More on (moron?) the market (and other systems)

I wrote yesterday about how government intervention, even that which is designed to "free the market," is inescapably non-market in nature. I may have appeared to disagree with that intervention, but I don't; despite being essentially a free-market guy myself, I recognize the need for democratic institutions to condition the market at times. It's the specific remedy which needs to be discussed, and I really don't care for the snake oil that's being peddled by folks who want to cover up the real effects. For example, a cap-and-trade system is not market-based at all, as the cap has to come from somewhere, and it is fair to question how these caps will be derived, who will benefit, and so forth.

More broadly, and excuse me if I've written about this before, we need to understand that these systems in which we live are created by human beings for the benefit of human beings. There are those who would claim that free-market capitalism and representative democracy have somehow been conferred on us by God, but that's a pretty unhelpful view, not to mention kind of nuts.

Since they are human-created systems, we have the right to change them when they don't work in the ways we would like, when their results cause conflict with other values. We could have a health care system based solely on market principles, but it offends almost everyone's sensibilities to see people dying in the street.

Clearly, if we believe in the basic premise of the system, it makes sense to find solutions within the system itself. One of the remarkable aspects of our democratic system is that it offers a marvelous balance of powers within the system, so we can frequently find redress by using the system as it was designed. For example, no elected official has an infinite term, so dissatisfied voters can turn out that official at the completion of the term.

More amazingly, our democracy allows us to change the system itself. Do we want term limits for senators? We can get that by passing an amendment to the Constitution. One of the current issues in Illinois is that we don't have a recall provision in the state constitution, and a lot of people would like one, if only to get rid of the hugely unpopular governor. However, there is a mechanism by which we can add a recall provision if it has sufficient support, and this is a real strength of our democratic system.

Unfortunately, free-market capitalism has no such facilities within itself for change. The very essence of it is "freedom," which includes freedom to uplift as well as tear down. If a CEO decides to pay his/her workers 50 cents an hour while pocketing $20 million a year, there's nothing in free market doctrine that prevents that, no matter how much our sensibilities might be offended. (Yes, I understand that there are other countervailing long-term tendencies, such as competition among companies for that labor and worker mobility, but these tend to work fairly slowly.)

It is natural to assume that, were pure free-market ideology allowed to prevail, that individual incomes would fit a bell-shaped curve. I don't know if that's exactly true, but let's assume that as reasonable. Obviously, that would leave significant numbers of people below a line of subsistence, and that result offends most of us. But, working within the free-market system, we have no correction to this.

Therefore, we need some extra-market way of making results conform to our other beliefs, our sense of fairness and justice. Few people realistically complain about such things; only a very small number of people on the fringe would seriously contend that we should dismantle our public education system, even though it clearly is not the result of free-market forces.

Most of us understand this pretty well, we really don't think, Reagan notwithstanding, that government is always the problem. It is the only system through which the mass of people, through their elected officials, can effect changes to the result of the pure free market. That is why the current Republican thrust to paint Barack Obama as a "socialist" for believing that wealth needs to be shared is doomed as a campaign strategy, because there are few of us who are rich or heartless enough to believe otherwise - we are all, in the Republican formulation, socialists, even the preposterous Joe the Plumber.

What is interesting is to see even the most unassailable orthodoxies, upon closer examination, fall prey to modification based on real-world results. There have been few things more unanimously supported over the last few decades than wondrous free trade. Anyone who pointed out potential pitfalls (or that the very definition of "free" in this context is problematic) was hooted down as ignorant; certainly no self-respecting economist would utter a discouraging word. That "amateurs" would point out that 60,000 Americans paying $1 less for a sweater doesn't really make up for the loss of a $40,000 per year job made no difference to the folks who believed that national income was the only measure of success. Concern over the plight of workers who were losing their careers was swept aside in a fervor of graphs and equations that proved we were better off, no, really.

So it's interesting to read an article in The New Republic by Christopher Hayes in which he documents growing doubts among economists that the gains from free trade are as large as we were promised, that other factors need to be taken into account (link from Mark Thoma). I won't quote from it, you should read it for yourself, but it does show that theory can sometimes yield to practical results, at least in some minds. We would be wise to heed this example in considering future "common wisdom."

Transparency?

A word that's been popular for a while is "transparency." Almost every one who writes an article or book on how to make business and government better cites more transparency as a goal. McCain mentioned it three times last night.

But what do we (and they) really mean by "transparency"? The Wikipedia entry is not too much help, talking a lot about openness and accountability. With government, it points out such positive steps as open meetings and freedom of information acts, and those are good things (too easily circumvented; we're still waiting to hear who "helped" Dick Cheney formulate an energy strategy in the early days of the Bush administration).

The concept gets even muddier when applied to business. Would this financial crisis have been mitigated by knowing exactly what securities were bundled into these shaky mortgage obligations? Perhaps, but how specific can you get? To understand the nature of those underlying mortgages, you would need to know not only the sales price of every house, but the financial condition of everyone who took out those mortgages.

Moreover, much of the value of a particular company comes from its "private" information, the techniques and ideas that they have developed and their competition hasn't. Should potential investors in Google, which, since they're a public company, includes everyone, be informed as to the company's exact search algorithms so they can ascertain the real value of their technology over, say, Yahoo's?

Back to government. McCain can be withering when he accuses Obama of giving away too much information: "You don't tell the enemy what your plans are." Perhaps true, but that's not exactly transparency, is it? Ultimately, everyone is in favor of more transparency for everyone else, but not for themselves. Until each person confronts and resolves that conundrum, calls for transparency seem easy and hollow.

Democracy vs. capitalism - 1/8/08

[I wish that we were making even the slightest bit of progress in thinking about these issues. Alas, we're not.]

This post is the first of a series in which I try to work out some of my feelings about democracy and capitalism. I wrote a post on May 22 of last year, which said some of what I think. It's bad form, I guess, to quote oneself, so I shan't, but, in that post, I outlined the basic conflict I see between the two systems.

I want to go further here and start to think about how we resolve those conflicts. Let me discuss it through the medium of the issue of offshoring jobs.

Offshoring is vitally important, not only for the effects it has already had, but for the future potential. I don't want to discuss comparative advantage here, but that idea, which is thought to allow maximum (and efficient) production in all nations, may no longer hold. With the triumph of technologies that eliminate borders, there may be nothing left (at least someday) for Americans to trade - not without a serious diminution of living standards in the U.S. There are other effects, like the lowering of prices, which factor in on the positive side, but I'm not writing about that here. I'm merely trying to show that offshoring is an important issue.

Unemployment insurance is a matter that we do not trust to the capitalist system, that is, we do not assume that companies will lay people off, but support them for a certain length of time. Because it is a social goal not to allow people to go without that support, the democratic system kicks in and provides for this insurance (which it does by taxing the capitalist system, i.e., making it less efficient).

Offshoring, however, of much greater potential import for restructuring the way we live, is left totally within the capitalist sector. Yes, I know there were some ineffectual Congressional hearings, and it flared as a campaign issue in 2004, however briefly, but polticians have steered clear of any real action.

Companies get to decide what industries, professions, jobs will be handed over to other countries. If that means that a town is without its source of livelihood, or a family is without a means of making a living, that's how change goes - at least you can pay a dollar less for that sweater down at Wal-Mart. But democracy keeps its hands off the issue.

I know that Ronald Reagan had a lot to do with this. His dislike of government (in all matters except his personal living style and providing arms illegally) has become the accepted norm, which means that, despite his stated intent, he hurt democracy to the benefit of capitalism.

For we are all complicit in allowing certain issues to fall outside of the purview of our elected representatives, and to be under the control of our decidedly unelected CEOs. (Offshoring is not the only such example; our energy policy, such as it is, seems to be driven far more by the desires of capitalists than by the needs of the people.) But what is the end result of this division (drivers' licenses to the democratic system, job policy to the capitalist)? It's not simply that business items fall into capitalism, because these items cross all lines in our society.

And how do we restrike this balance before everything important is handled by those who want to make money, not those who wish to fulfill larger social goals?

Passion

I wrote last week about how I've lost some of my blogging zing recently, how I haven't been feeling the magic, how it's become more of a struggle to do this at least once a day. I may have figured it out, and I have a couple of people to thank for that. First, we have the invaluable Jill at Brilliant at Breakfast talking about, well, I'll let her speak for herself:

Most Americans are idiots. They don't read us; they watch the news, and they STILL thnk that if they see it delivered by a guy in a suit on TV, it's the truth....

I wish Americans would stop treating the words that come out of that damn electronic box in the living room as Treatises from God and recognize that what they're seeing is a function of the baggage carried by those delivering the news. When you see someone like Chris Matthews or Karl Rove talking about how Barack Obama is "elitist", you know that what's talking is not the adult you see, but the awkward fat teenage boy with the man-tits, the one stuck in right field because he can't run and can't hit, the one jerking off with a copy of Penthouse in his parents' bathroom while the Bill Clintons and the Barack Obamas get the girls because they are, in the case of Clinton, charming and gregarious; and in the case of Obama, because he's the coolest guy in the room.

Brilliant (and not just at breakfast)!

The second item that has proved revelatory is the exchange between mcfnord and me, which I talked about just yesterday. mcfnord went on to make another comment on the original post, but I'm not going to rehash all of that. What's more important is what I learned about myself, and I'll try to give some flavor of it here.

Because, in looking at my response, I saw an attempt to be reasoned, to be conciliatory, to be agreeable. And that's generally the way I am, for whatever that betrays about my psychology or my upbringing, I tend to avoid conflict whenever possible. mcfnord can ignore much of what I'm actually saying as he essentially uses my site as his soapbox, and I continue to play the welcoming host.

I receive what is probably a snotty e-mail from a "real" journalist, and I play it cool and take it seriously (here), rather than calling it out as the unprofessional, touchy reaction that it was. (And I totally blow by the nasty subsequent e-mails and comments that just happened to come at the same time - maybe a certain "managing editor" needs to grow up.)

Here I have a forum for expressing myself, one that belongs to me, and I use it for dispassionate discussion of the events of the day, all very nice, all well-reasoned, but none of this expresses what I feel, which is, there's stuff that's seriously wrong here, my nation is in bad shape and refusing to see it or to deal with it, and I'm parsing the statements of a seriously self-involved person, trying to give him credit for what little truth emerges from his solipsism.

But then I look at George Carlin, or Harlan Ellison, or Neil Postman, or Jill, or Carrie, and I think, these are my heroes, these are the people who are (or were) out looking at what's going on, and telling others with passion and bite and in-your-face directness. These are people who understand that no one will listen to truth unless it's expressed directly and powerfully, who have taken stands and are sticking to them and are shouting them from the rooftops.

And I am not doing those things.

I read over my last month or so of posts, and I like them in a rational way. I've made some good points, even some I haven't seen elsewhere. But I see that very little of what I've written engages the soul.

I've given CEOs a pass, arguing that the problem is not what they say, because they have powerful incentives to say those things, but our willingness to ascribe to them an objectivity they don't have, can't have. And that's absolutely true. But that doesn't absolve those nattering rich boys, who, after all, have converted people's lives into a level of personal comfort and luxury that would make a pasha envious. They're liars, each and every one of them, when they tell us they can't "find" Americans to do the jobs they want done. They're liars when they sit in front of Congress and tell our lawmakers that we need to import more talent without mentioning how fat that will make their bottom line.

And our lawmakers, these wise solons who will lead us to the promised land of health and wealth, who sit on their well-stuffed arses and do nothing to deal with the massive problems that confront us. Even such insignificant tools as the members of the Illinois House sit back and ignore infrastructure problems, health care, pension funding, mass transit, and on and on, but they always find time for photo ops and TV appearances where they tut-tut about "legislative gridlock" and...do nothing.

And our media, which oozes Q-rating friendliness whether the story is dancing cats or a school shooting. THe death of one of their own is treated as more significant than the death of a world leader, even though there is no shortage of talking heads to fill the magic chair. This media god, who reduced journalism to a search for inconsistencies, rather than using the remarkable access he held to delve into the issues and philosophies of those who seek to lead us, is gone, and we're supposed to mourn him as much as we would someone in our own families.

This media, supposedly on its last legs, moving toward a revenue model that relies on unpaid "citizen journalism," fearing the advent of a celebrity blog site as the final death knell for traditional news gathering: at the same time, one of these great old newspapers blows two of its precious pages on a giant map of Chicago places that Barack Obama has deigned to visit in his life, imbuing them with some of his majesty (maybe we should all make a pilgrimage to the curb outside the ice-cream shop where Barack and Michelle had their first chocolatey kiss, maybe pay for bronzed ass-prints).

And, of course, the largest do-nothing force of all, the citizenry, these people who have been blessed with the greatest system ever devised and take it for granted. That the goal of America is not to provide every person with a large-screen TV is completely beyond the ken of these millions of pinheads. The whiners about $4 a gallon gas, these people who crank up their minivans for half-mile trips to the store to buy one item, who leave their motors running all the time Janie is at soccer practice because they don't want to be without air conditioning for one moment of their pampered lives, sympathy is wasted on these people. If you want to see America as a catchbasin for the personal dreams of 300 million Americans, don't be surprised when things go against you, because the strength of this country is not in individuals "doing their own thing," but in people creating institutions that make the nation better.

People see the confirmation of the Second Amendment as a victory for individual rights, but want to do nothing to deal with the results of letting every 13-year-old loose to cap some other 13-year-old who looked funny at his lady. Rather than rolling up our sleeves and paying a little more to fund a focused attempt to find alternative energy sources, we're going to provide "incentives" to big companies to find them, at which point we're going to pay even more (that's assuming that the breakthrough comes in this country - otherwise, we'll still be dependent on foreign sources - does no one with a brain see that?).

Corporate clods raid the Treasury through tax breaks at the same time they impoverish communities and lay waste to careers, and people rush to newsstands to goggle at their rankings, as if stealing from Americans is some kind of sport. Speaking of sport, we spend untold amounts of time and money marveling at a "sport" which is a veritable celebration of waste, even though we could get the same effect from standing on a highway overpass and watching those drivers jockey for position. We create artificial environments for our mercenaries who put on a uniform with a city name across the front, call them heroes, and give them a pass on anti-social behavior. We allow our institutions of higher learning to be known primarily as career enhancers for these "warriors" of the gridiron or hardwood, as we ignore the very real needs of the real warriors we sent to fight and die or be maimed in the subjugation of a country that posed no threat to us at all.

We impeach a president for tackiness and infinite disrespect for his office, but we don't even think of doing so to a vice president who dismisses the concerns of 200 million Americans, the people who built the country that has made him a multi-millionaire, with, "So?" We flock to the lobby kiosk to plunk down our $3.95 for a magazine that can afford to pay $15 million to a celebrity couple for pictures of their twins, when you could go to a refugee camp and see plenty of babies being born, babies who will die because they can't afford routine medical care.

We tell ourselves that we prize excellence, then we support an "education initiative" which is about setting the bar as low as possible and spending our limited resources pushing the most unmotivated over that bar, while we ignore the very real needs of those who might someday be special, telling ourselves, "They'll do OK anyway." We can't even figure out how to fund our schools, letting one have a dedicated diving pool while a few miles away, the money is spent on metal detectors and security guards.

We allow the beauty of the Grand Canyon to be defiled by gas-guzzling airplanes so that over-endowed people can enjoy a "unique experience." We seriously discuss allowing rapacious energy companies to ruin our offshore waters so we can prop up a dwindling oil supply. We encourage sophists to discuss the "cost-benefits" of global warming so as to put off making hard decisions.

But what we actually do is ignore these things. We can't be bothered to spend even a few minutes a day reading or thinking; we're too busy looking at the fake ball-girl video on YouTube or debating the merits of the new iPod to engage in reality. We leave the tough stuff to the self-interested "experts" and hope to be left alone. We let our schools teach "creation science," guaranteeing a whole new generation of idiots.

These are the things I need to be writing about. When I'm hired to write code, I write code. When we hire CEOs to run companies, they enrich their bank accounts and their egos. When we hire politicians, they fill chairs and wait to be told what to do by their "leadership." When we hire media people, they cling to abstruse notions of objectivity and ignore the truth.

So that's it. I'm throwing down the gauntlet to myself. I'm not going to suggest that I'm going all heat, no light - that would be too big a change to expect. I will still try to be rational and reasonable.

But I'm also going to try harder to bring some of the passion I feel about life in 2008 to what I write. I'm going to spend less time looking at other people's points of view or incentives, and comment on their results. Understanding does not have to preclude caring, and I'm going to try to express that caring in stronger, firmer terms than I have been. Thanks, Jill, for reminding me of that.

Some links

A busy day today, so I'll just provide some links of interest with minimal commentary:

1) Steven Pinker writes interesting books on language and cognition. They're pitched at the general audience, and they're full of pop culture references and links to current research, but not at a highly technical level. So little is really known about how the brain works, particularly with respect to which aspects of it are hard-wired through evolution and which are flexible, able to be shaped by environment, that there can be huge controversy over each of the schools.

Such is a current dustup over bioethics, as Pinker responds to a report from the President's Council on Bioethics, then becomes subject to criticism himself (article here containing links to the original report and more commentary).

I won't wade into the specifics today, but I worry when someone who is strong in one field starts using that reputation to make claims in another. That's not to say I disagree with Pinker here, just that there's a danger of his becoming another Chomsky, whose controversial views have overshadowed his groundbreaking work in linguistics.

2) Kevin Drum writes a week ago about the trouble that the conservative movement has found, that it has exhausted itself and needs to find something new. Ezra Klein argues that "the moment isn't providing the problems" that conservatives need (apparently feeling that life is a matter of faddish problems that arise, and one side or another is positioned to deal with them). His conclusion is that, once the old problems re-emerge, conservatives will once again be in the ascendancy.

I hope they're both wrong, that we see Americans come together to fix problems that are real, that are pervasive, that won't go away when the media gets tired of them. Medicare and Social Security, competitiveness in the face of foreign efforts, lack of affordable health care, global warming, reduction in the supply of petroleum, even a definition of what this nation actually is and should be - none of these are fads, to be dealt with by whichever party feels like dealing with them. We need all hands on deck working on these.

3) Hank Williams writes about how the Internet is contributing to a lack of focus, tying that to the ineffectiveness of advertising. It's certainly true that, if you see one ad a day, you tend to remember it; if you see a thousand, you don't remember any. And we see more than a thousand, just look around. One certainly has to wonder how many of the ad-supported sites and blogs will survive when they run up against people's need to eat.

4) Tom Friedman continues his new-found concern about the state of America, citing the power we've handed to the petroleum countries. He also refers to the new books by Fareed Zakaria and David Rothkopf, each of which predicts massive changes that will take away from America's influence on the world. As before, I await Friedman's recognition of his own contribution to this effort, how his cheerleading for globalization covered up the very real problems that quite a few of us foresaw.

Slippery slope

I'm not fond of slippery slope arguments. The idea that, if you accept one thing, then you must accept the next, and so forth into infinity, and the infinity is unacceptable, so you cannot accept the first, is logically untenable. It also leads to questionable policy when governments use it (if we let the Communists take Vietnam, then they'll take Hawaii...).

However, slippery slope arguments need to be carefully differentiated from implication arguments. While the line is not always clear, it is fair to create a chain of implications (B follows A, C follows B, D follows C; A; then D), even if it is difficult to create all of the implications.

This musing on logic comes as a result of a letter in today's Chicago Tribune. I wouldn't normally make a big deal about a single letter, but I think the sentiment expressed is one that a surprising number of people, including our administration and possibly one of our presidential candidates, hold:

This is in response to the recent article in the Chicago Tribune that carried the headline "Attacks rage in Baghdad; Shiites loyal to Sadr denounce crackdown" (Page 1, March 28).

It was disturbing to open my Chicago Tribune to a front-page photo from Iraq with that accompanying headline.

This highlighted to the world the deeds of those who wish to bring defeat to this nation.

The terrorists are news savvy.

They do listen to what politicians are saying.

They do pay attention to how the media are reporting the war.

Terrorists groups must love the Tribune and other media publications as they assist the enemy in their media games.

Bad news and sensational headlines from Iraq might sell papers here in the United States.

This same bad news also gives hope to the enemy.

The terrorists are well aware that negative news coverage here in America will increase the calls to withdraw from Iraq.

Time and patience are on the side of the terrorists.

Unfortunately many Americans seem oblivious to the fact there is a global war being waged by Islamic jihadists.

Iraq is just one theater in this war.

And this war threatens not only America but all of Western civilization.

The terrorists are listening.

Words do matter.

Newspapers must be held responsible for the impressions they create in the minds of their readers.

So here is my possibly slippery slope argument: Should the media have withheld coverage of the World Trade Center attacks because it gave "hope to the enemy"? Would we really be stronger if the only coverage we received was happy news, making the terrorists think that we were unaffected by their challenge? The parallels to Bush's "call to go shopping" are unmistakable.

Perhaps the most remarkable sentence in the letter is the last. Newspapers have enough problems these days without being held responsible for whatever ideas pop up in the heads of anyone with 75 cents to spend. There are questions of objectivity and fairness with which the best newspapers struggle, not always successfully; if they go further and only write stories that create favorable impressions, they won't be doing their job at all.

More to the point, they won't be informing the public of those things that permit democracy to work. It's difficult to imagine what our nation would be like if we didn't have journalists providing a counterpoint, no matter how often flawed, to the official spin. I can be critical of journalists at times, but I have never once questioned that their job is necessary and important. It's a shame that fear causes other people to see it differently.

Democracy vs. capitalism

This post is the first of a series in which I try to work out some of my feelings about democracy and capitalism. I wrote a post on May 22 of last year, which said some of what I think. It's bad form, I guess, to quote oneself, so I shan't, but, in that post, I outlined the basic conflict I see between the two systems.

I want to go further here and start to think about how we resolve those conflicts. Let me discuss it through the medium of the issue of offshoring jobs.

Offshoring is vitally important, not only for the effects it has already had, but for the future potential. I don't want to discuss comparative advantage here, but that idea, which is thought to allow maximum (and efficient) production in all nations, may no longer hold. With the triumph of technologies that eliminate borders, there may be nothing left (at least someday) for Americans to trade - not without a serious diminution of living standards in the U.S. There are other effects, like the lowering of prices, which factor in on the positive side, but I'm not writing about that here. I'm merely trying to show that offshoring is an important issue.

Unemployment insurance is a matter that we do not trust to the capitalist system, that is, we do not assume that companies will lay people off, but support them for a certain length of time. Because it is a social goal not to allow people to go without that support, the democratic system kicks in and provides for this insurance (which it does by taxing the capitalist system, i.e., making it less efficient).

Offshoring, however, of much greater potential import for restructuring the way we live, is left totally within the capitalist sector. Yes, I know there were some ineffectual Congressional hearings, and it flared as a campaign issue in 2004, however briefly, but polticians have steered clear of any real action.

Companies get to decide what industries, professions, jobs will be handed over to other countries. If that means that a town is without its source of livelihood, or a family is without a means of making a living, that's how change goes - at least you can pay a dollar less for that sweater down at Wal-Mart. But democracy keeps its hands off the issue.

I know that Ronald Reagan had a lot to do with this. His dislike of government (in all matters except his personal living style and providing arms illegally) has become the accepted norm, which means that, despite his stated intent, he hurt democracy to the benefit of capitalism.

For we are all complicit in allowing certain issues to fall outside of the purview of our elected representatives, and to be under the control of our decidedly unelected CEOs. (Offshoring is not the only such example; our energy policy, such as it is, seems to be driven far more by the desires of capitalists than by the needs of the people.) But what is the end result of this division (drivers' licenses to the democratic system, job policy to the capitalist)? It's not simply that business items fall into capitalism, because these items cross all lines in our society.

And how do we restrike this balance before everything important is handled by those who want to make money, not those who wish to fulfill larger social goals?