Thursday, April 03, 2014

US Oligarchy

The news yesterday carried two unrelated articles that tell the current political story very clearly. One is about how corporate lobbyists have so thoroughly killed Republican Congressman Dave Camp's tax reform bill that the Congressman will not run again for his House seat, even though he holds the important position of chairing the tax writing committee. The second is about the Supreme Court's decision in a case, McCutcheon v. Federal Election Commission, No. 12-536, that holds unconstitutional any limit on the total amount of money that a person can contribute to political candidates or entities.

In other words, we now live in an oligarchy of the wealthy, in which politics (and judges) are completely controlled by those who can and do provide unlimited funding. They will control, for their own benefit, decisions on all important public issues, from climate change to war. Citizens, even those who by normal standards would be regarded as wealthy, no longer have a realistic voice in their own political destiny.

The implications are not entirely terrible. After all, some of the most successful societies in history have been ruled in this way. Think ancient Athens, Republican Rome, and Great Britain between the Act of Settlement in 1701 and the 1st World War. 

More ominously, though, we now live in a world where the fortunes of these oligarchs are no longer tied to the conditions and destinies of the countries in which they live. If the US declines as its middle class shrinks, while certain other countries flourish, the American oligarchs will not be much affected. And if worse comes to worst and social revolution breaks out, they will--like the bin Laden family on September 12, 2001--simply flee to places abroad.  Basically, they don't have much stake in the national destiny.

This leaves the US in a position identical with traditional colonial possessions. The mother country could exploit the possession quite ruthlessly, because its authorities had little stake in the colony's well-being, and returned as little benefit as was absolutely necessary to the exploited territory. 

Friday, December 20, 2013

Response to Timothy Egan's op ed 12/20/13

We liberals do no service by denying that many of those who need public assistance fail to help themselves and appear to be moochers. The self-righteous right, the smug who have enjoyed good luck all their lives, and many poor or lower middle class people who observe the homeless and the out of work up close, are responding to a highly visible reality. What is lacking, though, is an explanation. Why would homeless people spend their days onerously picking up tin cans, sitting in the cold or the heat to beg, living in proximity to psychopaths and other dangerous people, and subjecting themselves, their pets, and their children to filth, bureaucracy, public contempt, and deprivation? Calling them moochers (and worse) assumes that they are rational people who lack the moral fibre to act in their own interest, much less the community's. Yet as I understand it, many of the people on public assistance are either there temporarily due to misfortunes beyond their control, or because their minds lack the internal structures and capabilities necessary to function in our modern urban society. We act as if they stupidly and irrationally choose their misery. In reality, such people are the exception, not the rule.

Friday, November 08, 2013

The Trolley Car Dilemma is False

I was reading a review in the recent NYRB of a book by the man who invented the "trolley problem," Joshua Greene, which shows that many people refuse to kill one man, even though it would save 5 people. A runaway trolley car containing 5 passengers can be diverted if you push a man off a bridge into its path. If you don't do that, the car will crash and kill the passengers. What do you do? 

The "trolley car" problem has become a widely used thought experiment in philosophy classes. For example, Michael Sandel starts his MOOC course on justice with it.    Greene talks about the psychological difference between active agency and passivity. But I think the setup is falsely rigged. The problem presents the deaths as a certainty, a "fact." But anyone in the position of the man who has to kill to save the 5 would not see it as a certainty, but just as a possibility. Consequently, the trolley problem poses a false dilemma. 

Tuesday, October 08, 2013

Koch Brothers and Debt Crisis

I am responsible for managing a substantial investment portfolio, and consequently have been watching the government shutdown/debt ceiling discussions with considerable care. As early as late June I was turning some of that portfolio into cash (prematurely, as it happened), out of fear that the Republican radicals would shut down the government and cause a default on the debt, with virtually incalculably bad consequences for the country and the world, as well as the markets.

Noting that the stock market did not seem to share my concern I kept wondering why, and exploring all the possible reasons. The most plausible was that Bernanke's warning of the end of stimulus had caused bonds to drop in value, sending a lot of cash into the stock market seeking returns, while during the summer there were no significant new threats looming, China's slowdown seemed to have halted, and the European economy was gradually improving.

Last week John Boehner stated unequivocally that he would not allow a debt default to happen. I regarded this as a major turning point, because I thought Boehner could not say this without having some reason to believe that the crisis was in the process of resolution. I therefore put some of my cash back into the market. But over the weekend he seemed to reverse course, putting forward a new series of demands, and Eric Cantor voiced confidence that the Republican demands would be met. This made me think that Boehner is not as disciplined in his comments as one might expect of someone in his position.

Over the weekend there was another development, at least for me. A NY Times report detailed the long planning for this "crisis" on the part of the Koch brothers and similarly loony Republican billionaires. I had long thought that discussions of the Tea Party positions were deficient in leaving the money out of the equation and focusing only on the ideology of the radicals, since it was the money that gave them their teeth, convincing saner Republicans that they would lose their jobs if they did not hew the radical line. This article not only confirmed that view, but explained some of the more mystifying sideshows, such as the recently surfaced demand that to lift the debt ceiling Obama had to approve the Keystone pipeline, which the article said was 20% owned by Koch Industries.

My bottom line conclusion for the moment, therefore, is that the billionaires are running the show for the radicals, and dictating Boehner's positions. If so, then I return to a more optimistic view because despite their vicious and repellent views, these people are not actually crazy. They are excellent bluffers, and I believe they are running out a strong bluff here. Then they'll fold, because defaulting on the debt will be ruinous for them and they know it.

Friday, July 12, 2013

Recent NYT Comments

The Republican case against immigration reform rests, I think, on an unstated but very tenable premise: that as in the days of Jim Crow, voter suppression works, and will keep whites a majority of the voting population indefinitely. Voter ID laws are just the start of it. The nullification of rights is an old right wing game, as the abortion battles show they are terrific at it, and it works.
--7/11 2:39 pm in response to op ed by Ross Douthat, "Rubio-Schumer and the Republican Future"

In describing Justice Ginsberg as clear-eyed and realistic, Greenhouse puts her finger on the Court majority's current modus operandi: to elevate form over reality. The very clever Chief Justice (no relation) has neatly turned our Constitutional rights to equal protection and due process into safe harbors for the nullification of those rights in actual practice. The practice of Republican-controlled states is to demolish minority voting rights with laws framed as equal, but aimed at particular targets, like Anatole France's observation that a law equally prohibited both rich and poor from sleeping under the bridges of Paris. Roberts has ratified those practices. The law once prohibited corporate campaign contributions. But Roberts found this an unjustifiable impingement on the "equal" free speech rights of corporations and other organizations. Now we have corrupted elections at every turn. And so forth. Never in human history has a court wreaked so much damage on a successful political system as has the Supreme Court left to us by the Bush family.
--7/11 4:29 pm in response to op ed by Linda Greenhouse, "The Cost of Compromise"

Egypt, like Pakistan, most of Africa, and many Middle Eastern and Asian countries is mired in an eternal succession of thieving elites. As long as the elites see less to gain from creating an economically and socially viable state than from using power to line their family pockets and destroy opponents, the turnover will continue. Moreover, they have perfected the art of fleecing the Americans, who now provide most of the assets that they steal. The only thing we can do to end this misery is to support those who are actually honest, have some concept of the public good, and seem competent. Absent such people, we should do as little as possible. 
--7/8 4:36 pm in response to op ed by Ed Husain, "How Not to Become the Next Pakistan."

As a lawyer I am less interested in who wins or loses a Supreme Court case than in the reasoning and law that leads to the decision. People commonly ascribe results to the personal views of the justices, but the results should be the outcome of an honest process of legal reasoning, not preordained by judges' personal preferences. When the latter happens, lawyers regard the process as intellectually corrupt.
    In the decisions of the last two days, we have seen examples of both genuine legal reasoning, and intellectual corruption. A pattern has now become clear. Normally, the court's decisions are based on legal reasoning, but when it comes to cases that involve the fundamental structure of our democracy the conservative majority seems to privilege personal preference. We have seen that in Bush v. Gore, in Citizens United, and now in the Voting Rights case. In all these cases, the court has departed from usual practice and precedent in pursuit of decisions pleasing to the conservative majority. In doing so, it has sanctioned the free use of chicanery and money to restructure the Constitution's representative democracy into something that may soon approach an oligarchy. It is that corrupt process, and those devastating results that we must mourn.

--6/26 12:46 pm in response to "Supreme Court Bolsters Gay Marriage with Two Major Rulings"

The collection of big data by the NSA is not yet a Star Chamber. We need this information for security in the modern world, and until it leads to the punishment of people without according them the full range of constitutional protections, I cannot see the actual harm of it. I think that both Snowden and the security apparatus have behaved reprehensibly. Snowden broke the law, violated his promises, and cozied up to our fiercest rivals, but at least he has launched a valuable debate and exposed the overly compliant FISA court, which has apparently never turning down a security request. The security people, on the other hand, have gone over the top in claiming that the disclosures injure US safety (not clear how), and their fear of daylight reminds one of George Orwell.
--6/28 2:46 pm in response to Roger Cohen, "The Service of Snowden"

Tuesday, April 09, 2013

Joe McCray's response to America's Innovation by Design Article

April 2, 2013
            My friend and long ago law partner, Keith Roberts, has published a thesis congratulating American capitalism on the advancements its technological innovations have brought to mankind.   Not withstanding the ease and lucidity of the piece, it is just plain wrong.
            I will approach this on a seriatim basis.
            If Americans have creativity and invention written into their DNA, then that is because the natives of the countries that settled here shared that DNA.  Open land, a tolerance for larceny and a paucity of law enforcement are more likely explanations for the economic growth of the nation in its early years and well into the Nineteenth Century.  A peculiar strand that could be identified as American – democracy- often stood in the way of the reckless and the savage. 
            This country’s “troubles of recent years” were and remain a consequence of the same larcenous tendencies manifested in the ruthless tactics of monopoly building, getting ahead by crushing others and extracting value from cheap labor. The only innovation involved in that “trouble” was camouflaging lies and making money from it. 
It cannot be seriously claimed that the American education system is or has been robust for many of the last forty years.   Can a system that produces a higher rate of illiteracy than any other industrialized nation be called “robust”?  Should we take pride in an educational system that produces members of Congress that believe the universe was created in a matter of days and only a few thousand years ago; that deny evolution; that insist that dumping hundreds of tons of carbon derivatives into the atmosphere everyday carries no adverse consequence for the planet? 
As for marketing and financing, there is little doubt that the American experience has produced new forms, but there is doubt as to whether those forms have contributed to a healthy, if robust, economy and society.  Marketing the “cornucopia” of goods to Americans is fraught with fraud, i.e. misrepresentations and undisclosed dangers.  Attempts to ameliorate the dangers inherent in such marketing have been opposed mightily, ruthlessly and legally. The claim is that freedom to lie about one’s product is protected by the First Amendment to the United States Constitution.  One need only understand that truly native genius involved in marketing cigarettes to conclude that American innovation in marketing is probably not a good thing. 
As for financing:  banks and their endlessly varied progeny have combined regularly for nearly three centuries to destroy the economic lives of millions.  This last disaster (that is to say, most recent) demonstrated to anyone paying attention that the American financial system is as dangerous to all of us as a trainload of nuclear waste.  If “robust” is the same thing as a system that permits its participants to wreak havoc and then take home outrageously large paychecks, then “robust” is not something to be real happy about.  Across-the-board rewarding of abject incompetence is hard to justify.
The design innovations that inspire Mr. Roberts’ enthusiasm, to the extent they are really American, are, upon close inspection, revealed to be unworthy.   Carbon fuels have been with us for more than a century.  Somewhere shortly after the end of World War II, there was a general awareness that petroleum was power, let alone untold wealth.  Our manufacturing leaders made vehicles that required the use of petroleum products and, until 1970, took no steps to improve the fuel efficiency of its products – even in the face of competition of small cars from Japan.   American auto manufacturers failed to make any serious effort to replace the gasoline or diesel fueled internal combustion engine until California and the Federal Governments began to require those efforts.
Innovations that we, as a society, require for our own “robustness” are not the subject of capitalist enterprise.  Rather, innovations that return wealth to the wealthy proliferate. Overarching those efforts is the ongoing search of American capital for means to avoid paying labor the value it produces.  The most destructive of the creative and innovative devices in recent years has been the evisceration of the American producing class by shipping jobs to overseas locations. 
While it is with a great deal of affection that I celebrate my former partner’s celebration of American capital over a libation or two, I can’t, in conscious permit it to go unscathed by truth.

 --Joe McCray 

America's Innovation by Design, Project Syndicate March 14, 2013

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America’s Innovation by Design

NEW YORK – Born at the dawn of the Industrial Revolution, the United States has creativity and invention written into its DNA. By emphasizing economic freedom and individual achievement, the US has fostered a strong entrepreneurial culture. And, by marketing cutting-edge technologies, financing their development, and purchasing them, Americans consistently transform innovation into economic growth.
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Illustration by Paul Lachine
Indeed, despite the US economy’s troubles in recent years, its educational, marketing, and financing capabilities remain robust. As developing and advanced countries alike clamor to increase their share of innovation-driven economic growth, the US has already established the necessary institutions – and a solid lead.
Before the Industrial Revolution, global economic growth was gradual and intermittent, depending on population growth, the discovery of treasure, and unexpected technological advances. But, as traditional cost structures and production techniques yielded to mechanization and vast economies of scale, consumers gained access to a cornucopia of new (or newly affordable) goods.
When manufacturing and trade replaced agriculture and household labor as the dominant economic activities, technological innovation became commercially and militarily vital. The US, Europe, and Japan established national innovation infrastructures, comprising government research entities, scientific institutes, research and development laboratories, and technologically oriented universities, night schools, and vocational schools.
During World War II, the US pulled ahead, becoming the global leader in innovation. While its predominance has waned since then, owing to heavy investment in technological infrastructure elsewhere, it remains on top.
America’s global reputation for technological prowess draws talent from all over the world. In 2008, foreign nationals accounted for a majority of US Patent and Trademark Office filings. In 2011, US nationals were responsible for 48.4% of filings.
America’s higher-education system has given individuals the ability and drive to innovate. According to one well-known survey, the top 15 universities in engineering, technology, and computer sciences (measured by awards and research output) are in the US. In fact, America boasts 20 of the top 25 technical universities, 52 of the top 100, and 154 of the top 500 universities – almost as many as Japan, Germany, the United Kingdom, France, China, and India combined.
Moreover, the US accounts for 26% of college-educated adults worldwide – as many as China, India, and Russia combined. According to the Center for Measuring University Performance, more than 700 US universities conduct research.
Support for education and research extends beyond universities. The US accounts for nearly one-third of global R&D spending – 2.6 times China’s share – including 37% of global R&D spending in the energy sector, 49.7% in life sciences, 58% in information and communication technologies, and 27.5% in chemicals and materials. In 2012, spending in the US on aerospace and defense R&D was almost 3.5 times higher than in all other countries combined. While the US does not dominate every field, it remains the world’s principal source of technological innovation overall.
Given the opportunities that America’s embrace of innovation implies, more than two-thirds of the foreign science and engineering students who study in the US remain for at least ten years after graduation. And the US has not only translated education into innovation; it has converted innovation into economic growth.
The first step in that process is marketing, which maximizes the commercial viability of innovative technologies by stimulating desire for them. Marketing communicates value and appeal to potential buyers, while reducing barriers to sale.
US business schools – which emphasize marketing in their curricula – dominate international rankings. For example, they filled eight of the top ten positions in theFinancial Times' 2011 rankings. Long the world’s largest marketplace, the US boasts more retailers, advertising agencies, and promotional communications than any other country – evidence that its capacity to stimulate desire for innovation remains strong.
The second step of the process is financing – giving individuals the purchasing power to innovate, and to consume innovative technologies. This occurs largely through credit (purchasing power in exchange for the promise of repayment). Formerly limited to wealthy individuals and established firms, credit has become pervasive – especially in the US, where nearly all consumers have credit cards, venture capital funds vie to sponsor innovation, and robust securities markets allocate savings to new projects.
Given its well-developed financial system, which includes by far the largest number of commercial banks worldwide, America is well positioned to continue to provide the needed purchasing power to support innovation. For example, US-based private equity/venture-capital firms raised $548 billion for investment purposes in 2003-2008 (excluding government funds) – more than double the rest of the world’s combined total of $251 billion.
In addition, the value of stocks and bonds on US securities markets totaled $67 trillion at the end of 2010, compared to $63 trillion in Europe and only $16 trillion in China. Indeed, despite recent excesses, the US financial sector remains among the world’s most accessible sources of purchasing power for both innovative technological ventures and consumer purchases.
By far the world leader in higher education, research and development, marketing, and finance, America maintains a strong capacity to translate technological innovation into economic growth. In an uncertain economic environment, US policymakers must protect and build upon one of their country’s most valuable assets – and its institutional underpinnings.
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