charges against Dominique Strauss-Kahn, DNA evidence and all, it is now clear that the former head of the International Monetary Fund treated the organization as his sexual fiefdom. “Despite my long professional life, I was unprepared for the advances of the managing director of the IMF,” wrote Piroska Nagy, an IMF staff economist whom Mr. Strauss-Kahn pursued until she agreed to a brief affair in 2008. “I did not know how to handle this,” she added in a letter to a law firm investigating the affair. “I felt, ‘I was damned if I did and damned if I didn’t.'”

Ms. Nagy’s letter—which added that Mr. Strauss-Kahn was “a man with a problem that may make him ill-equipped to lead an institution where women work under his command”—has received considerable media attention in recent weeks, and rightly so. But perhaps its real interest lies in the way none of Ms. Nagy’s points seem to have found their way into the firm’s October 2008 report to the IMF Executive Board.

On the contrary, the report, conducted by three lawyers at the firm of Morgan, Lewis & Bockius, concluded that “there is no evidence that the MD [managing director], either expressly or implicitly, threatened the female staff member in any way to induce her to engage in the affair or to keep it confidential.” The IMF board gave Mr. Strauss-Kahn merely a wrist slap for a “serious error of judgment,” along with board assurances that the episode would “in no way affect the effectiveness of the Managing Director in the very challenging and difficult period ahead.”

All this was dutifully reported by the press at the time as one of those nothing-to-see-here stories. It also made for a striking contrast to the media’s overdrive when it came to trumpeting the unreal (in every sense) “scandal” that had brought down World Bank President Paul Wolfowitz the previous year. And one has to wonder why.

Remember that Mr. Wolfowitz’s alleged sin was that he had arranged a job transfer, along with a substantial raise, for his companion Shaha Riza, a bank employee at the time Mr. Wolfowitz took the helm in 2005.

But any suggestion that favoritism had been involved quickly fell apart when it came to light that Mr. Wolfowitz had disclosed the relationship with the bank’s board before taking the job; that he had sought to recuse himself from the matter; that the bank’s ethics committee had forbidden him from recusing himself; and that the committee had also directed him to arrange a promotion and pay raise for Ms. Riza “on the basis of her qualifying record” and out of concern for the “potential disruption” to her career for a conflict of interest that was not of her own making.

That was it. Yet outside of these columns, few other news outlets could be bothered to report the facts. Was it because Mr. Wolfowitz, as one of the most prominent advocates for deposing Saddam Hussein, was such a convenient media villain? Or because the board and management of the bank were so resistant to Mr. Wolfowitz’s aggressive anti-corruption agenda, and all too happy to leak selective and bogus information to suggestible journalists?

The answer was both. In the end, the bank board formally acquitted Mr. Wolfowitz of all charges of ethical misconduct, though it got what it most wanted, which was his resignation. Under successor Robert Zoellick the bank is out of the news and back to the business-as-usual of shoveling money out the door. How wonderful: Its annual claims on the American taxpayer now exceed $2 billion.

As for the IMF, his sexual pursuit of underlings forgiven, Mr. Strauss-Kahn was treated in the media as a hero for pushing vast sums on bankrupt economies like Greece. Even now, with the bailouts failing and their mastermind on bail, he is seen as a visionary brought low by his fatal flaw.

Yet what ought to be clear is that the reason Mr. Strauss-Kahn was so popular within the IMF (female company excepted) was that his own behavior was so in tune with the ethos of the institution. Here is a place where power can be exercised without electoral accountability, privileges can be enjoyed without scrutiny, salaries can be claimed without taxes, and other people’s money can be spent with abandon.

He thrived because he enhanced the power of the IMF and did the political bidding of the same European countries that loathed Mr. Wolfowitz’s independent streak. And—if the allegations against him prove to be true—no wonder DSK felt he could behave with impunity in the comfort of his $3,000-a-night New York City suite.

Mr. Strauss-Kahn will soon face his own reckoning, though we won’t hold our breath for any changes in the culture or the mindset of the IMF he once led. As for Mr. Wolfowitz, he long ago proved his innocence. What he has won now—and what his erstwhile detractors should concede—is an additional measure of vindication.

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