Framing the Market

May 21, 2012 — Poor Richard
Market failure diagram showing deadweight loss

Market failure diagram showing deadweight loss (Photo credit: Wikipedia)

I’m tired of  the market hype from the right and the left. The 1% relentlessly pushes a free market (invisible hand) mythology without defining what they mean by it, all the while lobying for regulations that favor their own interests. And the Left has begun pushing a post-market (new-age invisible hand) mythology. Each form of market/anti-market fundamentalism will fail for the same reason: denial and wishful thinking (two sides of the same coin).

Is the market guilty as charged, or has it been falsely framed by both sides?

MYTH: The Free market.

FACT: There is no such thing as a free lunch or a free market. Every market is manipulated by the strongest players. The private sector cheats, steals, lies, and bullies. The state regulates according to a mixed set of public and private interests. If those interests get out of balance, either the public or private sector (or both) will suffer.

“Markets are not provided by nature. They are constructed — by laws, rules, and institutions. All of these have moral bases of one sort or another. Hence, all markets are moral, according to someone’s sense of morality. The only question is, Whose morality? In contemporary America, it is conservative versus progressive morality that governs forms of economic policy. The systems of morality behind economic policies need to be discussed.”    AlterNet / By George Lakoff and Elisabeth Wehling

MYTH: The Invisible Hand.

FACT: There is no such thing. There are only real, material “hands” that we either cannot or will not look at.

MYTH: Government is the problem, not the solution.

FACT: The solution is maximizing utility through appropriate checks and balances. Government has a role in 1) providing regulatory counter-balance to private concentrations of power which amplify the cheating, stealing, lying, and bullying; and 2) socializing some of the costs of education, R&D, infrastructure, public safety, national defense, etc.

MYTH: Markets are the problem, not the solution.

FACT: Ecosystems behave like economies with markets. Natural markets tolerate large amounts of power asymmetry (aggression) and information asymmetry (deception). What is not found in a natural ecosystem is an externality. They do not exist there. Externality in human economics is an entirely abstract fiction. An externality is where someone gets something for nothing and gets away with it indefinitely. That doesn’t happen in an ecological economy. If it did, all life would probably be extinct.  Instead, nature is stubbornly resisting and postponing its extermination at our hands. It actually doesn’t happen in the real human economy, either. It only happens in human economics, which is riddled with a variety of naive or intentional accounting errors which are generally explained by economists as externalities or market failures. Naturally, externalities and other accounting errors inevitably produce market failures.

Post-market theology

I won’t dwell on the myths of “economics as if only the 1%  mattered,” because they are now fairly well understood by many. We have given the invisible hand a very long trial. It’s had some episodic success but it is now failing badly. But there is lately a “new age” invisible hand that some are appealing to as an alternative.

I recently published a piece with the alternate title of  “Escape from the Planet of the Economists.” In that piece I made a case for “economics as if people mattered” and “economics as if the biosphere mattered.” I drew from writers like E. F. Schumacher who argue that the human economy is part of the ecosystem, not vice versa. This is currently being called sustainable or ecological economics. I completely agree with the particular arguments of the particular authors I cited. But some economic pundits are embracing this general framework without adequate understanding of what the ecosystem is or how it works, and without adequate understanding of what markets are or how they work. They seem fairly sure that you can’t shoehorn nature into a marketplace, and fairly sure that that one idea explains everything.

The premise seems to be that since the market has not historically conserved and enhanced the biosphere, the biosphere must work on non-market principles. The problem is that the second conclusion doesn’t necessarily follow from the first. It is a non sequitur. First, the nebulous thing we often call “THE market” doesn’t exist. Instead, the economy is an aggregate of many markets. Because many (or nearly all) of these markets are distorted or flat-out broken, it appears that markets per se are unworkable. Its as if someone in the middle of a vast junkyard of broken cars concluded that all cars were inoperable. In fact, with the right knowledge and tools, many of those cars could be fixed. But my imaginary character doesn’t have that knowledge. He doesn’t have the right tools, either.

If the first error is a false analysis of the problem, a second error inevitably follows–a false solution. The reason all the old cars (and old markets) in the economic junkyard are broken is that they were not maintained in a responsible fashion because they were only on temporary lease to their operators. Lets say all those irresponsible operators were just following the example, and sometimes the advice, or direction, of their betters, the 1%.

And now this two-faced 1% is getting caught in the act of green-washing their activities. They are pulling the strings of their politician manikins, sending them to international summits on hunger or the environment or global warming, campaigning for austerity or resource management schemes full of tricks and loopholes big enough to drive a fleet of deep-water drilling platforms through.

Many conclude that these amoral capitalists have nothing to offer but more waste, fraud, exploitation and abuse. Which is pretty much the case. So its only natural for a movement to gravitate around respect for the 99% and for the environment, and then go looking for post-market methods for shaping society and finding harmony with nature. They turn to gift economies and sacred economics drawn from mankind’s romanticized past, or imagine societies that function on harmony and good will instead of greed and accounting. They may be inclined to imagine bountiful commons that manage themselves the way nature manages itself. I’m sympathetic to the sentiments and the philosophy, but that doesn’t satisfy me. I want the skills and the tools to get broken markets and broken ecosystems back on the road to thriving.

GB.MEX.10.0143

GB.MEX.10.0143 (Photo credit: balazsgardi)

Of course what goes by the name green often isn’t (including some versions of “green economics“), and the only solution for that  is eternal vigilance against green-washing. “Big Green™” would be dumb not to appropriate certain language from Natural Capitalism, for example–its just so easy.

“When plunder becomes a way of life for a group of men, they create for themselves, in the course of time, a legal system that authorizes it, and a moral code that glorifies it.” – Political economist Frederic Bastiat, The Law [1850]

We are well-advised to be wary of giant green snakes and wolves in green clothing sneaking into the people’s garden; but not to be prejudiced against all applications of  market thinking in ecological economics. Is there any reason the 99% cannot “occupy” and democratize markets?

I can believe that the United Nations Environment Programme (UNEP) and the Reducing Emissions from Deforestation and Forest Degradation (REDD) projects are (or are not) clever tricks to disguise continued exploitation. Either way, the effort to scientifically quantify natural systems, as in  approaches to sustainable or Natural Capitalism, is not in itself a sinister scheme. It is required for good management of any system, whether fishery, forest or farm. No doubt the language of pending high-level agreements may be obfuscating some ulterior motives. I’m very skeptical of trading permission-to-pollute credits. But what is often proposed as the alternative is not exactly transparent, either.

Here is a fairly typical example from a writer who rejects Natural Capitalism and similar approaches because he fears a slippery slope to green-washing. He proposes an economic system based on:
  • peace, harmony and balance among all and with all things;
  • complementarity, solidarity, equality and social and environmental justice;
  • collective well-being and the satisfaction of the basic necessities of all;
  • recognition of human beings for what they are, not what they own;
  • elimination of all forms of colonialism, imperialism and interventionism
There are lots of ambiguities there. Such ambiguities can easily morph into obscurities and obfuscations which can provide cover for abuse and exploitation of people or natural capital or both. Not even the ban on colonialism and interventionism really holds up to analysis unless we go back to being hunter-gatherers and stop colonizing or intervening in nature. As one of my peers pointed out to me recently, appeals to optimality are really arguments that we’re living (or will be)  in the best of all possible worlds; or would be if only we’d regulate or deregulate or something.
Inquisition 2.0?

How will we draw the lines between good-faith green economics and green-washing? No simple answer, but that’s the kind of thing that empirical science, at its best, can be good at. The alternative to science may be a kind of post-market fundamentalism whose dogma demands belief in a new-age invisible hand. I am already seeing omens of an Inquisition 2.0 which will torture disciples of sustainable capitalism until they confess to sins of  green-washing and recant their faith in science.

An ecological moral philosophy is useful, but a new version of the invisible hand (even a spiritual one) is not. A real science of sustainable economics is needed regardless. Such a science won’t be achieved just by good will and wishful thinking. It will require deep observation, painstaking metrics, statistics, and very complex accounting.

Confusion of tongues

The original Green Revolution was guilty of so many sins it may have cast a permanent cloud over the word “green”. Modern corporate and political green-washing darkens that cloud even more.

The battle for the soul of the word green reminds me of the confusion of tongues (confusio linguarum), the fragmentation of human languages described in the Book of Genesis 11:1–9, as a result of the construction of the Tower of Babel.  And George Orwell charicatured the authoritarian appropriation of language with  Newspeak in the novel Nineteen Eighty-Four. In the novel, it refers to the deliberately impoverished language promoted by the state. (Wikipedia)

I’m not convinced that the left is not impoverishing the conversation on sustainability in another way with its glittering generalities about sacred economics and effortless abundance.

In a nutshell, without the rhetoric, the  moral or spiritual approach to economics boils down to:

  • reducing the scale and scope of markets
  • expanding the scale and scope of the commons
  • putting more emphasis on the public sphere

All that really means to me is there is no unitary, all-encompassing market and certain things aren’t on the auction block. Markets shall have circumscribed scope or boundaries, including appropriate regulation and no more archaic, grandfathered externalities. But the notion that everything should evolve from markets toward something else is pure speculation. Well-regulated, democratically-managed markets might be natural and desirable even within many local commons. An agricultural land trust might want a big, bustling produce market, and why not?

What we must add to the moral philosophy is an ability to mimic the balance between steady-state and development in living systems.

We need to start seeing markets, commons, and ecosystems alike as complex adaptive systems requiring appropriate (e.g. transparent, dynamic, and democratic) constraints and regulatory mechanisms both internal and external. We need to see them as layered, overlapping, recursive, and locally differentiated by environemntal niches.

These systems are almost unfathomably complex and I wager that all our current models and subjective interpretations barely begin to scratch the surface of the objective reality. Any notion that we can re-engineer the whole market ecosystem from the top down is the height of hubris. Instead it will take a great deal of inspired trial and error from the bottom up and from the inside out.

In our efforts to upgrade our economic consciousness, plenty of kumbaya will be essential, but it won’t be sufficient. Humanity cannot live on love and peanut butter alone.  I think many of the innovators  who will fertilize the science and technology of sustainable markets may come from the highly experimental (and less theoretical) hacker, re-mix, peer-to-peer (p2p), and open source cultures.

Ecological economics can also be thought of as integral economics, a framework that includes but transcends existing fundamentalist market frameworks, integrating local econo-diversity with global interdependence–i.e. “reinventing economics for people and place.”

Neither markets nor economic anarchy seem to scale well by themselves. But I think they might scale indefinitely in balanced proportions.

Poor Richard

Related articles

“They want us to believe the choice is the “free market” or government, when in fact it’s one system because government sets the rules of the market. And the real choice is between a system that works for the many or the few.

They want us to think people are paid what they’re “worth,” when in fact people are paid according to how the moneyed interests have organized the market — to their benefit and against most of the rest of us.

They don’t want us to see the upward pre-distributions hidden inside the market that give them a big chunk of our paychecks, as we pay more than we should for everything from drugs to Internet service to food.

They don’t want us to know how much their pollution is sickening us, their devastation of our lands is imperiling us, their sacking of our communities is ruining us, and their takeover of our democracy is robbing us of our capacity to set things right.” 

~Robert Reich

ADDENDUM

Robert Ryan is a Graduate Student Assistant at the University of Pittsburgh. Class of 2013 · PhD · Structures and Foundations · Business Environment, Ethics, and Public Policy · Strategic Management

This is my online interview with Robert Ryan on 5/22/2012:

Poor Richard: Robert, I’m curious what you think of my very unscholarly take on markets and green economics in “Framing the Market.”

Robert Ryan: The simplest way to summarize this problem is “optimization under constraint”. In the same way that engineers perform constrained optimization problems, it is generally assumed in markets that individuals do the same, each using the same rationale as an engineer of their own personal consumption functions. Markets (here we are referring to idealized, perfect ones) are non-coordinated mechanisms for spot transactions to optimize utility under budget constraint. What this generally means is that the only two important variables are individual level preferences and budgets. As you have mentioned, this doesn’t hold true if you have more important variables like information, time, transaction costs, bargaining power, etc. Simply put, there is no “environment” in traditional market models, period, which is what separates them from evolutionary ecosystems. Ecosystems aren’t just individuals. There are group level dynamics where individuals interact with “BOUNDARIES” of the system. For example, consider how tides in a sandbar ecosystem is a boundary condition for the survival of a population of sandbar-dwelling animals. The very existence of tides shapes behavior. The list of natural system boundaries for markets include, but are not limited to: Rationality (what Herbert Simon called bounded rationality)…environmental entropy and finality (in the sense that some resources tend to be not only scarce, but decaying and non-renewable, and that some resources have critical inflection points where they pass between sustainable in supply and not……power (which is delineated by human institutions, including knowledge, law, etc.)…technology (which is the level of possible combinations of resources to create final goods)….etc…..notice that all of these constraints can be put into the economic system, but economists struggle to do so because of the complexity problem causing indeterminacy (the mathematics of chaos takes over, essentially, when everything ids dependent on everything else recursively). The simplest way to escape the problem of chaos is to hold some things constant over time. So, this is what people do to solve problems- hold things constant that may or may not BE constant. Their biggest error in the modern age occurs when hey hold constant essential SUPPLY SIDE problems, such as pollution externalities being ignored. An externality as you defined it is not quite right. An externality really is when one individual’s action that maximizes THEIR preferences impacts the entire economy negatively. For example, if a polluter pollutes, everyone else picks up the tab. The simple way to deal with externalities is to regulate against them, but that requires common agreement among everyone in the regulation.

Poor Richard: Robert. I appreciate and agree. Could I add your remarks as a comment to my blog post? (I was being a little flip with my definition of externalities. Maybe I should tweak it.)

Robert Ryan: Many people don’t know that economists indeed do solve such problems. The most popular field of economics for dealing with this problem is the economics of contracts. A market is a special case of contracts where all tricky bits are held constant. However, contract economics is generally specified so that you can account for ANYTHING. But, the math is really tricky for even the simplest of contracts. Contract economics presumes a bunch of agents are trying to negotiate a solution to an economic problem, and at least one of them is a principal. This is basically the mathematical representation of social contract problems: “we all get together before birth, or before the veil of ignorance, and devise a social contract to solve problems” – is how my professor Lawrence Ales puts it. For example, there may be some golden ratio of consumption of farmland that if you pass beyond you begin destroying future farm output. In order to prevent this, the principal is granted the ability to distribute to farmland (forming your constraint) and then the agents can auction for their slice of production. In this fashion you cap the use of farmland. Easier said than done, because it is hard to know exactly how this problem works in the real world–the chaotic inter-dependencies of the precise use of farmland and the precise use of other kinds of resources (water, air, etc…what technical combinations are employed in production, etc. ) are hard to know, and the equations of their interdependency are recursive. Carbon caps are an attempt to do exactly this, and the logic for it comes from contract economics, not market economics. To summarize again, you can solve these problems one at a time by holding other problems constant, but you get the “law of unintended consequences” even in contract economics in a complex world. Solving one problem can often pass the problem into another domain. Solving carbon problems can, for example, pass the problem on to other kinds of supply issues, rent-seeking behavior, arbitrage, etc. However, we can still do some of this with economic engineering (combinations of market and contract rules) if we use a kind of Pareto efficiency rule– start with the biggest problems first and work backward– permit the little inefficiencies to exist and simply engineer human solutions to the tough problems. When the problems of the world are explained thusly, then it becomes obvious that ethical solutions to market economic problems are certainly obtainable, and only ignorance or immoral behavior can explain why we don’t engineer problems of public goods of such nature. This means our real problem is NOT economic but political/social. Ironically, everyone keeps blaming economists when the real blame lies in the power structures of political reality.

AS a general rule, one would say that markets should only be the appropriate mechanism where externalities and supply side inter-dependencies are trivial. When they are major problems, markets will inevitably destroy whatever environment you are dealing with. They eat themselves. They are cancerous. However, if you can contain and isolate markets from the ecosystem so that they are in “remission” essentially, then they are optimal. Ecosystems do suffer from cancerous market-like problems, too. The main reason why ecosystems tend to survive in the long run is that the entire system adapts to starve the cancer. Human markets aren’t designed to adapt to starve the cancer efficiently. They will in the long run, but in the long run we’re all dead. A troublesome species like humans can simply write themselves out of existence. Well, if that’s not an acceptable endgame solution, then we have to constrain our own cancers before we eat ourselves. This is why we need social contracts, and if we cannot make adequate ones, we need to break into subspecies (tribes, etc.) and exterminate the cancerous subspecies that are indigenous to the problem in order to save the species. That sounds awful, but true.

Poor Richard: I agree with you about the difficulty of the math. Fortunately massive data collection and pattern detection may soon give us a new way of doing science, and replace a lot of difficult mathematical modeling. I think we should take about 10% of all scientists and mathematicians and put them on that critical path.

Robert Ryan: We are reaching a state of the world that definitely calls for a technocracy in the similar sense that Plato wanted us to have philosopher kings. Truly the smart people of this world could be put to work solving our problems in a fashion far superior than is currently being done, and this is a big part of my political platform I advance. I call it the Pragmatist party (or New Bull Moose).

Poor Richard: I like the sound of the Pragmatist party. How would it handle the 1%?

Robert Ryan: By appealing to the top 20% instead. One of the big fallacies is that the 1% can out-bully the entire middle class. They can’t. No middle class and there is no economy, no military, no institutions to exploit. The middle class has not really shrunk. Its the lower middle, or working class, that has been getting worse off and shrinking as more people are falling to the lower class. The real middle class is really the professionals, intellectuals, entrepreneurs, petite bourgeoisie. There is no political party designed to appeal to them directly. In fact, both American parties preserve power by going around them completely. Most of the real middle class are independent and non-extremists. The pragmatist party basically says: enough is enough. These are the real job creators, the innovators, the creatives of society. Without them there would be no economic growth. So, let’s appeal to them pragmatically and say they can deflate the 1%, and in exchange for gaining more representation, they must take better care of the lower classes than the 1% has. Our target audience is thus the people who truly dominate campaign donations, charity donations, and our communities, but have been so fractionalized and “suburbanized” so as to think of themselves as independent instead of a class. If they were to think of themselves as a class again of sane people of balanced reasoning, then the middle class could save us.

Poor Richard: How can you appeal to such a class without insulting or alienating the rest of the 99%? And isn’t there a good reason that the middle class doesn’t make waves?

Robert Ryan: Yeah– I’ve had this discussion many times before. Well, we are reaching a point where, for the first time in American history, their prospects are not looking to get better, and they all mostly know that their nation is crumbling slowly, and that there is no good reason for this to happen. There are already plenty of instances of these people getting together to get the job done on a smaller scale. Typically you see this in university/business/local govt. cooperation. Various entities have gotten together to plan to save Detroit, for example. And they’re already on the right track. These sorts of cooperative efforts to socially contract new, smarter solutions do happen, and when they do, they tend to be more localized. This is part of the sensibility of the authors out there writing about the urgent need to revitalize our cities– cities are the places where, historically, the top 20% collaborate to make great places to live for everyone. The 1% typically help finance everything and provide resources flowing into these cities. But the very history of the city is the history of the yeoman specialists and master tradespeople getting together and making economies tick. The role of the larger federal system is to provide resources to these self-organizing activities on a more local level– such as infrastructure banking, research grants, development money, etc…but the activities have to be more local and less centrally planned. There seems to be an optimal scale efficiency of central planning, and it is when you have diverse interests willing to throw their hat into a common state interest– in the US, this has never been the federal level because of a lack of common identity. Regions and states are more apropos. Richard Florida is one man who understands this and would be an ideal candidate for such a party.

Richard Florida | Creative Class Group

How Detroit Is Rising

You’ve heard the story of the city’s downfall. This is the story of its comeback.

Multimedia showcase | Creative Class Group

mimicking the balance between steady-state and development in living systems

Posted in Culture and Microculture, Progressive Economics. Tags: , , , , , , , , , , , , , , , , , , , , , . 2 Comments »

The value of inefficiency

October 16, 2011 — Poor Richard

I think that class, culture, and ideology conflicts among the 99% tend to hurt us and help the 1%. Differences  don’t always have to lead to conflicts. Coalitions can transcend  differences and a coalition of the 99% has many differences to include and transcend.

The positions staked out by the Occupy Wall Street General Assembly all appear to be valid Constitutional, common law, and ethical positions to me.

But perhaps equally important, the 99% movement may offer us an opportunity to help each other to develop and mature psychologically and to evolve culturally.

I’m hoping for the OWS struggle to force us 99% to become more ideology-pluralistic. If we could figure out how to tolerate our diversity and agree to disagree on some issues, maybe we could develop enough common political ground to force the powers-that-be to reform in certain areas.

Beyond that, maybe each ideological group within the 99% can learn to better appreciate the value of diversity and good-faith opposition. Perhaps in some way such diversity and opposition is just a natural “separation of powers”.

In many countries, the principle of “separation of powers” is an important principle of governance.

Quoting from Wikipedia:

“The model was first developed in ancient Greece and came into widespread use by the Roman Republic as part of the unmodified Constitution of the Roman Republic. Under this model, the state is divided into branches, each with separate and independent powers and areas of responsibility so that no one branch has more power than the other branches. The normal division of branches is into an executive, a legislature, and a judiciary. For similar reasons, the concept of separation of church and state has been adopted in a number of countries, to varying degrees depending on the applicable legal structures and prevalent views toward the proper role of religion in society.”

The implicit justification for separation of powers is the goal of a counterpoised balance between opposing forces that leads to a state of stable homeostasis. The point of separation is not to create efficiency but to create inefficiency. If efficiency were the goal, we might get rid of the messy legislature and judiciary and leave all government powers to a unified executive. The independence, equality, and mutual opposition of separate branches of government preserves various values and methods that we want protected. We don’t want one one approach to governance eclipsing the others.

The separation and contra-posed balance between the public and private sectors of an economy may have a similar utility.

I think that progressives err in the false hope that big government will automatically protect them from big business, and I think libertarians err in the false hope that small government will automatically free them from tyranny.

The greatest danger to liberty is not in the balanced opposition between the public and private sector but in their collusion.

In the article “Libertarians to Occupiers: Crony capitalism is the problem | Libertarian Party ” Libertarian Party Chair Mark Hinkle says:

“I have been following the Occupy protesters, who call themselves the ‘99%’, with interest.

“It’s true that 99% of Americans do not enjoy the special benefits of crony capitalism. Crony capitalism is very different from real capitalism. In crony capitalism, government hands out special favors and protections to politically well-connected businesses.

“The TARP bailouts, Solyndra, and the military-industrial complex are all facets of crony capitalism.

“Libertarians love free markets and hate crony capitalism.

I agree about the negative consequences of “crony capitalism”. But is crony capitalism only defined as an unwholesome alliance between government and business? What about unwholesome alliances between businesses? Granted, the state can behave badly. Business can behave badly. Is the libertarian position that business behaves badly only when corrupted by the state? In the absence of state interference, in a “state of nature”, would business regulate itself in a way consistent with the public interest, the general welfare, and the pursuit of happiness by the weakest members of society?

The LP article says “A free market is where the government leaves businesses alone, does not attempt to pick winners and losers, does not stifle competition, does not hand out corporate welfare, and does not absolve businesses of liability for their actions. Most of our economy today does not resemble a free market at all.”

Picking winners and losers, stifling competition, handing out corporate welfare, and absolving businesses of liability are things that government generally should not do, I strongly agree. But is opposing and correcting such abuses necessarily the same thing as “leaving business alone” entirely?

It is generally recognized that a free society is characterized by consent of the governed, and that such consent usually includes consent to a system of laws–the rule of law being a lesser evil to the rule of men or the law of the jungle (the “war of all against all” —Thomas Hobbes).

Most people agree that a free market is also a creature of law and not a creature of wild nature or of an oligarchy (a powerful or elite class). In nature, the wild marketplace is very free for the strongest but hardly so for the weakest. A market that is as free and fair for the weak as for the strong is a market of laws. A market of laws is a market with referees.

In libertarian theory, who are the makers of the laws and who are the referees if not the people’s elected representatives?

Human beings don’t live by ideology alone. They must also have peanut butter. The objective metrics of happiness and well-being are better in societies with bigger governments, higher taxes, and less disparity in wealth and income. Those things are not “natural”, nor are they good in and of themselves. We should only measure utility in pragmatic terms, in outcomes judged against our most important values and how well they are served by any particular institution, process, policy, or rule.

Where are the benefits of small government in failed states like Afghanistan, Sudan, or Somalia? Such places are ruled by tribal cronyism and corrupt warlords. I fear that a libertarian revolution would fare little better than communist revolutions have done.

Does that mean there is no room for capitalism in the US? Capitalism comes in many shapes and sizes. Libertarians and progressives can agree on the evils of crony capitalism. But other forms of capitalism also embrace questionable theories about the definition of freedom, the role of externalities, etc. It is all too common for theories of capitalism to incorporate euphamisms for injustice, theft, deception, etc. On the other hand, there are theories such as natural capitalism and cooperative capitalism that try to correct many of those faults. My own terminology for cooperative capitalism is Green Free Enterprise.

An evolving society should be an open laboratory where all economic theories (within reason) can be tested and compared. I would even like to see public and private solutions to providing goods and services compete side by side in the marketplace. Of course, to keep the public sector from taking unfair advantage over private enterprise we would need strict rules of fair play. I explore this in “Why can’t the public and private sectors just get along?”

In modern society there is also room for many competing political ideologies, but there is no room for any single ideology to overpower the whole.  The US founding documents were amazingly ideology-agnostic for their time. I would like to see our future become increasingly pragmatic, utilitarian, and ideology- agnostic. But regardless, for the marketplace of ideas to stay open and free requires limits, rules, and honest referees.

A central thesis of mine is that the true backbone of human civilization and progress is not political theory or ideology but actually what is known as “common law“.

From time to time new states are formed (sometimes in revolution as was ours) and old states are re-formed to achieve closer conformity with the global evolutionary progress of common law, which traces back to pre-history, before the laws of Greece and Rome, even before the ancient code of Hammurabi. The common law represents a gradual, case-by-case resolution of tensions between conflicting rights, interests, values, and circumstances. That is the process which has produced those societies that are best and most convivial to live in today. I think that is the only process that is complex and inefficient enough to produce better societies in the future. Revolutions that have tried to establish states based on pure ideologies rather than on a reconciliation with the global progress of common law have failed.

Back to Occupy Wall Street

In the case of the Occupy Wall Street movement, I think we are hearing many diverse complaints, demands, and proposals from many sub-groups. But from the General Assembly I have seen a set of plainly and briefly stated, specific charges of abuses of power. I have not heard a call for revolution or an end to capitalism from the General Assembly. Only a list of obvious crimes and injustices and a call for redressing these grievances as simply and directly as possible.

In the US the right to petition is guaranteed by the First Amendment, which specifically prohibits Congress from abridging “the right of the people…to petition the Government for a redress of grievances.”

The positions staked out by the Occupy Wall Street General Assembly are all valid Constitutional and common law positions.

In my opinion, the Occupy Everywhere Together movement is a kind of social and economic earthquake caused by an increasing fracture between layers of society based on common law and layers of powerful special interests. Those powerful special interests exert their power both upon and through government. The line between the public sector and the private sector is not the primary fault line causing this quake. The central fault line runs between the parts of society based upon thousands of years of civilization and common law principles of justice and equity; and those cancerous parts of our society that have grown disproportionately from special interests over the past few decades.

But the cancer has already metastasized and is widely spread throughout society, as the “Stockholm Syndrome” of the Tea Party and the “53%” illustrate. It isn’t just the 1% who are corrupt. The corruption has flowed into every organ and tissue of society where mass media and popular culture could carry it. There is no simple and efficient way of treating this cancer.  There is no neat, efficient  ideological or structural cure.

We are each going to have to battle this cancer of corruption within our selves, within our own beliefs, assumptions, and lifestyles. The Occupy movement may be a venue for this struggle, not just between the 1% and the 99%, but among and within ourselves. It will be best if the Occupy Movement lasts a very long time, if it burns slowly, and it forces us to get to know our own internal diseases very intimately.

Nothing about this can or should be efficient. Efficiency does not give us the space and the time to explore the hidden corners and crevices of our diversity, complexity, and dissonance.

That is the value of inefficiency.

Poor Richard

Related:

(blog.p2pfoundation.net)

Gideon Rosenblatt and Lawrence Lessig: What to think of the framing of the #OccupyWallStreet movement as a ‘Tea Party of the Left’?

Dave Pollard on the long term prospects of the ‘metamovement’

Tim Rayner on the characteristics of #OccupyWallStreet as a swarm movement

John Robb on Real Open Source Leadership at #OccupyWallStreet

Understanding the Consensus Methodology at Occupy Wall Street

Addendum:

swampland.time.com
Q11. IN THE PAST FEW DAYS, A GROUP OF PROTESTORS HAS BEEN GATHERING ON WALL STREET IN NEW YORK CITY AND SOME OTHER CITIES TO PROTEST POLICIES WHICH THEY SAY FAVOR THE RICH, THE GOVERNMENT’S BANK BAILOUT, AND THE INFLUENCE OF MONEY IN OUR POLITICAL SYSTEM. IS YOUR OPINION OF THESE PROTESTS VERY FAVORABLE, SOMEWHAT FAVORABLE, SOMEWHAT UNFAVORABLE, VERY UNFAVORABLE, OR DON’T YOU KNOW ENOUGH ABOUT THE PROTESTS TO HAVE AN OPINION?

VERY FAVORABLE 25%

SOMEWHAT FAVORABLE 29%

SOMEWHAT UNFAVORABLE 10%

VERY UNFAVORABLE 13%

DON’T KNOW ENOUGH 23%

NO ANSWER/DON’T KNOW 1%

Q12. DO YOU AGREE OR DISAGREE WITH THAT POSITION?
A. WALL STREET AND ITS LOBBYISTS HAVE TOO MUCH INFLUENCE IN WASHINGTON

BASE: FAMILIAR WITH PROTESTS (787)

AGREE 86%

DISAGREE 11%

NO ANSWER/DON’T KNOW 4%

Q12. DO YOU AGREE OR DISAGREE WITH THAT POSITION?

B. THE GAP BETWEEN RICH AND POOR IN THE UNITED STATES HAS GROWN TOO LARGE

BASE: FAMILIAR WITH PROTESTS (787)

AGREE 79%

DISAGREE 17%

NO ANSWER/DON’T KNOW 3%

Q12. DO YOU AGREE OR DISAGREE WITH THAT POSITION?

C. EXECUTIVES OF FINANCIAL INSTITUTIONS RESPONSIBLE FOR THE FINANCIAL MELTDOWN IN 2008 SHOULD BE PROSECUTED

BASE: FAMILIAR WITH PROTESTS (787)

AGREE 71%

DISAGREE 23%

NO ANSWER/DON’T KNOW 6%

Q12. DO YOU AGREE OR DISAGREE WITH THAT POSITION?

D. THE RICH SHOULD PAY MORE TAXES

BASE: FAMILIAR WITH PROTESTS (787)

AGREE 68%

DISAGREE 28%

NO ANSWER/DON’T KNOW 4%

Q12A. IN YOUR VIEW, WILL THIS PROTEST MOVEMENT HAVE A POSITIVE IMPACT ON AMERICAN POLITICS TODAY, A NEGATIVE IMPACT, OR WILL IT HAVE LITTLE IMPACT ON AMERICAN POLITICS TODAY?

BASE: FAMILIAR WITH PROTESTS (787)

POSITIVE IMPACT 30%

NEGATIVE IMPACT 9%

LITTLE IMPACT 56%

NO ANSWER/DON’T KNOW 6%

——————————————————–

Why the Tea Party and Occupy Wall Street Should Cooperate (http://www.theatlantic.com)

“For all their disagreements, they share a belief that the relationship between finance and government needs reforming”

I discuss these questions further with my libertarian friend, Jeff:

Jeff wrote: “There are issues where the two sides could agree — ending corporate welfare, closing at least some overseas bases – to name just two. I think both groups span a broader spectrum than is being recognized. Some of those participating in OWS are actually advocates of less government interference in the economy — interference which invariably favors Big Business. And the TEA Party groups range from sincere advocates of a small, limited government to typical Romney-McCain Republicans.

PR: Well said, Jeff. Ending corporate welfare and excessive consolidation is as crucial to free enterprise as it is to democratic governance. IMO the global financial crisis is not just some random drive-by event, but is part of a criminal strategy of “robber baron” monopoly capitalism. Financial crises = budget cuts = mass privatization = neo-feudalism (global corporate governance). True free enterprise is the antidote.

I am frustrated by the difficulty my friends on the left have in seeing their entrepreneurial responsibilities and opportunities. I am also frustrated by the difficulty libertarians seem to have understanding the threat posed by concentrated wealth and power whether it be in the public or private sector. I think that progressives err in the false hope that big government will protect them from big business, and I think libertarians err in the false hope that small government will free them from tyranny.

It may well be that a cross-pollination between libertarians and progressives is the only way forward out of this mess. That is going to take depolarizing some class war and culture war biases on both sides. I have been as guilty of polarizing rhetoric as anyone, but I am rethinking my biases and trying to figure out how to mend my ways. You may be just the man to help me with that if you can overlook some of my inevitable old-guard-lefty rhetorical lapses.

I understand it is fairly common for libertarians to oppose corporate welfare, but how are libertarian positions spread on the consolidation of wealth and power in the private sector? IMO that is the more serious threat to liberty, fully equivalent to any threat from the state. As a progressive I might add that at least in the case of state power we still have some semblance of popular representation.

Jeff: “I believe a case could be made that most of the outrageous concentrations of wealth occur -because of, not in spite of, political interference in the economy. This is sometimes at the State and local levels, not just at the Federal level — for instance, a State might pass a statute setting such stringent requirements to sell health insurance within that State that only a few insurers can meet them; they then can divide up the market and charge much more than they could have in a free market. At the local level, even such weapons as zoning and sign control can lead to larger competitors getting larger still, and smaller competitors either shrinking or even going under. Note that -thoroughgoing- deregulation, not the faux kind such as the California electricity “deregulation” of several years ago, is almost always fought by the bigger entrants in a given field. Regarding government power, I would prefer to see legislative districts be smaller so that those not backed by Big Business have a chance of winning.

PR: I agree with all of the above except the possible implication that consolidation and concentration might magically disappear if not for the state. I’b be very skeptical of any such theory, but it’s probably moot. The state, like the poor, is always with us. In fact, I think most ideology is moot, since in the absence of a revolution we can never make over the status quo from top to bottom to meet the conditions required to test and either validate of falsify any ideology. Perhaps we can look around the world for real examples that might support or contradict a given theory. If I had to choose between Scandinavian counties where taxes and regulations were high, or African countries where taxes and regulations were low, I’d prefer the former.

Re: Libertarians to Occupiers: Crony capitalism is the problem | Libertarian Party,  (www.lp.org)

‎”It’s true that 99% of Americans do not enjoy the special benefits of crony capitalism. Crony capitalism is very different from real capitalism. In crony capitalism, government hands out special favors and protections to politically well-connected businesses.”

PR: I agree about the negative consequences of “crony capitalism”. But is crony capitalism only defined as an unwholesome alliance between government and business? What about unwholesome alliances between businesses? Granted, the state can behave badly. Business can behave badly. Is the libertarian position that business behaves badly only when corrupted by the state? In the absences of state interference business, in a “state of nature”, will regulate itself in a manner consistent with the public interest, the general welfare, and the pursuit of happiness by the weakest members of society?

The LP article says “”A free market is where the government leaves businesses alone, does not attempt to pick winners and losers, does not stifle competition, does not hand out corporate welfare, and does not absolve businesses of liability for their actions. Most of our economy today does not resemble a free market at all.”

Picking winners and losers, stifling competition, handing out corporate welfare, and absolving businesses of liability are things that government generally shouldn’t do, I agree. But is that really the same as “leaving business alone” entirely?

It is generally recognized that a free society is characterized by consent of the governed, and that consent usually includes consent to a system of laws–the rule of law being a lesser evil to the rule of men or the law of the jungle (the “war of all against all” (Hobbes)).

Most people agree that a free market is also a creature of law and not a creature of wild nature or of oligarchy. In nature, the wild marketplace is very free for the the strongest but hardly so for the weakest. A market that is as free and fair for the weak as for the strong is a market of laws. A market of laws is a market with referees.

In libertarian theory, who are the makers of the laws and who are the referees if not the republic?

Anyway, my own theory is that the real backbone of civilization and progress is not political theory or ideology but actually what is known as “common law”. From time to time new states are formed, as was ours, and old states are periodically reformed, to come into closer conformity with the evolutionary progress in the common law, which traces back to pre-history, even before the code of Hammurabi. The common law represents a gradual, case by case resolution of tensions between conflicting rights, values, and situations. That is the process that has produced those societies that are best to live in.

Jeff: “The libertarian view is that the only “regulation” should be that a business must not engage in force or fraud. Yes, businesses can sometimes for “unholy alliances”, but if they try to exploit that, then others can enter the market involved to compete with them. “Monopolies, trusts, etc. do not last long *if* they are not favored by government. Often, as in the case of the railroads or the phone companies, government will actually force smaller businesses to merge with the larger ones, to form a giant that would never have come about without political interference.

PR: I don’t buy that. What prevents a dominant player from continuing to buy up the competition? That requires neither force nor fraud, and has occurred many times. In fact, it would appear to be almost the rule. Government often gets bribed in to make the process go faster or cheaper for the predator, but is seldom really an essential or necessary accomplice.

Rockefeller and Standard Oil is the classic example where massive consolidation occurred rapidly in a largely unregulated market, but there have been plenty of other examples. Microsoft retarded the progress of computer technology by perhaps 20 years with no help from government. Government corruption often plays a role, but I see the role as secondary. In any case, I see the appropriate solution as eliminating corruption, not eliminating government.

People have a right to have an active, instrumental government and IMO that’s what most people actually desire. No self-sufficient minority will succeed in thwarting that desire very easily. That’s why I think libertarians waste a lot of energy and intelligence that should be invested pragmatically and creatively towards a libertarian sub-economy instead of trying to convert or reform the mainstream. The same goes for anarchists, agorists, mutualists, communists, socialists, etc.

I share your aversion to coercion and I think the mainstream should be forced to provide more “opt out” opportunities wherever practical, especially for taxes on services that someone never uses. One of the ironies I don’t understand is why some nominal libertarians complain about the poor not paying taxes. That whole strata of the economy is pretty libertarian, isn’t it?

Fortunately, despite the US leaning a bit toward central planning and regulation, there are numerous areas of the economy that are still fairly open and free, and I don’t think anyone is trying to exclude libertarians from those parts of the economy or from pursuing self-sufficient lifestyles. That is a route I’ve often taken.

An ideology- pluralistic 99% political coalition might also be used, albeit ironocally, to force the federal government to give each of our ideological subgroups undisturbed domains of the economy and culture within reason. We could almost do that now simply by each group aggregating in its own state, but perhaps we could enact a federally supported relocation program. This might really ease a lot of the tension and conflict between the more extreme or fundamentalist elements of the different ideological camps within the 99% and let the more moderate 78% get on with their lives in peace in the other 46 states.

How about:

  • Democratic Socialism Land: Hawaii
  • Libertarian Land: Texas
  • Commieland: Washington
  • Anarchy Land: Arizona
Posted in Codependence (Politics), Culture and Microculture. Tags: , , , , , , , , , . 4 Comments »

Public Truth

March 29, 2011 — Poor Richard
No Fairness Doctrine

Image via Wikipedia

Fox News’ Lies Keep Them Out of Canada

By Robert F. Kennedy Jr., Reader Supported News, 01 March 11

s America’s middle class battles for its survival on the Wisconsin barricades – against various Koch Oil surrogates and the corporate toadies at Fox News – fans of enlightenment, democracy and justice can take comfort from a significant victory north of the Wisconsin border. Fox News will not be moving into Canada after all! The reason: Canadian regulators announced last week they would reject efforts by Canada’s right-wing Prime Minister, Stephen Harper, to repeal a law that forbids lying on broadcast news.

Canada’s Radio Act requires that “a licenser may not broadcast … any false or misleading news.” The provision has kept Fox News and right-wing talk radio out of Canada and helped make Canada a model for liberal democracy and freedom. As a result of that law, Canadians enjoy high quality news coverage, including the kind of foreign affairs and investigative journalism that flourished in this country before Ronald Reagan abolished the “Fairness Doctrine” in 1987.

Fairness Doctrine in the US

In the US, our commitment to free speech even extends to liars. None of us here want a “Truth Police”. That would be too “chilling” on our rights and liberties. The “Fairness Doctrine” ingeniously addressed the problem of biased (and lying) speech on the public airwaves not by limiting speech, but by adding more speech to it.

The Fairness Doctrine was a policy of the United States Federal Communications Commission (FCC), introduced in 1949, that required the holders of broadcast licenses to both present controversial issues of public importance and to do so in a manner that was, in the Commission’s view, honest, equitable and balanced. The 1949 Commission Report served as the foundation for the Fairness Doctrine since it had previously established two more forms of regulation onto broadcasters. These two duties were to provide adequate coverage to public issues and that coverage must be fair in reflecting opposing views.[1] The Fairness Doctrine should not be confused with the Equal Time rule. The Fairness Doctrine deals with discussion of controversial issues, while the Equal Time rule deals only with political candidates.

In 1969, the United States Supreme Court upheld the Commission’s general right to enforce the Fairness Doctrine where channels were limited, but the courts have not, in general, ruled that the FCC is obliged to do so.[2] In 1987, the FCC abolished the Fairness Doctrine, prompting some to urge its reintroduction through either Commission policy or Congressional legislation.[3] Following the 1969 Red Lion Broadcasting Co. v. Federal Communications Commission decision, which provided the Federal Communications Commission (FCC) with more regulatory power, the main agenda for this doctrine was to ensure that the viewers were exposed to a diversity of viewpoints.

n 1974, the Federal Communications Commission asserted that the United States Congress had delegated it the power to mandate a system of “access, either free or paid, for person or groups wishing to express a viewpoint on a controversial public issue…” but that it had not yet exercised that power because licensed broadcasters had “voluntarily” complied with the “spirit” of the doctrine. It warned that:

“ Should future experience indicate that the doctrine [of ‘voluntary compliance’] is inadequate, either in its expectations or in its results, the Commission will have the opportunity—and the responsibility—for such further reassessment and action as would be mandated.[7]

The Fairness Doctrine has been strongly opposed by prominent conservatives and libertarians who view it as an attack on First Amendment rights and property rights. Editorials in The Wall Street Journal and The Washington Times have said that Democratic attempts to bring back the Fairness Doctrine have been made largely in response to conservative talk radio.[32][33]

On August 12, 2008, FCC Commissioner Robert M. McDowell stated that the reinstitution of the Fairness Doctrine could be intertwined with the debate over network neutrality (a proposal to classify network operators as common carriers required to admit all Internet services, applications and devices on equal terms), presenting a potential danger that net neutrality and Fairness Doctrine advocates could try to expand content controls to the Internet.[34] It could also include “government dictating content policy”.[35] The conservative Media Research Center‘s Culture & Media Institute argued that the three main points supporting the Fairness Doctrine — media scarcity, liberal viewpoints being censored at a corporate level, and public interest — are all myths.[36]

In June 2008, Barack Obama‘s press secretary wrote that Obama (then a Democratic U.S. Senator from Illinois and candidate for President):

“ Does not support reimposing the Fairness Doctrine on broadcasters … [and] considers this debate to be a distraction from the conversation we should be having about opening up the airwaves and modern communications to as many diverse viewpoints as possible. That is why Sen. Obama supports media-ownership caps, network neutrality, public broadcasting, as well as increasing minority ownership of broadcasting and print outlets.[38] ”

In February 2009, a White House spokesperson said that President Obama continues to oppose the revival of the Doctrine.[39]

(Wikipedia)

At the end of the day, the Fairness Doctrine only helped to provide more diversity. That’s not the same thing as truth. Its more like truthiness.

(By the way, it is very interesting to me that the conservative Media Research Center considers the public interest a “myth.” Conservatives tend to consider the concept incoherent or ambiguous, but I believe that says more about their own cognitive process than about the public interest.)

Broadcasters always hated the fairness doctrine for a variety of reasons, financial and ideological, but I am not sympathetic to the arguments against the doctrine based on property rights, since mass media (even cable) depends on public resources — spectrum and rights of way. But I am sympathetic to concerns about chilling free speech by placing burdens upon it–even the burdens of truth and decency.

On the other hand, I am deeply concerned about the power of mass media in our culture and its capture and use by the super-rich to promote their agenda and spew their propaganda. Our media is almost all privately owned –for sale to the highest bidder. Don’t huge media monopolies threaten our access to accurate information and undermine the democratic process itself?

We rightly prize our freedom of speech, but we also know the right to free speech comes with a responsibility. We all know about  the “power of the pen”, and we all know that power can cause harm. And not just hurt feelings, but financial and physical injury. That’s why we have laws against libel, slander, criminal defamation, and incitement to violence. That’s why, as every school child of my generation knew, we can’t falsely yell “fire” in a crowded theater.

Of course when it comes to our free press, we rightly bend over backwards to be permissive. The public interest in a free press is often greater than the interests of individuals or even groups that may be harmed by journalistic errors, irresponsibility, and even outright lies. But when lies and inaccuracies become pervasive, isn’t there is a compelling public interest in demanding a certain level of honesty and responsibility, even from the free press?

Yes. The only question in my mind is how to maximize that public interest without unintended consequences. We don’t want to throw the baby out with the bath water or shoot ourselves in the foot.

Truth, Justice, and the American Way

Superman fights for “truth, justice and the American way.”  (“In the 2006 film Superman Returns the phrase was recited by the character Perry White as “truth, justice, all that stuff.” ~Wikipedia)

So what would Superman do? What is the American way (or all that stuff)?

Truth

There are three ways to make truth and accuracy available in the media. They can (and should) be used in combination:

  1. Diversity. This is promoted by busting up or regulating monopolies. Then (using this method alone) it is “hands off” and hope for the best.
  2. Regulation. This is imposing penalties, as Canada has done, for lying or for causing harm. We regulate speech and visual content in the US to restrict sex and “foul” speech (the least justifiable intrusion of big government into free speech, brought to us by libertarians and republicans), but not lies. We can’t touch outright lies on media claiming to be news. The Fairness Doctrine was a relatively soft form of regulation, but it may have still been unnecessarily burdensome on private media. We need to explore new regulatory principles and methods (see “Justice”, below).
  3. Public media. By itself, this leaves “hands off” the private media, but offers robust public alternatives that have high standards, public oversight, and a firewall against partisan political influence.

Justice

We need methods for regulating private media in minimally invasive, burdensome, chilling ways to minimize the harm that media may do to individuals, to groups, and to civil society. What I propose is in a sense a method of private regulation. In general, I think we need to leave private media alone unless they do harm. Basically, I think we just need to make sure that media is fully accountable for civil torts as well as crimes. We need to insure that anyone unjustly harmed by media has legal standing to pursue a remedy. We need to see to it that there is an adequate statutory framework to address the most common types of injury; that there is enforcement; and that there is judicial due process. There needs to be a single point of entry to the justice system for citizens who claim to have suffered injury by the media. There needs to be public-appointed representation for citizens who can’t afford private counsel. But I think we need to go one step further and give all citizens the right to sue media for injuring the public welfare. Failing to serve the public well is not generally the same as injuring the public but in some cases it might rise to that level, especially where the public has contractual expectations of the media by virtue of spectrum, rights-of-way, tax breaks, etc..

Wherever government has authority to act, citizens should have that authority as well, at least by having standing to bring an administrative or judicial complaint or suit to force the government or court to act. But the scope of government regulatory authority should by no means be the limit of a citizen’s right to sue for an injury sustained. All tort principles also apply.

Will this open a floodgate of excessive litigation? Will big media bullies game the system or turn it against those it is intended to protect? Sure. This has been the problem with the law from day one. It has been the problem with democracy from day one. Democracy is the worst possible form of government except for all the others. What is the alternative? We have to strive to put big business and little people on an equal footing in the law, at every step in the process. Fair play is the American way, but it takes all of us, every day, in every way, to operate as a fair and just society. Legislators, courts, and regulators have always struggled with bias, manipulation, and corruption. Not surprisingly, much is known about how to minimize them. We know much more than we apply. None of this is anything new, and it is only peripheral to the proposals made here. It goes without saying.

Fair Play–the American Way

Bust up monopolies. Our people, from the woman in the street to most of the judges on the US Supreme Court, have generally opposed monopolies. Our country got its start largely due to popular opposition to a Brittish monoploy, the East India Company. Hatred of monopolies is in our DNA. But how can we have a free press if all the presses have been bought up by a few giant corporations, some of which are even based in foreign countries, just as the East India Company was? As we have had to do in many industries in the past, we must break up the giant media monopolies to protect the freedom of the press. This is just as true in the internet age as at any time in the past. The internet is the modern “press”. Though it was created by universities and public institutions, private monopolists are constantly encroaching on it, trying to capture its infrastructure and resources and turn it into a digital version of medieval feudalism. Modern monopolists talk “freedom” and “private property” but they want all the freedom and private property for themselves, not for us.

Public media, public access, public interest

Diversity and regulation are not going to fully satisfy the needs of the public interest.  We need a public media system that has parity with private media.

Perhaps the best example of public media thus far is the British Broadcasting Corporation (BBC), the largest broadcaster in the world, with about 23,000 staff. In the US we have the smaller, weaker Corporation for Public Broadcasting (CPB),  NPR, PBS, and their affiliated local stations. In the US, the public broadcasting system is dwarfed by private players and is under constant attack by conservatives and their corporate masters. The attacks are usually framed in ideological or fiscal terms, but their fundamental motives are political and commercial (anti-competitive). Often, public media are accused of being propaganda organs of the state. For Fox supporters to call PBS a propaganda organ is the height of hypocrisy and irony.

A  fair, open, transparent, and accurate media is a prerequisite for a fair, open, and transparent society. Democracy cannot just leave all of its media needs to private, independent (undemocratic) operators and “hope for the best”. We can’t let the Foxes run the hen house if we want to keep getting any eggs.

For the fiscal year 2010, the budget of the US Department of Defense, including spending on “overseas contingency operations” was $663.8 billion.

CPB’s annual budget for fiscal year 2010 was $422 million. Of course that doesn’t count all those funds donated “by members like you” who must listen to sickening corporate promos, tag lines, and seemingly endless on-air fund-raising marathons.

I propose that a new US Public Media Corporation be funded at parity either with the military budget or with the largest private media conglomerate, whichever is greater. I am convinced that our public access to self-education resources, reliable information, and social networking and collaboration infrastructure is as important to the maintenance and security of our democracy as the military.

The funding for such a corporation should come entirely from the public treasury (no more commercials, corporate promos, or fund-raising marathons) and should be totally isolated from private, commercial, or political special interests.

I suspect that those organizing this corporation could learn a lot from the US Postal Service.

One of the first orders of business would be the provision of broadband and 4G mobile network service to every location and person in the nation. If necessary, some exiting infrastructure should be nationalized by eminent domain. The rates charged for these services would be computed on a break-even basis the way that the Postal Service computes it postage prices.

Wherever technically feasible, the organization and infrastructure built by this public media corporation should be decentralized, local, democratic and peer-to-peer. The network should be modular/cellular, massively redundant, and self-healing. There should be few if any central points of failure. This is not about command and control but about serving the public interest in all the ways the marketplace has failed to do so.

The public media corporation should address all media modalities: broadcast, satellite, mobile, and fiber; networks, platforms, applications, and tools; and last but not least, content.

The “trunk” of the public media system would be a National Public Internet (NPI). (See the related article at the end of this post)

I also think it is time for a National Public Wikipedia that would aggregate many wiki domains including the legacy Wikipedia and forks like Citizendium. This public metawiki would not intervene in legacy wiki editorial and political issues but would establish a universal presentation, user interface, and meta-data standard so it could serve as a two-way portal (editing and presentation) and a single point of access to all participating wikis. This National Public Wikipedia could also have a layer that aggregates and standardizes all the reputation/quality/confidence metrics. In conjunction with this, the same organization could also host a National Public Search Engine and a National Public Social Networking platform based on transparent open source software. Further, the same organization could maintain a distribution of Linux that would include a p2p cloud server node on which all these National Public Internet services could run in distributed fashion.

The private marketplace has had long enough to get its act together and deliver the networks, platforms, and content we want and need. It has failed miserably in comparison with what has been wanted and what has been technically feasible.  The free market is great for some stuff, but it is no panacea, and if we don’t ALL see that by now its probably because we have been dumbed down  by the private mass media–or because we are corrupt, self-serving liars with massive conflicts of interest between our personal greed and the public good.

Of course, in a national public media corporation, there is no constitutional protection for Lies and the Lying Liars Who Tell Them. A lying liar (such as a Rush Limbaugh) could be fired at the drop of a hat. Its a  so-called “morals clause”. The same is also true for any private media corporation (such as a FOX*), and it has been all along.

That is the public truth.

Poor Richard

* FOX = Fraud, Oligarchy, Xenophobia

PS While we’re at it lets start a US Department of Market Failures. It can receive online petitions for goods and services that are not available (for no good reason) in the “free market”, such as a notebook PC with pre-installed Linux, a lawn sweeper with metal (not plastic) gears and wheels, a pull-behind friction-powered sickle mower, a rammed-earth brick machine, photovoltaic window film and roof tiles, and so on. Then it can contract for these goods and services from small and minority-owned businesses and operate an online store for their sale and distribution.

Related Articles

Bill St. Arnaud: Marriage of Facebook & Telcos – and why we need a National Public Internet (NPI)

big, fat, lying liars like Limpbaugh and FOX*
Posted in Codependence (Politics), Corporate Crime, Progressive Economics. Tags: , , , , , , , , , , , , , , , , , , , , , , , , , . 6 Comments »

The Economical Bestiary

September 10, 2010 — Poor Richard

Mythical Beasties of Economyland

The world of economics and economists is a world populated with many mythical and fantastic beasties. This Bestiary or Bestiarum vocabulum is a catalog of some of the most familiar as well as some of the most exotic and bizarre!

“Bestiaries were made popular in the Middle Ages in illustrated volumes that described various animals, birds and even rocks. The natural history and illustration of each beast was usually accompanied by a moral lesson. This reflected the belief that the world itself was the Word of God, and that every living thing had its own special meaning.” (Wikipedia)

Click to enlarge

Detail from the 12th century Aberdeen Bestiary (Wikipedia)

Click for article

Ψ

“If all the economists in the world were laid end to end, they wouldn’t reach any conclusion.” —George Bernard Shaw

*

“For every economist, there is an equal and opposite economist”. –Source?

*

“The first refuge of a scoundrel is economics” — Poor Richard

_________________Φ __________________

Economyland Safari Contributors:

Poor Richard: Safari Guide

Lori : Mythical Exo-taxonomist

“Natural Lefty” : Super-Natural Historian

This is an open-source peer-2-peer project owned by its contributors
Please see details here.

You are invited to leave content suggestions in a comment.

Creative Commons License

___________________________________________________________________________________

Preface

Both liberal and conservative economists and economic partisans seem to have difficulty separating reality from fantasy.  “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” (Upton Sinclair)

In the culture war each side relies heavily on propaganda or spin (a mixture of valid and false reasoning with a mixture of fact and made-up bullshit); both sides tend to reason backwards from conclusions to any facts that might confirm them while studiously ignoring inconvenient truths. That’s generally known as confirmation bias.

I hope that the reality-based community may find something in the Economical Bestiary that they can use, or at least something that will amuse.

Introduction to Economyland: Reductio Ad Absurdum

(Alternate title: Escape from the Planet of the Economists)

Economyland is a place on the flat world of Reductio Ad Absurdum where the Economical Bestiary’s mythical beasts run wild in a free state of nature. Economyland is the true center of the universe around which the sun, planets, stars, and all the rest of the universe revolves. Economyland was created by God and placed under the dominion of man, a sort of Disney-esque theme park for economists of all species. In ancient times Economyland was known as Economia:

In the Eastern Orthodox, Greek-Catholic Churches, Latin Catholic Church,and in the teaching of the Church Fathers which undergirds the theology of those Churches, economy or oeconomy (Greek: οἰκονομία, oikonomia) has several meanings. The basic meaning of the word is “handling” or “disposition” or “management” or more literally “housekeeping” of a thing, usually assuming or implying good or prudent handling (as opposed to poor handling) of the matter at hand. (Wikipedia)

War of the World-views

Pius conservatives are fond of accusing science of being reductionist, of reducing the divinely-wrought human being and the world of nature to an oversimplified, materialistic machine. This is, as always, the conservative pot calling the kettle black.

Liberal economists don’t do much better. Most economists share a model of the economic world that is simplistic, reductionist, and naively anthropocentric.

<– click on the image for a closer view of Economia

Capitalism defines the economic system in terms of the dynamics of capital and labor; production, distribution, and consumption; or as it is often framed, the supply and demand of goods and services. The natural world is seen only as a supply depot for raw materials. The production and consumption of goods and services of and by the biosphere , is treated as a giant externality. And that view is a giant existential blunder.

Of course, it is a conveniently self-serving (if short-sighted) blunder in some quarters; and we need not wonder too hard about how and why this oversight has persisted for so long.

In contrast, “economics as if people mattered” (see below) has to begin with economics as if the biosphere mattered. The biosphere can not be treated as a free supply depot and waste dump. The ecosystem cannot simply be seen as a magical black box that God put here to provide for all human wants and dispose of all human garbage. You’d have to be either a moron or a person with serious conflicts of interest skewing your judgment (or both) to hold such a view. Yet that is just the view of most economists, for whom nature is simply a part of the human economy rather than vice versa.

One of the first widely respected economists to correct this misapprehension was E. F. Schumacher who published Small is Beautiful in 1973, which placed the study of economics where it belongs, inside the study of the ecology of the biosphere. His ideas were of course treated with contempt by most conservative economists and they are generally still ignored by or unknown to most liberal economists.

Small Is Beautiful: Economics As If People Mattered by E. F. Schumacher.

Schumacher was a respected economist who worked with John Maynard Keynes and John Kenneth Galbraith. For twenty years he was the Chief Economic Advisor to the National Coal Board in the United Kingdom, opposed the neo-classical economics by declaring that single-minded concentration on output and technology was dehumanizing. He held that one’s workplace should be dignified and meaningful first, efficient second, and that nature (and the world’s natural resources) is priceless.

Schumacher proposed the idea of “smallness within bigness”: a specific form of decentralization. For a large organization to work, according to Schumacher, it must behave like a related group of small organizations. Schumacher’s work coincided with the growth of ecological concerns and with the birth of environmentalism and he became a hero to many in the environmental movement. (Wikipedia)

The Happiness Index (E.F. Schumacher Society/New Economics Institute)

The E.F. Schumacher YouTube Channel

Another writer, Richard Heinberg, a Senior Fellow of the Post Carbon Institute, is making an effort to put the study of economics into a modern scientific perspective. Following are a few excerpts from a pre-publication version of his book “The End of Growth:”

The classical [economic] theorists gradually adopted the math and some of the terminology of science. Unfortunately, however, they were unable to incorporate into economics the basic self-correcting methodology that is science’s defining characteristic. Economic theory required no falsifiable hypotheses and demanded no repeatable controlled experiments. Economists began to think of themselves as scientists, while in fact their discipline remained a branch of moral philosophy—as it largely does to this day.

…For help, we can look to the ecological and biophysical economists, whose ideas have been thoroughly marginalized by the high priests and gatekeepers of mainstream economics…

The ideological clash between Keynesians and neoliberals (represented to a certain degree in the escalating all-out warfare between the U.S. Democratic and Republican political parties) will no doubt continue and even intensify. But the ensuing heat of battle will yield little light if both philosophies conceal the same fundamental errors. One such error is of course the belief that economies can and should perpetually grow.

But that error rests on another that is deeper and subtler. The subsuming of land within the category of capital by nearly all post-classical economists had amounted to a declaration that Nature is merely a subset of the human economy—an endless pile of resources to be transformed into wealth. It also meant that natural resources could always be substituted with some other form of capital—money or technology. The reality, of course, is that the human economy exists within, and entirely depends upon Nature, and many natural resources have no realistic substitutes. This fundamental logical and philosophical mistake, embedded at the very heart of modern mainstream economic philosophies, set society directly upon a course toward the current era of climate change and resource depletion, and its persistence makes conventional economic theories—of both Keynesian and neoliberal varieties—utterly incapable of dealing with the economic and environmental survival threats to civilization in the 21st century.

Another giant of economic empiricism and innovation, though not an economist per se, was W. E. Deming.

William Edwards Deming (October 14, 1900 – December 20, 1993) was an American statistician, professor, author, lecturer, and consultant. He is perhaps best known for his work in Japan. There, from 1950 onward he taught top management how to improve design (and thus service), product quality, testing and sales (the last through global markets, through various methods, including the application of statistical methods.

Deming made a significant contribution to Japan’s later reputation for innovative high-quality products and its economic power. He is regarded as having had more impact upon Japanese manufacturing and business than any other individual not of Japanese heritage. Despite being considered something of a hero in Japan, he was only just beginning to win widespread recognition in the U.S. at the time of his death. (Wikipedia)

Though still virtually unknown and unappreciated in the US, Deming was almost solely responsible for the transformation of Japanese industry from having, in my childhood, a reputation for manufacturing cheap junk goods to, by the mid-70′s, a reputation as the maker of the world’s highest quality and highest value automobiles, electronics , and many other consumer goods. Though his ideas of continuous improvement were originally widely rejected in the US until recently because they did not fit with autocratic US corporate culture, in the 80′s and 90′s US industry imported many Japanese manufacturing consultants due to the reputation for quality and efficiency that Japan had gained, ironically, as a direct result of adopting Deming’s ideas.

Demings methods, rejected by US captains of industry for decades, swept through the entire Asian world and are largely responsible for the fact that Asian manufacturers are still kicking US industry’s ass today in markets as diverse as cars, cell phones, personal computers, and solar cells.

Where would American workers be without such enlightened and visionary corporate management? Perhaps still in the middle class instead of in unemployment lines or among the the ranks of the working poor. The story of W. E. Deming proves yet again that a profit is without honor in his own land.

The US Is Becoming an “Underdeveloping Nation”

Maxneef

While President Obama tapped former corporate executives to become his top economic team, many economists question the path the United States is on. Amy Goodman of Democracy Now speaks to the acclaimed Chilean economist Manfred Max-Neef. He won the Right Livelihood Award in 1983, two years after the publication of his book Outside Looking In: Experiences in Barefoot Economics.

“We are simply, dramatically stupid. We act systematically against the evidences we have. We know everything that should not be done. There’s nobody that doesn’t know that. Particularly the big politicians know exactly what should not be done. Yet they do it. After what happened since October 2008, I mean, elementally, you would think what? That now they’re going to change. I mean, they see that the model is not working. The model is even poisonous, you know? Dramatically poisonous. And what is the result, and what happened in the last meeting of the European Union? They are more fundamentalist now than before. So, the only thing you know that you can be sure of, that the next crisis is coming, and it will be twice as much as this one. And for that one, there won’t be enough money anymore. So that will be it. And that is the consequence of systematical human stupidity.”

“First of all, we need cultured economists again, who know the history, where they come from, how the ideas originated, who did what, and so on and so on; second, an economics now that understands itself very clearly as a subsystem of a larger system that is finite, the biosphere, hence economic growth as an impossibility; and third, a system that understands that it cannot function without the seriousness of ecosystems. And economists know nothing about ecosystems. They know nothing about thermodynamics, you know, nothing about biodiversity or anything. I mean, they are totally ignorant in that respect. And I don’t see what harm it would do, you know, to an economist to know that if the beasts would disappear, he would disappear as well, because there wouldn’t be food anymore. But he doesn’t know that, you know, that we depend absolutely from nature. But for these economists we have, nature is a subsystem of the economy. I mean, it’s absolutely crazy.”

“The principles of economics should be based in five postulates and one fundamental value principle.

  • One, the economy is to serve the people and not the people to serve the economy.
  • Two, development is about people and not about objects.
  • Three, growth is not the same as development, and development does not necessarily require growth.
  • Four, no economy is possible in the absence of ecosystem services.
  • Five, the economy is a subsystem of a larger finite system, the biosphere, hence permanent growth is impossible.
  • And the fundamental value to sustain a new economy should be that no economic interest, under any circumstance, can be above the reverence of life.”

View the entire interview with Amy Goodman and Manfred Max-Neef.

Max-Neef’s Keynote at Zermatt Summit 2012

Keeping It Real

Modern economists need to get over their hair-splitting theories, self-serving technical jargon, and their detached, ivory-tower naïveté, and get real.

As E. B. White once aptly advised, “Bend down, Librarians, and taste the page.” I think it was also he who said “All their biology is Latin names.”

That is the message of the Economical Bestiary, which ridicules the brand of economics which persists to this day as little more than, as Richard Heiberg calls it, moral philosophy. The moral hazard for economists is succumbing to the personal, financial, and academic conflicts of interest between the cognitive corruption of their profession and the objective imperatives of reality.

Poor Richard

Ecological economics (Wikipedia)

Environment Equitable Sustainable Bearable (Social ecology) Viable (Environmental economics) Economic Social

Ecological economics is a transdisciplinary field of academic research that aims to address the interdependence and coevolution of human economies and natural ecosystems over time and space. It is distinguished from environmental economics, which is the mainstream economic analysis of the environment, by its treatment of the economy as a subsystem of the ecosystem and its emphasis upon preserving natural capital. One survey of German economists found that ecological and environmental economics are different schools of economic thought, with ecological economists emphasizing “strong” sustainability and rejecting the proposition that natural capital can be substituted by human-made capital.

(Wikipedia)

Natural Capitalism: Creating the Next Industrial Revolution is a 1999 book co-authored by Paul Hawken, Amory Lovins and Hunter Lovins. It has been translated into a dozen languages and was the subject of a Harvard Business Review summary.

Their fundamental questions are: What would an economy look like if it fully valued all forms of capital? What if an economy were organized not around the abstractions of neoclassical economics and accountancy but around the biological realities of nature? What if Generally Accepted Accounting Principles recognized natural and human capital not as a free amenity in inexhaustible supply but as a finite and integrally valuable factor of production? What if in the absence of a rigorous way to practice such accounting, companies started to act as if such principles were in force. (Wikipedia)

The principles used by Natural Capitalism Solutions are:

1. Buy time by using resources dramatically more productively.

This slows resource depletion, lessens pollution, and increases employment in meaningful jobs. It lowers costs for business and society, halts the degradation of the biosphere, makes it more profitable to employ people, and preserves vital living systems and social cohesion.

2. Redesign industrial processes and the delivery of products and services to do business as nature does, using such approaches as biomimicry and cradle to cradle.

This approach enables a wide array of materials to be produced with low energy flows, in processes that run on sunlight, emulating nature’s genius. It shifts to circular economies in which materials are reused, remanufactured and waste is eliminated.

3. Manage all institutions to be restorative of natural and human capital.

Such approaches enhance human well-being and enable the biosphere to produce more wealth from its intact communities and abundant ecosystem services and natural resources.(Natural Capitalism Solutions)

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