October 2011 Archives

Gone for a While



I will be away and out of Internet range until November 7th. My wife and I are off for a tour taking us from Crete to Zagreb with stops all along the Dalmatian Coast. The history of the region is rich, full of lessons of the rise and collapse of many nations. Maybe I can capture some of the wisdom and the hubris from the remnants of these civilizations as I travel along. It will be most welcome to escape the volatility and raucousness permeating my everyday life these days.

The Autumn of Our Discontent

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OWS crowd

The protests of the growing number demonstrating their anger at the “system” will not disappear even if the protesters tire and dissipate. The New York Times (10/14/11) carried an article on the front page of the business section and prominently on their web site telling how the barons of Wall Street are largely dissing the protestors and dismissing the whole thing. They call the OWS people “unsophisticated” and “gullible.” But they are afraid to say this publicly for fear of being make targets. By remaining anonymous they also cut off any opportunity for a conversation in which they might be able to listen to the real underlying concerns of the demonstrators and the unseen large numbers who are supporting them.

Wall Street is just a symbol and a “good enemy” as one of my friends in Greenpeace labelled Shell during the Brent Spar flap in the UK some years ago. It may be that the organizers of the protests are quite sophisticated and are well aware that the source of their anger is buried deeper in the entire political economy of today. There is little better tactically than a deaf target that makes the protestors case stronger and more appealing by attempting to ignore and belittle it. John Paulson of the bail-out tried to talk “sense” by pointing out that the 1 percent in New York pay 40 per cent of state and local taxes. He only reinforces the point; if the wealth were distributed more equitably, the same taxes would also be paid by a broader chunk of the people.

The bankers and others who dismiss the protests make a great and critical error by failing to accept that the roots of the discontent underpinning these growing events are deeply embedded in the political economy and that the facts cited as evidence of the failures of that system are valid. No matter what single cause is chosen to be the target, it would be seen as “wrong” because the issues arise out of a systemic failure with many parts going awry. My colleague at Marlboro, Ralph Meima, created an open-sourced Charter on the Internet as a place where the voices heard in the protests and those of other sharing the concerns could be captured and elaborated in print. The response has been massive and is growing. I have cited below a few of the arguments on this site to illustrate that it is not just the banks that are creating the massive breakdowns out there.

  • The 1% takes our houses without holding the original mortgages, through illegal foreclosure processes.

  • The 1% perpetuates inequality and discrimination in the workplace based on age, the color of one's skin, sex, gender identity and sexual orientation.

  • The 1% poisons the food supply through negligence, and undermines the farming system through monopolization.

  • The 1% strips employees of the right to negotiate for better pay and safer working conditions.

  • The 1% outsources labor and uses it as leverage to cut workers’ health care and pay.

  • The 1% influences the courts to let corporations achieve the same rights as people, with none of the culpability or responsibility.

  • The 1% determines economic policy, despite the catastrophic failures their policies have produced and continue to produce.

  • The 1% blocks generic forms of medicine that could save people’s lives in order to protect profitable investments in pharmaceuticals.

  • The 1% keeps people misinformed and fearful through their control of the media.

  • The 1% blocks alternate forms of energy to keep us dependent on oil.

I could add quite a few of my own and I am sure others could do this as well. These assertions bear on the political system, the courts, corporate America in general besides the financial sector, and so on. One constant threads through all, echoing Lord Acton’s famous statement, “Power tends to corrupt, and absolute power corrupts absolutely” We are close to the second part of his warning. The present inequities are so out of balance and fairness that corruption has become an apt descriptor. The powerful individuals may not be corrupt in the sense of Bernie Madoff or Boss Tweed, but the combined consequences of ego, greed, and privilege have corrupted and broken the system.

Since seeking singular causes and simple solutions is so engrained in our culture (even though it is inappropriate in system failures), I will offer what might be closer to a single “cause.” I am teaching a course on the “new economics of sustainability” at the Marlboro College Graduate School MBA in Managing for Sustainability. The first part has been devoting to reading critical of standard economics with a focus of humanistic economics. Schumacher, subtitled his famous book, Small Is Beautiful, Economics as if People Mattered. Schumacher started a conversation about the heartlessness and inhumane nature of neo-classical economics that much later involved the humanistic ideas of Amartya Sen and Martha Nussbaum, and others. Theodore Roszak defined humanistic economics as “ [A] nobler economics that is not afraid to discuss spirit and conscience, moral purpose and the meaning of life, an economics that aims to educate and elevate people, not merely to measure their low-grade behavior.”

Sen and Nussbaum focus on the essential purpose of an economy and the political system in which it is embedded as providing the capabilities to function fully as a human being and live a good and full life. The opportunity for fulfilling employment is central in both Schumacher and Sen. Schumacher draws from the Buddhist theme of “Right Livelihood,” where Sen draws on the ideas of Gandhi. The recession has exacerbated the failure of the system to satisfy this basic need, but even without the recent failures, this critical function has been largely absent or badly sputtering. All include some form of security, dignity, or authenticity. The singular focus of the present economic system to attend to human needs only through some transformation into a monetary equivalent leaves these qualities of life out and diminishes the well-being of all, even those in the 1 percent.

I find it ironic that the Tea Party and those crying out against the marchers draw their ideology on the need for autonomy and choice without interference from others, either individuals or the government. The government serves as the enforcer of private property that enables them to keep what they claim as theirs. The marchers are saying that they have little opportunity to enjoy either the material life of the ultra-wealth or other capabilities that access by means of great wealth provides. Present barriers to the 1 percent’s access are largely created and enforced by the system of institutions and rules that have enabled the wealthy to get where they are. Would they really want government and the rules that have given them power to go away? Selectively of course, but not as a matter of principle.

My conversations with Ralph and others about where this outpouring will lead are mixed in terms of direction and success. In theory, our relative freedoms compared to those in the countries of the Middle East that have had similar protests with successful systemic or regime change should argue for the possibility of changes here. I am doubtful, but hopeful, that we will see anything like such major shifts in the system. The very set of laws, which govern the society and preserve what freedoms we have, protect the status quo from anarchistic pressures and displacement. The institutions we count on for correcting the failures have become part of the problem, not the solution. I do not believe that either of our two parties can address these protestors with either substantive or meaningful offers to act in solidarity with them. Maybe a viable new political party with leaders credible to the electorate can be created quickly through use of the new social media. I cannot remember a situation in my 60 or so years as a voter with a confluence of aggravation, anger and the means for political mobilization so strong. To the new ramparts: Twitter, Facebook, . . .

(Apologies to Shakespeare for the title; photo credit: AP/Salon)

Hitting a Tender Spot on Wall Street

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pltocrat In a piece of delicious irony, Paul Krugman, speaking through his oped column in the New York Times, the elitist of newspapers, took on the oligarchs that are desperately trying to ward off the daylight of truth about inequality and unfairness.The article is one of many trying to guess what will be the impact of the surprising (to some) and growing protests against the super-rich and the institutions that have made them so. I have written earlier about this. He pulls no punches in castigating the those against whom the protests are being directed for using the most outlandish, and misconceived rhetoric.

The protestors are asking, relatively calmly relative to the protests against untrammeled power and inequity elsewhere in the world, to be heard. Their message is that the political economy of the US is badly, badly broken when it allows and actively abets a handful of the people to corner most of the wealth of the country. But not by the old-fashioned American way of hard work and fair play. Sure some of the rich have earned it fairly by bringing us goods and services that we all have benefited from. No one in the protest, I believe, would complain that the late Steve Jobs does not deserve all the riches he has acquired. It is those that have broken the rules or changed the rules midstream.

Adam Smith would be appalled at the way the capitalist system he started has been rigged. He was afraid of monopolies and other gross distortions in the economic system. Smith was a moral philosopher, not a modern economist, and saw the emergence of the market as a consequence of an invisible, but morally guided, hand. When the moral core vanishes as it seems to, the consequences we see are not unexpected. Robert Heilbroner wrote in this vein, “A general subordination of action to market forces demotes progress itself from a consciously intended social aim to an unintended consequence of action, thereby robbing it of moral content.”

The shrieks coming from those who are the targets of the protest are shrill and unkindly. The protesters have been well-behaved and responded to excess police force largely with dignity. As Krugman writes, not so from the oligarchs and power brokers. They are raising the screeds of Joe McCarthy from the grave where it should stay. The protestors are as American as Herman Cain is. What is it to be an American? Being born here or living by the values and principles that led to the creation of our nation. Those who cry out against the protestors are the Anti-Americans. Enough from me. You should read the whole column. I recalled as I read this an earlier article by Krugman in the Time Sunday Magazine. With a little searching I think I found it. He had it right close to 10 years ago. Given the time of the year, perhaps we are seeing the first stages of the "American Autumn."

The Protests Are Not Class Warfare!

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“Romney: Wall Street Protests ‘Class Warfare’” reads a headline from the National Journal, among other media sources reporting on a statement by Mitt Romney made during a visit to a retirement community in Florida. Here’s the gist from this source.

Republican presidential frontrunner Mitt Romney on Tuesday compared the current anti-Wall Street protests to “class warfare.”

“I think it’s dangerous, this class warfare,” Romney said to an audience of about 50 people in response to a question about the protests over such issues as high unemployment, home foreclosures and the 2008 corporate bailouts.

He made his remark while greeting members of an overflow crowd that was unable to get into his official appearance before a larger group of about 300 at this central Florida retirement community.

The Wall Street protests, organized by a confederation of progressive groups, have spread beyond New York to other cities, including Chicago, Los Angeles and Boston. Two groups also have announced plans to set up an encampment in front of the White House as well.

Here we have another example of the irresponsible and inflammatory political rhetoric being used to scare people and create bogeymen. Class warfare is only a metaphor for a struggle against social and economic institutions—the political economy— that have created differential circumstances of such magnitude that they disadvantage and deprive large masses of the society. Wall Street is a symbol of the form of capitalism that dominates our society today. Romney’s words are instructive in making clear that a class, the very wealthy, is tied to this institution. The protesters are not warring against the individuals that constitute the class but against the institutions that have made them unfairly wealthy.

It is the unfairness and other injustices that are the real targets of the group. Protests and revolts aiming at social or economic classes rarely target the individual members of the class, but the way the political economy has unfairly set them apart and provided privileges unavailable to the commoners. By labeling this current protest a form of class warfare, Romney is attempting to deflect attention from the very real conditions that are tearing apart the cohesiveness of our society. The program he panders to would only exacerbate the conditions, separating the wealthy further from the rest of us.

This protest which started on a very small scale is spreading in spite of attempts by the police to squelch it. Another protest coming through a different route, the Internet, has also sprung up to point out the unfairness and excessiveness of levying a steep increase in banking fees by Bank America. Well over a 100,000 people signed on in just a matter of days. Protests against institutions come only when there are people available to man the picket lines. With tens of millions of Americans unemployed and many others barely making it, having seen their assets shrink year by year, the reserves for these and other demonstrations are vast. These events can only serve as omens for further signs of system dysfunction and more push back. I asked earlier in this blog when the Wall Street protests began whether this was the first sign of an American Spring, mimicking the recent events in the Middle East.

The real lesson for both the right and left is to begin to recognize that it is the system that is the culprit. The system I speak of is the complex system of institutions, beliefs and norms that constitute our social and economic life. It is constructed from smaller, nested complex systems operating at different time and spatial scales. After the upsets of WWII, our socioeconomic system slowly evolved, built on a complex interconnected set of subsystems that regulated the growth and assured that all would have access to the vital nutrients of well-being. For years, the well-being grew and was shared fairly. But over time, the governance mechanisms and balance among the component subsystems have shifted with unforeseen and, perhaps, unintended consequences. It can be argued that the outcomes were deliberately fashioned. In the language of complexity, the socioeconomic system has grown rigid and brittle; its balance has disappeared such that the known governance mechanisms do not work or simply don’t fit the present world.

The present protests and those that are certain to follow, given the ability to mobilize armies of the disaffected via the Internet, will continue to expose systemic problems. To mislabel them in a collective ad hominem way as Romney and the rest of the Republican hopefuls are doing can only push the possibility of finding effective solutions further away. What is most important for the health of the country and all who live here is to stop attacking convenient targets and start addressing deeper issues. We are in serious straits today. The threats to the environment have been around for decades, without any real acceptance of their seriousness. The threats to the society from without (terrorism) and now within (injustice and unfairness) are newly visible, exacerbated by a recession, but cannot be ignored without great risk. As a lifelong liberal, I have my favorite set of “solutions,” but know I must put these in the closet for a while until the real problems deep in the system are revealed and addressed. Sustainability has always depended on this kind of process, but given the signs of incipient instability appearing, near-term actions also need this kind of scrutiny. Please, Mr. Romney and other “hopefuls,” address your invectives to the real culprit, not the easy targets.