What Do You Want For Christmas?

Just as a thought experiment, let's say that the election goes the way it should and the Democratic Party sweeps it in the landslide that really could be. So we, the non-insane portion of the electorate, have control over the federal government and hopefully made some progress unraveling teabag control over so many of the states. What do "we" do? And I guess it has to be stated as what is your wish list of progressive ideas? The number one challenge facing the United States is the Republican Party, for argument's sake let's assume that they have been rendered more or less harmless in the wake of a landslide election for the moment, what is number two? There is such a backlog of issues, such a huge pile of reforms necessary. What would you prioritize if you could have the ear of President Hillary Clinton and Speaker Nancy Pelosi and Leader Chuck Schumer? There is a good chance even with the professional liberal class of Democrats in charge, we progressives will get at least one thing from our list addressed. Last time it was health insurance reform, and judging on what Obamacare has actually done as opposed to what could have been it has made a real difference in the lives of many Americans for the good. This time around the issue that could make a real difference in the long run is the establishment of a financial transactions tax on stocks and bonds.

Of course, the sheer number and depth of problems facing this country and the world is breathtakingly immense. Why start there? My contention is that the force driving all the other problems is rooted in the fact that too few people have too much money and therefore power. Imposing what is in effect a sales tax on the things they buy will begin to drain the swamp of the speculative capital that has wrecked so much havoc on main street. Busting through the obstruction from the parasitic right and the resistance from Democrats who foolishly respect wall street as the paragon of professionalism will be difficult in the extreme, that's why it has to be the first thing done. Riding in a wave election and still beholden to the little people, I think there's a chance to ram it through. First, a tax on financial transactions could be very small, even 0.1%, just the establishment and legitimization of such a direct assault on entrenched privilege would be enough.

Income and wealth equality; a whole package of "social questions" that Thomas Frank, Robert Reich, Bernie Sanders, and so many others have articulated; is the cause of most problems and the impediment to addressing so many others. This country is so flooded with capital that the uber rich cannot find productive uses for it, or perhaps they don't want to. So they buy politicians, both personally while in office and guaranteeing future obedience through lobbyist jobs and other perks. This is just intolerable. The only way to start reducing the bribery, greed, and injustice at the top of our society is to drain that swamp of money that just corrupts people and distorts markets. That is why the financial elite have bought the important politicians in both parties and drive the price of entry into politics so high that only themselves or their servants can have a chance at power.

The primary effect of charging a sales tax on stock exchanges is to slow things down. That is how the original idea of James Tobin's tax was envisioned. He wanted the tax imposed on spot conversions of currency that would penalize speculation against currencies and stabilize economies, especially after computers skyrocketed the amount of speculation that occurs in those markets. That is a good idea too, as global capital now has the power to crush countries with attacks on their currencies. But just in terms of domestic financial markets a small transaction tax would slow down and stabilize markets too. Would the Dow Jones have lost so many points after the "leave" vote was tallied in the UK if people had to weigh paying an absolute tax for impulsive trades? It is likely enough investors would remember that the Brexit was actually non-binding, a momentary loss of reason by the mob that did not need to be repeated in the market.

The practical effect is all upside for the public interest. If trading is slowed down then mutual fund managers will have fewer opportunities to lard up pension funds with fees. Also, it will be more difficult for panics to set in if every investor has to weigh the tax they paid for a stock against the gains, they will on average wait a little longer. Plus, it will absolutely eat into the obscene compensation packages of managers and brokers. When a uniform cost like a tax is levied on all businesses of an industry, if there is any competition between firms they have to eat some portion of it or someone else will and steal all the business. There is a lot of competition between firms on wall street. And we won't even have to take seriously the moans and shrieks of outrage by the fat cats that a sales tax on stocks will sink grandma and grandpa, the usual line of propaganda whenever regulating wall street comes up, because average investors buy long. No, the tax will be borne most heavily by the big players that buy and sell all day, every day.

But the symbolic effect of taking on wall street by a Hillary Clinton administration, even in a way that will encourage stability in the market, will defuse so many of the detractors who say she is too cozy with the fat cats. It will be the first step in democracy finally reimposing regulation over an out of control and very dangerous sector of the economy that has so much power. It is really difficult to find actual dollar amounts for the trading on wall street, but it is likely in the trillions... per day. Therefore, even a 0.1% tax would raise significant revenue for a federal government always strapped for cash. That would amount to a billion dollars for each trillion bought, each day. A billion dollars not available for Goldman Sachs and the rest to lobby, bribe, and extort government. A billion dollars a day "redistributed" from the vultures and pirates who stole it. Maybe for once we could use it for something productive? Shoring up Social Security, Medicare, and Medicaid come to mind. Or, a real Public Option, infrastructure spending, buying back all of the toll roads and parking meters that have been privatized, even getting the cost of education down to what it was when our parents went to college or forgiving student loans. The possibilities are endless, the public needs are great, and once put in place the tax could be raised and lowered as one more fiscal tool to manage the economy.

Anyway, that's my Christmas wish. If you agree, share this post and let's make it happen.

Election 2016: Opening Thoughts

One objective that this blog has developed is to make readers more skeptical and less gullible to the many distractions, misinformation, and outright lies perpetrated by political operatives. Education should be a universal value after all, should it not? You would be surprised how many people are simply not interested in learning more, improving themselves, or challenging information if it agrees with what they already believe. Is this where the dividing line should be drawn in our politics? Between the people who want to know more and improve themselves, versus the people who are content in their limited knowledge and want to force everyone else to freeze intellectually. It is a tragedy that the information superhighway accommodates too easily both of these.

The irony is thick when you consider that the Internet is one of the greatest technological developments of human history and a significant percentage of Americans use it to wall themselves off from anything that would challenge their views. Don't do that. Your computer or smartphone can answer any question you can think of, and most likely direct you to more sources of information where you can figure out new questions to ask. Much of our collected knowledge and wisdom out there waiting to be tapped and harnessed to your command. Sometimes you have to step back from your day to day routine and really consider what a fascinating time it is to be alive. Be curious. Be adventurous. But also, be cautious; and skeptical.

We humans have amazing qualities. We can use tools and remember the past; we can communicate with each other and our offspring, each individual is connected to their neighbors and the future in this way. The internet and all of its myriad portals are new tools that empower us to communicate and remember. But it also amplifies other qualities, such as that of deception, manipulation, domination, intimidation, exclusion, and unthinking obedience that are less useful. 

For example, when the first human tried using a stick to poke holes in the ground and plant food, he (or she) could gather more sustenance than the others who simply gathered nature produce. That person was able to feed themselves better than the others and was consequently able to have more children and live longer. Those children did not have to then spend time figuring out how to use a stick and could instead figure out how to make a better tool. In turn, that knowledge would spread until it was an entire tribe settling down to practice agriculture and take further steps forward in improving their techniques until they produced a surplus of food. When there is a surplus of food, some people can be freed from farming to spend time, energy, thought, and resources on new ways to help the tribe. Once that happens there is a division of labor, society is no longer equal and governing structures arise to regulate the relations of power. This is where politics is born. 

There will always be people who want to keep going, inventing new things, telling new stories, teaching and learning new ways to benefit society. And there will always be others who say "that's far enough," for some people change is just too much to bear. There are many reasons to oppose change or stand in the way of progress, it does not mean the same thing to all people. For another, going back to the idea of "where you sit determines where you stand" from the first post in this series, the division of labor and surplus creates opportunities for privilege, and change often threatens the privileged members of society. Luckily for those elites, many common people fear change out of reflex because of advanced age or lack of sophistication, intellect, curiosity, or imagination. The elite often have little trouble convincing a plurality or even majority of society to keep things the same, or at least change things very slowly and as skewed toward elite interest as possible. In the past the elite often took the form of land-holding warriors or priests and as such their words carried weight with the peasants, who feared for their lives and/or souls. Today, the elite often have power in the form of wealth and control over jobs, development, investment, etc. And especially control over media to sway public opinion towards the interests of that privileged few.

Whenever there is political conflict, it often takes the form described in the previous paragraph. Reformers, also known as Liberals or Progressives, put forward a new idea or invention and the privileged elite minority who happen to like their position in society thank you very much, resist the change with support among the uncurious and fearful commoners. In the past you would often find the peasants supporting the king against some middle-class force trying to change society. Today, things are far more complicated. But the conservative fear of change persists even in the United States of 2016. Subsequent entries to this series will explore these divisions and conflicts in greater detail. For now, take a look at the next politically-themed meme or article that shows up in your news feed with these ideas in mind. And try not to lose composure over the latest attempt by the cynical to make you afraid, because they want you to be afraid but it is very often in your best interest to remain rational. Until next time, good luck and keep exploring!

Defining the Free Market: From Abstract to Concrete,but always a Fallacy

Somewhere along the line, “free market” graduated from the world of abstractions and became an actual thing.  By “thing” I mean an entity, something identifiably self-contained, an object in time-space.   In reality, “free market” is simply a name we gave to an economy characterized by a reliance on market forces to determine value. But for many people, “free market” is more than a label: it is something concrete—at least that is how they talk about it. 

When abstractions are spoken of as real things, we call it reification.  Reification is a semantic fallacy, but its use is sometimes necessary when one wants to communicate complex realities with considerably less words.  However, a semantic fallacy, if not challenged, can go on to support faulty conceptualizations of reality, especially once it seeps into discourse.  The special problem in this case is that the reification complements an ideology, one that rejects the natural and necessary role of the government in the maintenance of the economy.  If expressed as a thing, “free market” can be thought of as being interfered with or kept from its natural activities.  If expressed as an entity, it can be given agency, rationality, and rights.  We often talk about government intrusions in the personal lives of people.  For some, a worse offense is when the government intrudes in the free market. 

But this conveys a faulty conception of reality.  As Robert Reich states: “Government doesn't ‘intrude’ on the free market.  It defines and organizes (and often reorganizes) it.”  In reality, an economy is the product of an infrastructure of law that is created, maintained, and enforced by the government.   It is an extension of the state for the purpose of ordering the complex human interactions that occur with economic activity.  And with the constant growth and complexity of technology, which puts economic relations in flux and opens loop holes for economic actors to exploit, these interactions need to be monitored regularly and the laws adjusted accordingly.  The “free market” is not a thing with a right to existence and freedom from molestation; it is a name for something that does not exist without the state and whose quality is wholly dependent upon the laws that form it.

But we are led to believe that economic regulations are always wrong and lead to a loss of freedom.   This rigidity often pits real people against a reified free market.  How else do we understand how a person who lost their health care through no fault of their own, and who, as a result, has lost their life savings because of an accident, is freer than one who has been helped by an update of the legal infrastructure?  Or, that gross accumulations of wealth at the top demand less taxation for the wealthy and less regulation over the actions of corporations—even when there is no historical evidence that this works?  In both examples, it is the “free market” that has been protected, not people.  And in both cases, rights-bearing people are being sacrificed to an ideology and a faulty conception of reality.

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If one accepts the idea that it is mostly hard work and sacrifice that determines one’s income and success in present-day America, it is impossible to explain the growing concentrations of wealth at the top.  Clearly other factors are involved.  A more satisfying explanation appears with a proper conceptualization of the economy and its contingent relationship to the government.   The reality is that the rules are out of date, the rich have given themselves an unfair and immoral influence over how things work, and we have the mechanism and the legitimacy to fix it.  Framing things this way makes it easier to get beyond the rhetoric, the confusing accusations of socialism, communism, or fascism, and on to clearer solutions and discourse.  This can be fixed, but not by those who think the “free market” can fix itself.


For a deeper understanding of how and why we got into this mess, and what the government can and should do to fix it, I highly recommend the documentary film by Robert Reich, Inequality for All.  


APPENDIX

While the Founders are quite removed from our world, they did understand that wealth discrepancy does not sit well with democracy.  It is interesting to see what they had to say about this, and the solutions they might have entertained.  While this is certainly not exhaustive or definitive, it does seem to suggest that at least some of them did not think it was unconstitutional or destructive of liberty for the government to take some kind of action on the economy.  According to David Cay Johntson, drawing on recent scholarship from The Citizen's Share: Putting Ownership Back into Democracy by  Blasi, Kruse, and Freeman, 

The second president, John Adams, feared “monopolies of land” would destroy the nation and that a business aristocracy born of inequality would manipulate voters, creating “a system of subordination to all... The capricious will of one or a very few” dominating the rest. Unless constrained, Adams wrote, “the rich and the proud” would wield economic and political power that “will destroy all the equality and liberty, with the consent and acclamations of the people themselves."

James Madison, the Constitution's main author, described inequality as an evil, saying government should prevent “an immoderate, and especially unmerited, accumulation of riches.” He favored “the silent operation of laws which, without violating the rights of property, reduce extreme wealth towards a state of mediocrity, and raise extreme indigents towards a state of comfort."

Late in life, Adams, pessimistic about whether the republic would endure, wrote that the goal of the democratic government was not to help the wealthy and powerful but to achieve “the greatest happiness for the greatest number."

R. Miller

Piketty and the absurdity of limits

The other day, contributor to this page Kewaskumite and I were discussing Thomas Piketty's book Capital in the Twenty-First Century. He had already finished it while I am still in the process of reading it, so the discussion was a bit one sided. However, Piketty explains his purpose and states his prescription fairly early in the book so I was aware of where Mr. K was going with his thoughts. This is actually a lot harder than it sounds because Mr. K's mind works about one hundred times faster than mine. Piketty roots much of his analysis in history, so I have a little edge there, and states that much of the problem in economics today is the gross inequality of wealth and income. His prescription is a global progressive tax on wealth because the core of his argument is that even a minute discrepancy in the rate of return on capital over the overall growth rate of the economy brings an ever-increasing growth in inequality.

But what Mr. K wanted to talk about was the future, where some of these trends we see in the news are heading and what can be done about it. Like Piketty I will give away the conclusion up front. On economic terms at least, Mr. K and I are on the same side but he is a math teacher, not a gloomy historian therefore numbers are what he looks at while I look more at (especially the dark side of) human nature. Mr. K's contention is that inequality has gone about as far as it can go in this country, even with the amount of money being dumped into elections, there is just very little left for the plutocrats to take. Also, the plutocrats will be spending an inordinate amount of money hanging on to their ill-gotten gains through bribing politicians, spending on propaganda, and through physical and cyber security. I contend that we have barely scratched the surface of how far down we can go.

Colorado may have struck gold by legalizing marijuana, but nationally the prison-industrial complex is still steaming ahead a ever-increasing speed. Matt Taibbi may have gone around the far-left bend in claiming that the Obama administration is worse than dubya where white-collar crime prosecution, but it is hard to argue with his premises. Or that the rule of law is now a fiction, as he contends in The Divide: American Injustice in the Age of the Wealth Gap where laws and punishment apply good and hard to poor Americans, while the rich and corporations can pretty much get away with anything. Power is everything, money is numbers on a computer. We have reached a point where no level of depravity is out of bounds. The top story in my circles this week was corruption in the Supreme Court, five of the Justices threw shame and common decency to the wind and decided that a corporation can flaunt the law and scientific reality if it feels so inclined, opening up new vistas for abuse by the powerful.

How many commoners can the powerful throw in prison? Well, privatized prisons have every incentive to push for ever more punitive laws. As do prison guard unions. as do "law and order" politicians. Will we see debtor's prisons for the unfortunates who fall behind on their student loans? If the outpouring of vitriol against mortgage relief by proto-teabaggers after Obama's election detailed in Pity the Billionaire, a better question is how have we lasted this long without them? The private prison industry has adopted the business plan of arms makers by citing operations in rural congressional districts, bringing jobs and diluted popular representation with them. Like the 3/5s clause in the constitution that counted slaves for political representation in congress, prisoners housed in rural districts increase the political power of right-wingers there without any threat to unseat them. Lots of authoritarian states then increase the antidemocratic tide by never allowing felons to vote again.

With the full-court press against women, teachers, non-christians, and anything that even smacks of liberalism succeeding despite a Democratic administration, to say there is a limit to how much harm the children of darkness can do seems almost naïve. I mean there must be a limit somewhere to how much damage can be done, this is just one instance that makes "the land of the free" Newspeak of the vilest order, but I cannot find where those limits could be.