Category: Politics

Categories
Barack Obama Criticism Health care Politics The Opinionsphere

The Federal Reserve, Henry Gates, Popular Policies, Health Care, Krugman on Cap and Trade, and High Times

1. Down with the Fed! William Greider suggests we “dismantle the temple” that is the Federal Reserve in a piece this week. Greider is not only one of my favorite authors and one of the best writers on economics, he is also one of the foremost experts on the Federal Reserve. They key problem for Greider is that the Federal Reserve is an essentially anti-democratic institution:

The Federal Reserve is the black hole of our democracy – the crucial contradiction that keeps the people and their representatives from having any voice in these most important public policies.

Ezra Klein gives the piece a symapthetic audience, but then explains his reservations:

[F]or a period of time, Ben Bernanke ran our economy under a monetarist’s version of martial law. And the really problematic thing is that it probably worked. It may be all that saved us. You could argue that in the absence of the Federal Reserve, Congress would have been a whole lot more aggressive and responsible because Bernanke wouldn’t have been there to backstop them. But would you really want to bet the U.S. economy on it?

2. Sanity on the Henry Gates Controversy. Jacob Sullum in Reason‘s Hit ‘n’ Run blog gives what I think to be the essential take-away from the Gates fiasco:

[E]ven if we accept the facts as presented by Crowley, it’s clear he abused his authority, whether or not the color of Gates’ skin had anything to do with it.

Let’s say Gates did initially refuse to show his ID (an unsurprising response from an innocent man confronted by police in his own home). Let’s say he immediately accused Crowley of racism, raised his voice, and behaved in a “tumultuous” fashion. Let’s say he overreacted. So what? By Crowley’s own account, he arrested Gates for dissing him.

3. The Appearance of Bipartisanship Creates Popularity. Matt Yglesias has an interesting piece exploring the difference between how the media treats the relationship between public opinon, Congress, and policy issues and how that relationship actually works.

4. Imitation is the Sincerest Form of Flattery. Ezra Klein points out that one passage from Obama’s speech Wednesday night seemed to be taking arguments directly from articles by Steven Pearlstein and David Leonhardt this week that got a lot of traction in the blogosphere. Both columns are worth reading even independent of their apparent influence on the Obama administration’s tactics.

5. Krugman on Cap and Trade Speculation. Paul Krugman takes on doubters encouraged by Matt Taibbi’s piece describing cap-and-trade as a giant scheme:

The solution to climate change must rely to an important extent on market mechanisms — it’s too complex an issue to deal with using command-and-control. That means accepting that some people will make money out of trading — and that yes, sometimes trading will go bad. So? We’ve got a planet at stake; it’s crazy to cut off our future to spite Goldman Sachs’s face.

6. A Laid-back Beat. Lastly, I came across this song in an episode of the British series Skins this week:

[Photo by me.]

Categories
Barack Obama Health care Politics Videos

Our Wall-Street Run Health Care

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There are quite a few ways to explain what is causing our health care and health insurance costs to skyrocket, but in terms of crude political terms, there are really only two possibilities: either health care costs are skyrocketing because the government is involved in a major way – with Medicare, Medicaid, the prescription drug benefit, the subsidy for employer-based coverage, etc.; or the market for health care and health insurance is inefficient independent of government interference.

I don’t have the expertise to resolve the issue – but to me it is telling that the costs of health care and health insurance began to rise exponentially not shortly after Medicare and Medicaid were begun, but during the early years of the Reagan administration with his derogatory fervor. Then the medical loss ratio began to decrease – as health insurance companies began to squeeze as much profit as they could from their businesses. In other words, the prices for health care and health insurance began to rise precipitously as Wall Street began to take a more assertive role in running the economy including health insurance. At the same time, the costs of government insurance has risen slower than that of private insurance companies.

Economists long ago discovered that health care markets are not efficient on their own – as most individuals do not treat health care as a typical service. Rather if people have a choice, they avoid using the service until they absolutely need it – and then are willing to pay whatever is necessary to get better. This also is demonstrated by the fact that despite the fact that America spends far more on health insurance than nations with similar health care systems, statistics show our overall level of care is generally lower than in these countries (fewer doctors per patient; a lower life expectancy; etcetera). At the same time, most individuals treat some level of health care as a right. Even right-wingers – as they decry the attempts to make health care a right in America – implicitly treat it as one when they tell the anecdotes about the 21-year old alcoholic who was denied a liver transplant under Britain’s system because the bureaucracy in place required him to prove he would not endanger his new liver. But unless getting medical treatment to extend this young man’s life is a right, why would anyone be outraged over it?

Because of these various factors, health care operates as an inefficient market as demand does not appreciably respond to changes in price. This helps explain how the health insurance industry began to fall under the sway of Wall Street and take on the telltale characteristics of a Wall Street-run corporation that exists primarily to generate exorbitant profits instead of to provide a service or product. When Wall Street focuses on an indursty, there follows certain predictable steps:

  • as a precondition, there needs to be a market inefficiency that Wall Street can exploit; for example, the inflexibility of demand for a product or service allows the creation of a rapidly inflating bubble in costs;
  • the pay of top corporation executives rises exponentially above that of most employees;
  • increasingly, these executives began to make decisions that benefit their shareholders in the short-term so as to maximize their paychecks and keep their jobs;
  • the product or service is degraded as corporations turn their focus to creating mass short-term profits;
  • the inefficiences present initially are exacerbated;
  • most important, many major risks and costs are deliberately externalized to the public so as to maximize private profits;
  • at some point, this becomes unsustainable and the bubble bursts.

This is exactly what we saw in Exxon’s massive profits during the surge in oil prices in 2008; and it is very similar to what we saw in the housing market; and it is also clearly what we have seen with health care in America for the past twenty to thirty years as the inflation in health care costs far outpaced all else.

I actually don’t like the idea of blaming everything on Wall Street – but the telltale signs are here:

  • health care demand is generally inflexible, although when costs are paid can be shifted as most people see health care as a right and medical facilities and doctors swear an oath to provide care to everyone;
  • health insurance companies – rather than maintaining their large dollar profits as prices skyrocketed in the 1980s and 1990s instead began to increase their percentage of the profit – as a Wall Street-run company always does, thus exacerbating the inefficiencies already present;
  • rather than seeking to reduce the costs of care while providing the best service possible, they sought to exclude as many sick individuals as possible and to cancel coverage for as many individuals who got sick as possible and to use other means of artificially lowering their costs without lowering the price of their service;
  • by refusing to pay for so many sick individuals, many of these costs are externalized to the public; by refusing to cover those who have preexisting conditions – and thus those who are more likely to need to use health care resources – the costs of taking care of these individuals is put upon hospitals and the public; while doing all of this, the insurance industry sought greater and greater government subsidies.

The toxic effect of this inflating cost bubble coupled with the attempts to externalize as many costs as possible have created the twin problems of a growing number of uninsured Americans and rapidly growing federal deficit fueled almost entirely by health care costs.

This is the status quo that we need to change. As Steven Pearlstein explained:

Among the range of options for health-care reform, there’s one that is sure to raise your taxes, increase your out-of-pocket medical expenses, swell the federal deficit, leave more Americans without insurance and guarantee that wages will remain stagnant.

That’s the option of doing nothing…

Doing nothing means leaving our Wall Street-run health care in place; and while right-wing critics focus on the specter of rationing by government bureaucrats and government bureaucrats in between you and your doctor and complain about the complex system the Democrats are proposing – they fail to acknowledge that this Wall Street-run health care rations care by cost and interjects bureaucrats reporting to CEOs imbued with the culture and ethos of Wall Street as they attempt to exploit every inefficiency in our current extremely complex system as much as possible, externalizing as much cost to the public as they can.

If the problem with our current system is not that the government is too involved – as right-wingers assert – but that the market is inefficient in providing health care – and that these inefficiencies are being exploited by Wall Street-run health insurance companies – and if with the economy still fragile from the bursting of the bubble in home prices and with radical changes not feasible or desired – then you turn to the various plans that the Obama administration and Democratic Congress are looking at which attempt to introduce various processes and incentives that will gradually shape the health care system into a more rational market – creating regulated markets for individuals to buy health insurance; eliminating abusive practices that artificially decrease medical costs for insurance companies; creating a public option to compete with these private companies; empowering an independent body (MedPAC) to regulate Medicare prices and practices; creating a body to look at and disseminate information on the comparative effectiveness of treatments and medicines.

It’s clear that our Wall Street-run health care industry isn’t working. More of the same – more deregulation as the Republicans propose – isn’t going to fix this problem. We need change. We need to take back our health care from Wall Street and make it responsive to consumers again. Our system won’t be perfect – and it won’t happen overnight – but the Democrats are clearly working to reform this system. The Republicans are merely seeking to obstruct.

Categories
Barack Obama Health care Politics

The Option of Doing Nothing on Health Care

[digg-reddit-me]Steven Pearlstein began his much–remarked column yesterday morning with a basic observation that most deficit-hawk opponents of Obama’s “experiment” with health care reform don’t seem to acknowledge:

Among the range of options for health-care reform, there’s one that is sure to raise your taxes, increase your out-of-pocket medical expenses, swell the federal deficit, leave more Americans without insurance and guarantee that wages will remain stagnant.

That’s the option of doing nothing…

I have yet to see any opponent of health care reform acknowledge that our current health care system is unsustainable and getting worse, or to acknowledge that the situation has reached a point where it undermines the very legitimacy of America’s model of the state.

Opponents of any of the Democratic health care reform proposals often argue that they are actually in favor of reform – just not this “fast” and not any of the plans being considered at the moment. They don’t have much of a response as to why they showed no concern for this issue when those more inclined to accept their ideas were in power. There have been some attempts to come up with an alternative health care reform, but it doesn’t seem like any actual plan will be offered. For example, Representative Roy Blunt, head of the GOP’s Health Care Solutions Group, is suggesting that no plan will be offered by the Republicans as he asks rhetorically:

[W]hy start diverting attention from this really bad piece of work they’ve got to whatever we’re offering right now?

This is good politics – as long as you’re not serious about reform. As long as your goal is to “break” Obama rather than to fix health care and our growing deficit problem.

I try to take things that people I disagree with politically seriously, assuming their good faith on the issue. But if opponents of the reforms on the table now don’t offer an alternative, talk about “breaking” the Democrats, and refuse to acknowledge the basic fact that the status quo which their opponents are trying to reform is leading to a disaster – all while simultaneously blaming Obama for this looming disaster – what other explanation is there for this behavior than “bad faith”?

Categories
Barack Obama Economics Health care Politics

The Lesson of 1993/1994

[digg-reddit-me]Like a lingering odor, the failure of Hillarycare in 1993 is hanging over this perilous moment in Obama’s presidency. It’s true that Clinton’s health care plan never got this far legislatively.  By presenting a complicated plan to Congress and trying to bully it through, the Clinton administration made a huge tactical blunder. But it is clear that both sides sense that this is the moment when health care reform could be derailed. While the Democrats and Obama have long been planning on pushing through health care, what is going on now is pure political blood sport. This is a zero sum game. This is a Democratic attempt to prove that they can accomplish something that is popular and helps the middle class and which they have been trying for sixty years with only moderate success to enact. This is the Republican attempt to protect the status quo and to slingshot their way back to power as they did in 1994.

Bill Kristol has said that this is the week to stop health care reform – to not worry about being obstructionist or trying to appear constructive:

There will be a tendency to want to let the Democrats’ plans sink of their own weight, to emphasize that the critics have been pushing sound reform ideas all along and suggest it’s not too late for a bipartisan compromise over the next couple of weeks or months.

My advice, for what it’s worth: Resist the temptation. This is no time to pull punches. Go for the kill.

Beneath the veneer of policy disagreement that Kristol is using, it’s clear he is advocating pure obstructionism. He senses opportunity. Which is why he and many other Republicans are now all repeating the same talking points: Obama’s health care reform is an “experiment” with your health; it will ration health care; you will lose the insurance you have now; the government will impose itself between you and your doctor; socialism! These rather familiar refrains are being thrown about for one purpose – and it has little to do with health care.

As Senator Jim DeMint rather infamously declared in a secret call to anti-reform advocates:

If we’re able to stop Obama on this it will be his Waterloo. It will break him.

Newt Gingrich echoed this point:

This could be the bill that drags his whole presidency down and they look back on it and suddenly the whole thing is unraveled.

And the Democrats seem to agree – as the former Organizing for America sent out DeMint’s statements to rally supporters – and Mark Kleiman, a Democratic blogger said, “This bill is make or break for the Democratic Party.”

The Republicans are trying to break the Obama presidency – as they did Clinton’s. Clinton came back, but he never had the same political support.

Meanwhile, moderates play an interesting role in this political blood sport. They decry both sides for being mean – and suggest everyone get along. They talk about bipartisanship, suggest the Democrats move slowly, and they feel queasy at the prospect that the Democrats – by actually governing and doing what they promised they would do – might be overreaching. Matt Yglesias ably responded to this point:

It’s not as if what happened in 1994 was the congress passed Bill Clinton’s big health reform package, then the public didn’t like it, then in revulsion they turned against Democrats. Nor did congress pass the proposed BTU tax, then the public didn’t like it, and then in revulsion they turned against Democrats. The noteworthy thing about the first two years of the Clinton administration was the lack of ambitious progressive programs put in place. And you could say the same about Jimmy Carter. Whatever it is people reacted against in 1978, 1980, and 1994 it wasn’t actually existing left-wing governance.

Ezra Klein – on the same theme – explained the lesson one of the key architect’s of Obama’s strategy learned from 1993:

Emanuel has carried that lesson with him into the Obama White House. “The only thing that’s not negotiable is success,” he likes to say. The worst outcome for the party — in part because it’s the worst outcome for its marginal members – is defeat. Voters punish defeat.

If the Democrats succeed – as Bill Kristol explained in 1993:

It will revive the reputation of the party that spends and regulates, the Democrats, as the generous protector of middle-class interests. And it will at the same time strike a punishing blow against Republican claims to defend the middle-class by restraining the growth of government.

Despite this moment of peril, Obama’s strategy to get health care through is still intact. His administration has learned the lessons of 1993- 1994 well – perhaps too well.

But make no mistake as you see the charges thrown about by both sides in these next few weeks. This battle is no longer about policy for either the White House or the Republican Party. (Though the right policies will be essential to its long-term success.) Right now this is political blood sport – it is about whether or not the Obama administration will be broken by obstructionist elements. The short-term success of the administration will be determined by whether or not they succeed in the next few weeks to pass something substantial; their long-term success will depend on the policies they are able to include.

[Image not subject to copyright.]

Categories
Barack Obama National Security Politics The Opinionsphere The War on Terrorism

Sick of all this naivete about Obama

[digg-reddit-me]I’m sick of all this naivete about Obama.

And no, I’m not talking about those who moon over him and who believe he can do no wrong. I’m talking about those who now are on their high horse acting betrayed because Obama isn’t doing what they want.

Specifically I’m talking about this and this.

The problem as I see it is simple: under Bush, many critics of the power grab that was Bush’s War on Terror rallied together against him – and in 2008, many of them rallied around Obama. In working for a common cause they seemed to forget that between them they had some pretty serious disagreements.

For example, on one hand, there were those who I’m going to label progressives and/or libertarians who believed that the proper response to terrorism was law enforcement and believed the term “war” was inappropriate and who opposed:

  • the illegal war for oil against Iraq;
  • the warrantless wiretapping that violated the Constitutional protections of the Fourth Amendment;
  • any form of indefinite detention;
  • torture;
  • the practice of rendition (from Bill Clinton to its expansion under Bush);
  • the state secrets privilege.

Also, progressives opposed:

  • the practice of targeted killing;
  • the flouting of international law.

And then there were the liberals who believed that “war” was the correct term for the nation’s struggle against terrorism, but who opposed:

  • the “dumb war” against Iraq – on the basis of the fact that it would hurt our interests;
  • the defiance of the FISA statute that limited the power of the executive branch;
  • indefinite detention at the sole discretion of the executive;
  • torture;
  • the expanded rendition program under George W. Bush;
  • the overuse of the state secrets privilege.

Also, liberals opposed:

  • the use of signing statements to eviscerate laws passed by Congress;
  • the defiance (even denial) of the checks and balances between the branches of government.

The liberals and progressives/libertarians agreed that they needed to oppose Bush’s power grab. They disagreed though on the proper response to terrorism.

Obama, being a politician, did not seek to emphasize these differences among those who supported him. He finessed the issues by stating the liberal positions strongly – but at the same time, he made no secret of the fact that he was a liberal instead of a progressive.

Obama has made his positions clear. As he said in the campaign:

Just because the President misrepresents our enemies does not mean we do not have them. The terrorists are at war with us…When I am President, we will wage the war that has to be won, with a comprehensive strategy with five elements: getting out of Iraq and on to the right battlefield in Afghanistan and Pakistan; developing the capabilities and partnerships we need to take out the terrorists and the world’s most deadly weapons; engaging the world to dry up support for terror and extremism; restoring our values; and securing a more resilient homeland.

He has since maintained that he believes we are “at war” with Al Qaeda:

Now let me be clear: we are indeed at war with al Qaeda and its affiliates. We do need to update our institutions to deal with this threat. But we must do so with an abiding confidence in the rule of law and due process; in checks and balances and accountability.

On Iraq, he famously said:

I don’t oppose all wars… What I am opposed to is a dumb war. What I am opposed to is a rash war.

When Obama voted for the FISA compromise, he did so on the grounds that the program was needed. He explained that he had opposed it because Bush had enacted it in defiance of the Congress and established law:

The exclusivity provision makes it clear to any President or telecommunications company that no law supersedes the authority of the FISA court. In a dangerous world, government must have the authority to collect the intelligence we need to protect the American people. But in a free society, that authority cannot be unlimited.

Obama has repeatedly stated that he opposed indefinite detention at the whim of the executive – but did not say he was opposed to it in every form.

In our constitutional system, prolonged detention should not be the decision of any one man. If and when we determine that the United States must hold individuals to keep them from carrying out an act of war, we will do so within a system that involves judicial and congressional oversight.

On rendition and torture, Obama has kept his word. On state secrets, he has not so far.

This isn’t to say that progressives and libertarians shouldn’t criticize Obama – but on most of these issues Obama has been clear and consistent. And given the reasonable alternatives, it’s hard to see who was a better candidate. (Though I can already see the comments about Ron Paul being written.)

The fact is: Obama is a significant improvement over Bush – and the changes he has made and is making are significant. It matters whether or not there is a check on the executive branch; it matters whether or not we have a president who does not flagrantly disregard the law. That’s not a reason to give up what you believe – to keep pushing the civil libertarian case against Obama.

But at least be honest about it.

Categories
Economics Health care Politics

A Distinctly American Health Care System

Jacob Weisberg in Slate has an interesting take on health care systems as reflecting the society of which they are a large part. The piece is worth checking out. Here’s his short description of America’s health care:

America’s evolved, undesigned system is also an expression of our culture at its best and it worst. Health care in the United States is innovative, entrepreneurial, expensive, litigious, and wasteful. It is decentralized, driven by self-interest, excellent at the high end, and increasingly unequal. It resists acknowledging trade-offs or limits and is characterized by shocking gaps in basic care.

Categories
Economics Environmental Issues Health care Politics Videos

Health Care Reform To Stimulate the Entrepreneurship

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Paul Gigot of the Wall Street Journal editorial page makes the same argument many Obama critics have been making – beginning with Rush Limbaugh who attempted to blame the financial collapse on the fear markets had at the prospect of an Obama victory in the 2008 election to the present, as Gigot attempts to blame any lingering effects of this financial collapse – and its economic aftereffects – on fear of “the Obama agenda.”

But neither Gigot nor Limbaugh nor any other right-wingers seem to give any consideration to those drags on risk-taking that our current status quo creates.

Gigot apparently thinks that raising taxes on a handful of powerful individuals has a greater effect on reducing risk-taking than the prospect of global warming, than the lack of a health care safety net has on potential entrepreneurs.

The difference between Gigot and myself is that Gigot is concerned that this handful of powerful people will be less likely to take risks with their vast sums of money – along with a dozen or so major corporations having less ability to generate major profits by externalizing costs for pollution and health care to the society at large. If a corporation has to pay for the damage it causes, then it is – by Gigot’s standards – less free. This is true only in the sense that a tyrant is less free than an ordinary citizen because he is no longer able to impose his way upon others.

If one wants to stimulate the economy by encouraging small businesses and entrepreneurship, there are few better ways to do it than to pass some sort of health care reform that makes it cheaper and more available outside of large employers. As Daniel Gross, financial columnist for Newsweek and Slate, explains:

An affordable national health care policy, which could allow people to quit their jobs and launch businesses without worrying about the crippling costs of premiums or medical costs, might be a better spur to risk-taking than targeted small-business loans.

I say this as a former small business owner and entrepreneur myself. One of my biggest concerns in working outside of an established business was that I was not able to get my health care through my job – which meant astronomical monthly premiums for a service I did not use – but which I could not be sure I would not badly need.

Gigot and other right-wingers are not focused on small business and entrepreneurs – although they does invoke them as a fig leaf for political reasons. If they were they could see the advantage of a public health care option. Instead of defending the free market, Gigot and other right-wingers seek to defend a corrupt status quo in which decisions are made by a princely few rather than being made in the competition and varied decision-making bodies of a free market. Health care reform – if done right, with a public option – will remove a major obstacle to individuals taking their own risks, starting their own businesses; it will be a small step to diversifying decision-making and creating a more free market.

Gigot – by taking the dogmatic position he does – proves he is not serious about protecting the free market; he is only interested in protecting the interests of his cronies among the monied elite.

Categories
Financial Crisis Foreign Policy Politics The Media The Opinionsphere

Sympathizing with AIG, Peace with Islamists, Senator Al Franken, Jay-Z, the Newest Lost Generation, and the Future of Journalism

1. Sympathizing with AIG. Michael Lewis has another piece plumbing the depths of the financial crisis. Except this time he is somewhat strangely sympathetic to AIG. His piece is a useful counter to Matt Taibbi’s angry screed on the same subject – but the lack of outrage in Lewis’s piece is discomfiting – like a writer who begins to sympathize with his serial killer subject. Still – worth reading – as Lewis concludes:

And yet the A.I.G. F.P. traders left behind, much as they despise him personally, refuse to believe Cassano was engaged in any kind of fraud. The problem is that they knew him. And they believe that his crime was not mere legal fraudulence but the deeper kind: a need for subservience in others and an unwillingness to acknowledge his own weaknesses. “When he said that he could not envision losses, that we wouldn’t lose a dime, I am positive that he believed that,” says one of the traders. The problem with Joe Cassano wasn’t that he knew he was wrong. It was that it was too important to him that he be right. More than anything, Joe Cassano wanted to be one of Wall Street’s big shots. He wound up being its perfect customer.

2. Peace With the Islamists. Amr Hamzawy and Jeffrey Christiansen have a thought-provoking, and somewhat discomfiting piece, in Foreign Policy suggesting that America make peace with non-violent Islamist groups – pointing out that many of them actually rely on America’s support for democracy for their success in a region of the world dependent on America and filled with dictatorships, and pointing out the signs that many of these groups are open to such a peace offer.

3. Senator Al Franken. John Colapinto profiles Al Franken in a typically humorous and in-depth New Yorker piece. More important than the piece is that this man is a Senator. Congratulations Senator Franken.

4. Jay-Z, Hegemon. Marc Lynch has written a few pieces this week applying principles of hegemony in international relations to Jay-Z and how he maintains power in the hip hop world – including specifically how he is responding to The Game’s recent attacks on him.

5. Europe’s Newest Lost Generation. Annie Lowrey discusses the problems that are facing Europe’s youth.

6. Shirsky on the Future of Journalism. Clay Shirsky has an excellent post over at Cato Unbound discussing without really predicting the future of journalism. As always with Shirky, thought-provoking and worth the read. He makes a point that I have been ruminating about in a number of posts recently (here and here) – that:

[J]ournalism is about more than dissemination of news; it’s about the creation of shared awareness.

In my posts, I labeled this “shared awareness” the “conventional wisdom.”

[Image by me.]

Categories
Economics Financial Crisis Politics

Tear down our capitalist system and replace it with a free market.

[digg-reddit-me]It’s Friday morning, finally finished with a week while living for the weekend, so I’m feeling loose.

My modest proposal for the day: Tear down our capitalist system and replace it with a free market.

The two terms are usually used synonymously – and I’m sure I am guilty of this myself. But after a long night of fevered dreams about politics and policy (yes, I really do dream about such things) I woke up realizing there is an important difference between the two ideas. (Perhaps as my unconscious mind dredged up some forgotten piece of writing from years ago.)

The free market is a commonsensical idea – as it is based on the values of competition, individual opportunity, and liberty. Adam Smith (from what I know of him) was only a proponent of this system – which he called “the system of natural liberty” – rather than a proponent of “capitalism” – a term he never actually used. Smith – arguing for this system – argued against government being used to prop up industries or to direct them. What he did not argue for though was “capitalism” as it has been understood for the past century. In many ways, the idea of capitalism evolved to defend our system from Marxist ideas – so it evolved to preserve the status quo rather than to describe an ideal system.

In this way, America’s economic system is different from its political system. The political system was created by men who held certain agreed-upon ideals and who attempted to write a governing document incorporating and protecting these ideals. This allowed later generations to try to better follow these ideas – to constantly seek “a more perfect union.” Rather than merely defending the status quo, it created an ideal to strive for. Our economic system though was created in an ad-hoc manner – and the ideology which grew up to defend it lacked any clear ideals. So, this ideology was defined then by what it opposed rather than a positive protection of certain principles. Capitalism then means less government interference, less centralized control of the means of production, less regulation. What this capitalism has created though is a rather unfree market – in which a small number of individuals own most of the capital – in which competition is thwarted by monopolistic practices, by bigger and bigger mega-corporations, by regulations proposed by the mega-corporations to keep out competitors, by bailouts.

Our capitalist system is based on valuing capital over labor, of seperating mangament and labor from ownership, of limiting the liability of individuals for their actions in corporate environments, of externalizing as much cost as possible to the public commons, of profit over all things. It is hard to see what most of these principles contribute to the creation of a free market. Indeed, many of them undermine it – creating a closed market, profitable only for a princely few who have the capital. This new feudalism is called freedom – but it is only free to an elite class of “ultracitizens” while the overwhelming majority of people get by in a “Sharecropper’s society” (to use terms introduced by David Rothkopf and Warren Buffett respectively.)

What we need is a founding economic document – that will describe the free market as it should be. A free market based on competition instead of capital; in which the government’s role is clear, predetermined, and predictable – rather than arbitrary and constantly contested; where regulation is seen as a protector of the free market rather than an encroachment upon it – as it forces externalized costs which are imposed on the society at large to be taken into account by the market; where the government’s role is in protecting and enhancing the opportunity of its citizens – rather than protecting the status quo and mega-corporations.

The fact is – capitalism as it is currently practiced has undermined the free market at every turn. While our current capitalist system has proved more productive than many other systems in the past, it has clearly fallen short of those implicit promises of what a free market should be. This economic crisis we are still going through – even as the financial crisis has passed – will offer up an opportunity to redefine the social bargain underlying our economic system if we are bold. So, we must be bold then – as soon as we figure out how to approach this.

[Image by me.]

Categories
Law Politics The Bush Legacy

Alberto Gonzales: Sharp Like An Old Crayon

The Times always gets an interesting array of questions written by prominent individual for its pre-Confirmation hearing piece with questions for the nominee. This last attempt was no different – but as always – the questions often revealed more about the questioner than their intended answerer. For example, Alberto Gonzalez suggests Sotomayor be asked:

Some overseas critics have questioned the legality of United States government policies on the war on terrorism. Should America’s standing in the world, to the extent it may be affected by the outcome of a case, ever inform a judicial decision?

Clearly, Gonzales thinks it should affect the outcome of cases – but it seems impossible to see how this principle would be applied. But one can guess that this argument was used to push Gonzales into taking positions he might not have otherwise as David Addington, Scooter Libby, and other top Bush administration officials working under Cheney pushed various extreme positions in secret – and then to cover up the excesses while Alberto “I Don’t Recall” Gonzales was Attorney General.

But it takes some sharp like Gonzales (sharp like an old crayon) to expose the underlying idea so baldly. Presumably Gonzales thinks American citizens have a right to know what the American government is doing in their name – but that this right must be counterbalanced by a Court acting as a kind of public relations arm of the U.S. government. As Glenn Greenwald said (in a piece I cannot find at the moment, so I paraphrase): “The inevitable logic of this position is that the worse the crime is, the greater the necessity to cover it up to protect America’s image.” This obviously creates an incentive for administration officials to make sure that their crimes are so bad future administrations will be compelled to protect them – to prevent information from becoming public and damaging America’s reputation.

[Image by Matthew Bradley licensed under Creative Commons.]