Profitable Aid

Oh dear, the U.S., among other rich nations, is under pressure to aid poor countries facing starvation and drought and flooding from the effects of the climate change induced by the rich nations’ profligate use of fossil fuels.  The latest UN report in late March had the World Bank report of the need for $100 billion annual aid to ameliorate climate change effects in poor countries removed from its executive summary, though still contained in its body, because of fears from rich countries that such language would force a doubling of their foreign aid during a time of depression.  Let’s see, that would mean for the U.S. an increase in foreign aid from .19 percent of GDP to .38 percent of GDP. What excessive generosity!  Why that’s the current percentage level of foreign aid giving of France or Germany, though it would be somewhat made up for by the fact that much of foreign aid will really be spent in the U.S. itself..  And it’s almost one-fifth of the annual growth in global soft drink consumption, which, by the way, also contributes to starvation by raising the global price of corn.  How dare anyone suggest such an idea!  The prognosticators are not giving increased aid by the U.S. much chance for success.

Sorry for the sarcasm. But it’s hard to avoid when such attitudes prevail in the face of a common crisis.  And that’s what the latest UN report highlights, that climate change is rapidly involving all nations, from Mediterranean droughts to melting Himalayan glaciers to sinking Polynesian islands.  There’s increasing likelihood of food shortages, which means the poor will, as usual, suffer most from the rising costs.  It is also increasingly likely that temperatures will soar above prior determined dangerous limits.  That’s why the focus of the report is on the need for immediate action.  Meanwhile, the “not my SUV crowd” is making it an article of faith that such warnings should be ignored, because they are bad for business.  According to them, the thousands of scientists who compiled the report can indeed be wrong, and are probably secret conspirators anyway.  Has anyone attended a scientific conference lately?

As for the unpleasantness of foreign aid, longer memories than most rampant libertarians seem to possess would recall that 90 percent of the original Marshall Plan aid money was actually spent on things built in the U.S., and helped boost the U.S. economic recovery from WW II as much as Europe’s.  The roaring times of the late 40s and early 50s were in part due to that.  Other contributors to a booming economy, by the way, were that big-government infrastructure boondoggle the interstate highway system and big government at its worst, the G.I. Bill.  Even libertarians don’t even have to feel generous to appreciate that.

Tuesday, Justin Lin, the Chief Economist for the World Bank, warned of the danger of the whole world falling into economic stagnation and depression because of faltering global demand.  He called for a world-wide Marshall Plan for $2 trillion from rich nations to be spent over five years to prevent that, noting that stimulus of poor countries will produce faster, stronger results than stimulus in less consumption-intensive rich countries.  Poor economies don’t just stash away cash in Swiss bank accounts; they go out and spend, creating multiplier effects. Lin suggests things like building new roads, bridges and ports to facilitate trade,  But what better things to spend stimulus money on than ways to handle climate change?  Numerous businesses around the world are already discovering that battling or adapting to climate change can actually be profitable.  It is in fact good for business.  The twin focuses of the new plan could be both trade and climate change.

I've mentioned before that the better way to deal with all the conflicts around the world (including the rich vs. poor nation type) is to treat them not as zero-sum games where one side must lose for the other to win.  Instead, the real winning approach to a better world is to treat the process like a jigsaw puzzle, where differing pieces are gradually put together to create a winning big picture for all.  Sometimes, looked at that way, putting together two problems creates a solution. This rich versus poor controversy could be a classic example.  Instead of fighting each other over a dwindling pot, we need to find ways to help each other and benefit at the same time. The new Marshall Plan proposed by Lin with an additional focus on climate issues is just the sort of project that could benefit all. 

The Future of Plutocracy

What strange bedfellows History makes.  It turns out that Joe Stiglitz, Aristotle and, eventually, Sir Isaac Newton are congenial companions after all.  A new study by a Paris-based economist Thomas Piketty and Emmanuel Saez, an economist at Berkeley, examines the growth of capital through history in various countries and concludes that it leads inevitably to excess concentration of wealth - plutocracy - correctable only by political means.  Piketty essentially argues that at certain levels of accumulation, capital growth detaches itself from the GDP growth of the surrounding economy.   Wealth grows as a function of inheritance or financial instruments rather than through production of goods and services. The concentration of capital away from production causes stagnation of the middle class, whose income is based on production, and the GDP growth of a national economy lags more and more below growth of the capital assets of the wealthy . Historically, this wealth accumulation outpaces growth in production until major technology change, crises or political means correct the imbalance.  In Europe, historical growth of invested wealth has been about 3 to 4 percent annually while growth in national GDPs has averaged 1 percent.

Capitalism per se lacks an internal mechanism to correct its own problem, and must always be corrected from “outside the system.”  Moral restraint by capitalists just doesn't seem to do the job.  Piketty and Saez argue for example that the vigorous growth of the American middle class in the 1950s was stimulated by the negative impact of World War II on the concentration of wealth and its positive impact on production of goods.  So also was the “Downton Abby” lifestyle described by Jane Austin curtailed by the Industrial Revolution and the Ancient Regime of France destroyed by the French Revolution.

Nobel Laureate Joe Stiglitz’s prior analysis of the modern American economy had already led him to that conclusion.  Stiglitz’s conclusions are based on the gradual accretion of small non-competitive advantages, “rents” in the language of economists, acquired through manipulation of, among other things, the political process to provide things like favorable legislation or regulation. The heaping up of small advantages eventually produces enormous imbalances that destroy the market. That is, wealth is accumulated not through superior production but through manipulation of non-market advantages.  Stiglitz, like Piketty, sees the result as eventual decay and decline of the economy, starting with decline of the middle class. History shows that the plutocracy that emerges is always corrected eventually by social revolution or societal transformation.  

Interestingly, Aristotle saw the same kinds of processes, though couched in considerably different terms, about 2500 years ago.  First, he saw the middle class as the key to the health of the nation; in fact, he invented the term ”middle class.”  He essentially saw the middle class as enabling political stability along with its economic role. Second, he warned against wealth not tied to the production of goods.  In his language, money was naturally barren, and the increase of it not tied to the fair value of the production of goods and services was an unnatural evil.  He seems more right all the time, though he lacked the tools of modern political economics to put his ideas into a comprehensive framework.

And Isaac Newton continues to remind us that “for every action there is an equal and opposite reaction.”  One can extend that to political economics as well as physics.  The continuing efforts of plutocrats to create economic “rents”, uncontainable within an already broken market system, inevitably produce backlash through the political system.  The stamp act, navigation acts and tea tax, “rents” for the British plutocracy, which set off the American Revolution are just one example.

I realize it’s ridiculous in a modern scientific sense to apply physics and classical philosophy to political economics, and I have made angry companions in arms of both physicists and economists (philosophers are a calmer breed.)  That’s partly what creates the problem.  We sit in our modern intellectual cubbyholes optimizing ROI without thinking about how the world really fits together and what our actions are doing to it.  Eventually the weight of our accumulated wealth collapses the floor (or climate, or middle class) beneath us, and there are no carpenters left to fix it.  There’s a sizable group of plutocrats these days who need to take a harder look at the future they are creating.

Five Old Men

Traditionally, American political parties have had a congressional wing and a political wing, often at odds with each other over priorities.  Now it appears the Republican Party has added a judicial wing, with only 5 members in it, but totally in harmony with the rest of the party.  Unfortunately, that constitutes a majority of the court, a legacy of the Gore/Bush decision.  And that could be the ruination of the rest of the country, for the “five old men” of this Supreme Court, like the “nine old men” of the 1930s Court, seem intent on wrecking any attempts at controlling the excesses of the radical conservatives.  Their decision today to give big money unlimited sway over elections is itself another nail in the coffin of the individual liberty they purport to defend.  Their solution to all the issues of our 21^st century world is to close their eyes and wish they were back in 1910 Kansas where all decisions were in the hands of wise old bankers and Rotarians.  And like their 1930s counterparts, the “five old men” seem divorced from understanding the actual lives of real people.  I’ve previously characterized that problem, in my post on Ernie’s Mannequin, as carrying around two centuries of archaic decisions like a dummy, believing the dummy is alive.

Franklin Roosevelt dealt with that problem in the 1930s by threatening to raise the membership of the Court until it was ”packed” with sufficient justices still in contact with reality to accept progress.  It was amazing how quickly some of the justices thought better of their prior positions.  That’s how the Social Security Act got accepted as constitutional.  Packing the Court is unrealistic today without prior Congressional reforms, but it surely is tempting.

It’s interesting that the “five old men” are, in fact, all men, while three of the four progressives on the Court are women.  The inclusion of women into positions of power has been a hallmark of progress throughout society in the last 50 years.  And the age of the justices means they lived much of their formative years in the era before that became a significant part of our lives.  Perhaps the “five old men” are a better portrayal of the world of “Madmen” than what’s on TV.

However the situation came to be as it is, it’s time for a change.  A court mired in the past, and fiercely defensive of it, cannot deal with the issues of the 21^st century.  Five old men cannot continue to deny progress to an increasingly restless and diverse citizenry without disaster.    The elections this autumn could be a major pivot point, forward or back.  This version of “Madmen” should get no reruns.

Confronting Barbarians

Vladimir Putin is in danger of becoming nekulturny. It’s the Russian word which is translated as “uncultured”, but which is a far worse insult in Russian than it sounds to an American ear.  You might get a bit closer by translating it as “barbarian.”  That’s what George Will correctly (surprise!) calls Putin for telling the Russian parliament that Crimea is all Russia “needs.”  Will points out that when something is what you need or desire, thinking that creates an unfettered right to it constitutes the mark of a barbarian.  That understanding actually goes back to Freud, who in Civilization and Its Discontents defined deferred gratification as the enabler of civilization itself.  To that list we have since added taming the horse, brewing beer, roast beef, Dionysian revels (substitute Mardi Gras or October Fest) and a variety of other things, but recognizing that just feeling you need something does not entitle you to grab it out of someone else’s hands is in fact what separates us from barbarians and toddlers.

Any parent has probably at some point had an instant urge to smack their toddler for that grabbing, but instantly knows better than to do so.  It’s a learning process for both toddler and parent.  The problem gets harder when you’re dealing with a barbarian holding a spear.  You may have multiple bigger spears and feel perfectly justified in using them.  But is there a better way?  Being civilized imposes a need for deferring gratification on you even if the barbarian does not share that need.  You probably impose some intermediate response like making the size of your spears really clear while trying to slightly improve the barbarian’s understanding of what being civilized really means – you know, it’s like dealing with a teenager.  That’s graduated response and essentially what foreign policy in these situations is all about.

The problem is that part of you feels ashamed from backing away from a fight in a good cause you know you could win.  That’s the situation Robert Kagan describes this morning in the Washington Post.  Polls show that Americans clearly prefer a foreign policy embodying a graduated response to Putin with a minimum of spear shaking and a maximum of non-violent alternatives like economic sanctions.  The polls also show a dip in Obama’s popularity for following that approach.  On a broader horizon, Americans clearly elected Obama to get us out of Iraq and Afghanistan, reduce our military commitments and pursue a more nuanced foreign policy, and they now show disapproval for his doing just that.  Kagan ascribes these paradoxes to that sense of shame for having done something sensible rather than something more gallant.

That’s of course the feeling any parent of a teenager knows – it accompanies “staying cool and conserving your ammunition.”  It’s also one of the discontents of being civilized.  It has its limits of course.  Exceeding those limits was what got Europe into trouble with Hitler at Munich.  Failing to preserve limits leads to disaster.  You’ve got to know when and how to say “That’s it!”  But mainly you need to know how what you do sends the proper message.  It’s best when that message is, “Welcome to civilization; you can put away that spear now. And no, you can’t have what you just grabbed.  That’s not the way we do it here.”

Translating that message into foreign policy moves can be very messy.  It’s hardest when hotheads maintain positions carved in stone.  The lesson for grabbing should hurt but not hurt to the fighting mad” point, and when people are already fighting mad, that gets very delicate.  The Obama Administration seems on the right course for now.  It’s not getting much credit for that now, but credit in complex situations generally comes as hindsight. 

The results will be measured by outcomes, and that’s what remains, perhaps deliberately, fuzzy.  Is the takeover of Crimea to be considered a fait accompli? If so, what happens with the Tatars?  The wrong answer to that question could lead to protracted bloodshed.  What about Russia’s possible future “need” for a guaranteed land path to their naval base at Sevastopol?  Or their opposition to being surrounded by states like Poland with ties to the EU and NATO?  We want neither surrender to barbarians or a return to Cold War days. This is a time when our foreign policy people need support, not disparagement.

Fondness for Battle

Standing on the bluffs above Fredericksburg, watching futile Union charges uphill into his thundering cannons, Robert E. Lee observed, “It is well that war is so terrible; else we should grow too fond of it.”  I’m afraid we have, nowadays in the pitched battles waged daily between our political parties.  Neither blood nor ink is spilled any longer in these unceasing wars – it’s so much easier to pour out the mutual hatreds and slanders via the internet – but the consequences remain terrible.  Families go without food stamps they need for feeding their children, drinking water is polluted, health care is lacking, diseased poultry is uninspected, businesses are bankrupted, future disasters are precipitated by current inactions.  The parties each charge the other with actions designed not for the benefit of the country but to promote the party’s own fortunes.  And both parties are right about that.

The problem is that large amounts of money must be raised in our current campaigning by advertising mode of electioneering.  The days are long gone when campaigning was done by shaking hands and kissing babies and issuing occasional quotes.  Now, due to the length of the election cycle, the numbers of people to be reached, and the Citizens United decision, endless cash is required, and it is easier to raise money by instilling hatred of an enemy than by seeking a common goal with those who differ.  Party professionals know that, and hatred is their daily product.  I get at least half a dozen political fundraising emails every day, and none of them is even close to the “love your enemy” message I get in church on Sunday – even when the political email arrives on Sunday morning.  They have grown too fond of their warfare.

George Washington’s farewell address included his famous warning against letting the strife of “party factions” undermine the Republic that he and the other Founding Fathers had devoted themselves to building.  Washington went on to say “The common and continual mischiefs of the spirit of party are sufficient to make it the interest and duty of a wise people to discourage and restrain it. It serves always to distract the public councils and enfeeble the public administration.”  More recently, John Dingell, announcing his retirement from Congress after 58 years, proved Washington right by saying he did so because Congress had become “obnoxious” in its partisanship.  Dingell pointed out that the current Congress had set a record by passing only 57 pieces of legislation and blamed a common “disregard of our country, our Congress, and our governmental system.”   That 57 pieces of legislation going to the White House was less than the number of times the House passed a repeal of the Affordable Care Act knowing in advance it would go nowhere in the Senate.

G.B, Shaw wittily observed that a nation is created by people divided by a common language and united by a common enemy, but when the common language is mutual hatred, the nation can also be destroyed.  We live in dangerous days.  Everything from class warfare to climate change to global terrorism to unending economic stagnation threatens us.  In some possible outcomes, our survival as a democracy is indeed threatened.  Those dangers can be both a threat and an opportunity to us.  One more quote – Aristotle was the first to get into the act of combining “common” and “enemy” into one sentence by writing “Even the bitterest of enemies can be united by a common danger.”  Our fondness for battle has got us into the wrong wars against ourselves.  We need to raise our sights to see the dangers we share and to relearn how to work together on them.  Politicians need to remember, like Dingell, why they set out into politics in the first place.  If it was purely from hate, they are in the wrong business.

By itself, of course, just hating each other less is not enough.  We need to try out things that have worked elsewhere, like the British practice of severely limiting the election cycle, or requiring media to provide free or low cost political ads as a requirement for licensing.  And Citizens United, and the underlying definition of corporations as political people, needs serious rethought. When you need lots of money to campaign, the temptations of lobbyists and PACs are too great.  And “here there be tygers.”  The need for money to get elected has itself become one of our greatest dangers.  Defeating it should unite us.

The Voices of America

One of the interesting aspects of the current wide-ranging discussions about Ukraine is that there seems an American consensus about the topic and a shouting match in the discussion of it.  The consensus is that Putin has gravely violated the sovereignty of Ukraine, that he must suffer serious consequences for doing so, and that while military confrontation must be avoided, economic and political sanctions of all kinds are appropriate.  But you couldn't tell that from the shouting.  President Obama is talking about the costs Putin must bear, while apoplectic senators like McCain are screaming from the podium and senior statesmen like Kissinger and Albright are urging calm. Talk show hosts are, as usual, frothing.

Years ago I sang in an excellent A Capella chorus whose director kept impressing on us that one of the most difficult things in choral music is to sing in unison, “with one voice.”  We were very good at that, but it took hours of practice.  In American politics it’s much harder and may never be achieved.  It’s part of the American culture.  The first CEO of General Motors was known to break up a meeting in frustration because everyone agreed on an important topic.  He treated consensus as a sign that not enough thought had been given to the subject.  It’s part of our history: Massachusetts even threatened to secede over the War of 1812.

What makes it unduly hard these days is the perceived need of politicians of both parties for consistent disagreement with others. It reminds me of the teenager stage when constant disagreement with parents is an imperative.  But they grow out of that.  Emerson noted that ”a foolish consistency is the hobgoblin of little minds”, and I suppose the minds of some politicians are as little as any.  Politicians in our history had no such need.  Henry Clay was a notable hawk during the 1812 War but strongly opposed the Mexican War, as did Abraham Lincoln, who later led us into the Civil War.  And their eloquence did not require shouting.

This of course is just wishing on my part.  As noted, cacophony is part of the American makeup.  Speaking nonsense is one way we exercise our freedom of speech, and we could not endure it if it were gone.  But sometimes it is important that others not part of our culture understand what we are saying, and that is a responsibility that should be understood and accepted by all public voices.  What turned the opposing voices of our past into an American harmony was realistic principle which agreed or disagreed as necessary, without regard to positions taken by the other political party.  It’s been said that part of the current crisis is that Putin does not really understand America, and our political voices are not helping.

It used to be that in an international crisis, domestic political voices quieted down and left the talking to the President.  Talking stopped at the shore line.  It’s not that way anymore, but I can wish that some of our political voices old enough to remember that era would think to bring it back.

Irrational Knowledge

Little side moments in life sometimes tell you more about yourself than a deep analysis.  I remember practicing just from curiosity with pastels, when suddenly the total mess of colors on the page came together to somewhat resemble the picture I’d set out to draw.  Wow!  Or that time I got to emote in the class play. Or that time I really had fun, broken glasses and all, in a college game of hand ball.  Political speech writer and columnist Michael Gerson, writing in the Washington Post the other day, told about the moments he enjoys reading about cosmology even without a clue about what the equations are saying.  That’s all useless knowledge, the kind you can’t earn a dime from and that economists contrast with rational ignorance.  But it surely is fun, and a vital part of what makes us human.

Actually, it turns out that it can be quite useful, only in ways you’d never expect.  Argentina has discovered that making music a required course in school has resulted in significant reductions in juvenile trouble-making, and has improved the general education skills of their children.  A nephew of mine turned a youthful interest in art into a career in helping troubled youth via art therapy.  The son of friends of ours took occasional breaks from his work as an electrical engineer to enjoy theater, until he discovered that his real love was backstage engineering work in theaters, and made a career of it.

That’s why it troubles me that so many public school systems are managing penny-pinching budgets and the costs of increased security by eliminating courses like art, music and theater.  Instead of using art and music to soothe the savage breasts of teenagers, they are hiring more guards.  That they are also limiting the life chances and pleasures of living for their future adults is of no account.  How many future architects and artists and singers are being lost?  Who knows?  But from a utilitarian viewpoint, those are jobs, too.

The problem mostly doesn’t exist in private schools.  They know the value of those “soft” courses, and make them an integral part of their education.  I’m grateful that the private school where my grandsons attend makes music a standard requirement, right along with the fine math, science, history and literature courses they provide.  They know the value of such courses and are willing to pay for them.

The problem is that necessary penny pinching  of public schools.  School boards and county commissions are often stocked with hard-nosed business men who never had a music class and see no need for others to have one either – not at the taxpayers’ expense.  And career educators, who should know better, try to please their bosses.  That was the message of that really good movie, Mr. Holland’s Opus.  That a shy teenage girl had been turned into a future state governor by the experience of studying music was meaningless; Mr. Holland’s job as music teacher was still eliminated.

Yes, better readin’, writin’ and ‘rithmatic need desperately to be taught and cost money to do so.  But so do music and drama and art.  And they too must be paid for.  And as is obvious from the private – public school contrast, it’s the poorer kids who suffer when they’re not.  The well known reason is that the costs of public education are funded by the property tax.  Poor neighborhoods lack the high property values that enable good education.

There’s a lot of talk these days about education reform, from charter and magnet schools to core standards.  There’s value in all those things.  But no real reform is going to occur until public schools are better funded, and that requires reforming the property tax system.  Economists and other pennypinchers go on about the rationality of ignorance, but that doesn't work anymore in our 21^st century world.  It’s time we started celebrating the irrational human beauty of knowledge for knowledge’s sake, and started digging into our pockets to provide it.  Our children, and our futures, deserve it.

The Theology of Climate Change Denial

When Galileo obtained one of the first telescopes from its Dutch inventor, he set busily at work examining things like the surface of the moon and discovering the moons of Jupiter.  The response from the Inquisition was fascinating.  The telescope, they declared, was a creation of the Devil designed to lure faithless souls to damnation by presenting them with false images of worlds not in accord with scripture.  If science contradicts belief then science, not belief, must be in error.  That of course is the mark of the “close your eyes and believe harder” branch of theology that we thought abandoned soon thereafter.  Not so.  Only one hundred years after the Scopes trial, the hard facts of science are once again being challenged, this time by the theologians of the “Don’t blame my SUV” community.

Twice this week, I have been astounded by the theological bent that climate change denial has taken.  By the way, personal note, I am a person both of faith and of science; I find no conflict between them.  The first experience this week was after I gave a short lead-in about the recent IPCC report before a group discussion on the impact of climate change on world food supplies.  A participant announced firmly that he could not accept climate change because 1) a friend back in 1980 had predicted a six inch rise in sea level by 2000 and been wrong, and 2) Eisenhower had warned against grant-seeking scientists at the same time he warned against the military-industrial complex.  I tried to encourage the “regret-free” approach recommended by the IPCC, and hope I at least left him thinking, but I’m doubtful.  Theology is a hard mistress.

The second experience this week was reading the column by Charles Krauthammer in the Washington Post in which he chastised climate change action advocates on the basis of the inherent uncertainty of science.  This is of course much like the Inquisition’s position in 21^st century language.  The science behind climate change has to be a fantasy created by the Devil.  Krauthammer, for example, accused advocates of attributing climate change as the cause of every extreme weather event.  In fact, climatologists and other knowledgeable advocates have been very careful to state that no one event can be attributed to climate change with any certainty.  Instead, they look to the frequency of extreme events as one of many measures of change.  He also criticized over-reliance on computer models, when in fact many of the findings are things like long term (thirty years or more) temperature changes, changes in ranges of species and glacial melting, all observable fact.  And all the findings in the IPCC report are very carefully annotated with degrees of certainty, many of them over 95 percent.  Aside from that, has Charles stepped outside lately?  My brothers on the gulf coast have warned me not to go there between the end of April and the end of September because of the increased heat.  Those moons of Jupiter are really there, Charles.

Theology is a language for talking about sacred things.  When one encounters it, a natural question is, what is the sacred thing?  A charitable explanation is that it is the classical conservative position that the present should not be sacrificed for an uncertain future.  All well and good.  But advocates these days, perhaps too conservatively, are not arguing unreasonable sacrifice; they argue for “no regrets” actions proportional to observed change which will result in good outcomes whatever eventually transpires.  Unfortunately the sacred word that pops to mind in many cases is “Mammon.”  The actions which in many cases are required to ameliorate or adapt to climate change are often community wide, not for the direct personal benefit of any one individual. Personal treasure is threatened, and that is intolerable.

The IPCC report notes that climate change will require cultural and social adaptations as much as it does technical ones.  Perhaps the greatest of those is that we are really going to have to learn how to work together, often altruistically often for the benefit of unborn grandchildren.  In our modern, “follow your own bliss” American culture, that will be very hard for many.  We need to work on this.

The Chains of Consequences

Corporations have come a long ways from the days when companies such as the British East India Company were creatures of the sovereign, with the mission of spreading empire to faraway places.  Monarchs gave corporations their marching orders, and knew they would be followed.  The East India Company had its own army to speed it along, and succeeded in adding Empress of India to Victoria’s long list of titles.  She had wanted that desperately because her cousin was already an emperor and got to march in first on state occasions.  Actual profits going to anyone were only a secondary concern.

Corporations had started off the same way elsewhere, as arms, sometimes militant, of the nation.  But along the way corporations had begun to be licensed by the monarch indefinitely, with no requirement for renewal. They were immortals!  They soon made their own declarations of independence and dedicated themselves to the pursuit of profits as happiness.  That independence required the evolution of a different kind of social contract; corporations, no longer creatures of the sovereign but not themselves sovereign, still needed the consent of society to function, and that was provided through regulation.  Our policy model for that regulation assumed the mutual interest of the corporation and American society in profit making. Hence the famous declaration that was taken to mean, “What’s good for General Motors is good for America.”  (That’s not what was actually said, but what society in general read into it.)  Howard Meyerson, in the Washington Post this past week, pointed out that the classic American corporate model established was in fact the stakeholder version of capitalism.  In it, profitable business includes value to the shareholders, the employees and to the public.  Companies such as Ford Motor Company are shining   examples of that model.  That model still works in other countries.  A battle royal is currently raging in Tennessee, where Volkswagen seeks to apply it to its new operations there by being friendly to unions in the German style that has made them leaders in adapting to a 21st century high-tech world.  They face stiff opposition in Tennessee, where the Senate president declares such friendliness to be "Un-American." But our social contract with corporations is based on that model, and it is the premise of our corporate regulation policy.  But it was a different kind of profits than we see today.    We have gone astray.

Beginning in the 1970s, an altered ideological stance emerged for corporations.  Libertarian ideologues headed by Milt Friedman argued that the focus of profit making was on shareholder profit as the measure of all things, and that the corporation had no obligation other than to shareholders.  The idea was happily accepted by corporations; it gave them freedom for the kind of global maneuvering we see today.  Now, not only the concerns of the sovereign could be ignored, but the concerns of the people as well.  But acceptance of shareholder capitalism was a major, unrecognized alteration of the social contract.  Corporations no longer needed to include employees in profits, or to spread the benefits of their profits to the communities around them.  Even price gouging and tax evasion become acceptable corporate goals under such ideology.  But the social assumptions underlying corporate regulation had not correspondingly changed.

The consequences have been devastating.  That change in corporate ideology coincides, as Robert Reich has pointed out with the flattening of the wage curve which has resulted in worker earnings remaining flat for the past 35 years while all productivity gains accrued to the top twenty percent, aka the shareholders.  And a consequence of that has been the economic stagnation resulting, again as Reich has pointed out, from lower demand as the public becomes less and less able to afford corporate products.  Regulatory policy that assumes the friendliness, loyalty and community spirit of corporations that have no intent of behaving that way has no chance of success.  We have placed ourselves in economic chains and leg-irons through our own efforts.

We need fundamental restructuring of our corporate regulation policy.   We can no longer assume the corporation as a friendly giant out to help us and our communities along with helping themselves.  No tax breaks should be provided without “poison pills” of very large payments to assure the corporation adheres to its promises and stays around to do so.  Breaks should be provided only with commitments to pay fair wages and benefit the community.  Corporate raids on natural resources like water supplies through things like fracking should be assumed contrary to the public interest unless strongly proved otherwise.  And the burden of proof should be entirely on the corporation.  Corporations have lost the right to public trust, with its consequences for tax breaks and easy regulation. They must work to regain it.

The Good, The Bad and The Ugly

After three years of negotiations, an agricultural reform bill has finally passed in Congress, and presumably will soon become law.  Some of it involved eliminating outrageous subsidies that go mainly to big corporations.  That’s good.  Stiffer environmental regulations on farms that the bill includes are good, too.  It requires a label showing country of origin on meat.  That’s a good idea in itself, though critics complain it will add costs to the consumer for the sorting of animals at stock yards and may set off trade wars with other countries.  That’s bad.  But the ugly part of the bill is that of the $16 billion in projected savings, over half, $8.6 billion comes from cuts in the food stamp program.  But that was done to avoid a House conservative alternative proposal to cut 5 times as much from the proposal.  The bill is classic compromise legislation, and good, bad or ugly, it’s the face of democracy.

One question that arises is whether in this complicated 21^st century, we can any longer afford such compromise.   Fifty years ago in political science, it was popular to talk about “iron triangles.”  The concept was that isolated special interest areas like agriculture are composed of a triangle of interests consisting of a congressional committee (the Agriculture Committees in the House and Senate, a lobbying group (farmers and ranchers) and a bureaucracy (the Agriculture Department).  All decisions are worked out by members of the triangle, and other areas did not intrude.  That’s how subsidies arise and continue like the annual payment to home owners whose house sits on land formerly part of a rice field which encountered hurricane damage.  That was indeed how it worked back then.  But the plight of those in poverty in the cities, environmental issues, international trade agreements, an internet-based world in which everyone knows and is concerned with the business of other, and dozens of other things have turned the triangles into unrecognizable multi-faceted configurations.  Previously, relatively small groups of Congressional leaders cut deals to get things done quickly. Sometimes the results, like the subsidies, were self-interested and against the public interest, but often great things were done.  The Civil Rights Act was passed with the efforts of a relatively small group of Congressional leaders pushed hard by Lyndon Johnson.  Even Johnson couldn’t get it done today.  The face of democracy begins to resemble something done by Picasso, and it’s getting uglier by the year..

Now, the consequences of decisions have widespread impacts no longer ignorable by others.  The particular form food stamp cuts took affects well over a million people in 850,000 households in about a third of the states.  Taking over half the savings out of the incomes of the poor may work as a political compromise, but it ravages the lives of people.  International treaties currently being negotiated will be affected.  Pollution levels are tied in.   Good enough in compromised legislation may no longer be good enough.

Beyond that, many of our problems arise quickly and must be solved quickly.  The long-term unemployment issue is a case in point.  Climate change legislation is another.  Three years topass an inadequate solution no longer suffices.  And beyond that, the results of time-consuming legislation get locked in.  Thirty years ago, Congress in the early days of the Reagan era hastily passed an elimination of the Social Security minimum benefit.  The public outcry caused them just as hastily to repeal what they had done.  When agricultural legislation takes three years to negotiate all the angles, the prospect of changing it is slim.

Congress’s latest success shows just how much Congress is broken.  Some of the causes are obvious.  It’s far too large these days.  435 members in the House generally cannot even agree on an agenda, much less significant legislation.  Its internal procedures are antiquated.  Procedures that made sense in 1814 no longer do.  It’s composed of far too many gerrymandered extremists, etc., etc.  Such a Congress can no longer adequately manage the complexities of today’s society.  None of these problems are at the Constitutional level.  The Constitution does not specify 435 members in the House or 60 votes to invoke cloture in the Senate.  But reform requires willingness of the Congress to address its own structural problems and of states to reduce gerrymandering and it can’t be done entirely from within Congress.  That’s as hard as changing the Constitution.

Congress’s fundamental problem is that it is the victim of culture lag, and that lag includes unwillingness to recognize the problem.  We are relying on a horse-and-buggy congress in a supersonic age, and our Congressional representatives in general don’t even see the problem.  It’s the kind of problem that can only be corrected at the ballot box.  It will require a long, hard push.  It’s time we began.