Politics and Markets: The World’s Political-Economic Systems by Charles E. Lindblom

I began reading this book sometime around 1978. I finished it today. I don’t remember why I stopped reading it the first time. Through the years, I thought about picking it up again but never did. Until a few weeks ago.

Charles Lindblom (1917-2018) was a Yale professor of politics and economics. In Politics and Markets, he categorizes and analyzes the different ways nations are organized, concentrating on the relative roles played by governments and markets in countries ranging from the United States and United Kingdom on one end of the continuum to China, the Soviet Union and Cuba on the other. Since the book was published in 1977, he pays a lot more attention to communism than he would do today.

Reading this book is strange at times. Lindblom is describing something in great detail that you might feel you already know. Don’t we all understand how governments and markets work? Well, not as well as Prof. Lindblom did. (Still, if you had to teach relatively advanced students from another planet about the way governments and businesses operate on Earth, starting from scratch, Politics and Markets would make a very good text.)

The book left me with two main thoughts. The first is hardly a revelation: all countries, even Cuba circa 1976, are hybrids. All countries have governments, of course. But all of them also employ so-called “free markets” as well. No society is totally planned by the government, for good reasons. Even the most pervasive governments use markets for various purposes, as when money is paid to acquire consumer goods or to attract employees to better-paying jobs.

This makes China’s transition from a communist country to a leading participant in world markets easier to understand. The Chinese have retained the one-party control of communism while doing a better job at capitalism than many of their capitalist competitors. The issue is always what mechanisms (laws, regulations, civic education) should be used to insure that businesses are successful while serving the health and welfare of society. Neither total government control of the economy nor total freedom for business would make sense. 

The other thought is more surprising. We often hear that democracy and capitalism work well together. They say it’s something to do with freedom. Yet there is a serious conflict between democracy and big business. Lindblom explains how the people who run businesses must be encouraged or induced to keep the economy functioning. If government officials interfere too much (from the business perspective), companies can stop producing sufficient amounts of the goods and services the rest of us need, at prices we can afford. They can also decide to pay us to little to live on or employ too few of us. If business people don’t produce enough or raise prices too much, there’s inflation; if they don’t pay us enough or hire enough of us, there’s deflation.. 

Because big corporations are so important to the economic life of a nation, the unelected owners and managers of these firms wield great power. From the book’s final paragraphs:

. . . It is possible that the rise of the corporation has offset or more than offset the decline of class as an instrument of indoctrination. That the corporation is a powerful instrument for indoctrination we have documented earlier. That it has risen to prominence in society as class lines have muted is clear enough. That it creates a new core of wealth and power for a newly constructed upper class, as well an an overpowering loud voice, is also reasonably clear. 

The executive of the large corporation, is on, on many counts, the contemporary counterpart to the landed gentry of an earlier era, his voice amplified by the technology of mass communication. A single corporate voice on television, it has been estimated, can reach more minds in one evening than were reached from all the platforms of all the world’s meetings in the course of several centuries preceding broadcasting. More than class, the major specific institutional barrier to fuller democracy may therefore be the autonomy of the private corporation.

It has been a curious feature of democratic thought that it has not faced up to the private corporation as a peculiar organization in an ostensible democracy. Enormously large, rich in resources, the big corporations, we have seen, command more resources than do most government units. They can also, over a broad range, insist that government meet their demands, even if these demands run counter to those of citizens expressed through their polyarchal [rule by the many] controls. Moreover, they do not disqualify themselves from playing the partisan role of a citizen — for the corporation is legally a person. And they exercise unusual veto powers. They are on all these counts disproportionately powerful, we have seen. The large private corporation fits oddly into democratic theory and vision. Indeed, it does not fit.

Lindblom doesn’t offer a solution, although he thinks more corporations might be treated like defense contractors or public utilities. The government would guarantee their profits while exerting significant control over their operations.

And with that, Charles Lindblom’s Politics and Markets can safely return to a bookcase to sit quietly for another 40 years. That’s if it escapes the recycling bin, or a natural disaster, since even excellent books don’t live forever.

Empire of Illusion: The End of Literacy and the Triumph of Spectacle by Chris Hedges

The title pretty much sums up the book. In five chapters, the author discusses five dangerous illusions that beset the United States. They’re the illusions of:

  • Literacy — crap like professional wrestling and reality TV and the distractions of celebrity culture in general)
  • Love — the popularity of pornography, especially the kind that demeans women
  • Wisdom — how colleges have been turned into glorified vocational schools
  • Happiness — the “positive psychology” movement that offers false promises and promotes conformity
  • America — how the “greatest democracy” on Earth is actually a militaristic empire in the service of corporate capitalism.

He often exaggerates how bad things are, but the book serves as a good corrective to the idea that this is a healthy nation. Some of the negativity derives from the fact that Empire of Illusion was published in 2009 during the financial turmoil of the Great Recession. For example, Hedges casts doubt on the idea that the Obama administration would make any improvement to our health care system, such as making sure that more of us have adequate health insurance.

Even if he overstates some of the problems, he criticisms all have a basis in reality. A brief sample:

 

Individualism is touted as the core value of American culture, and yet most of us meekly submit, as we are supposed to, to the tyranny of the corporate state…. There is a vast and growing disconnect between what we say we believe and what  we do. We are blinded, enchanted and finally enslaved by illusion…..[p. 182].

 

 

The more we sever ourselves from a literate, print-based world, a world of complexity and nuance, a world of ideas, for one informed by comforting, reassuring images, fantasies, slogans, celebrities, and a lust for violence, the more we are destined to implode. As the collapse continues and our suffering mounts, we yearn, like World Wrestling Entertainment fans, or those who confuse pornography with love, for the comfort, beauty and reassurance of illusion….And the lonely Cassandras who speak the truth about our misguided imperial wars, the economic meltdown, or the immindent danger of multiple pollution and soaring overpopulation, are drowned out by arenas of excited fans….[pp. 189-190].

 

I expect Mr. Hedges would offer our demagogic president’s scary political rallies as further confirmation of his thesis.

Five Bad Men Screw Us Again, Part 2

(1) As further evidence that the all-male, all-Roman Catholic, all-Republican majority on the Supreme Court is willing to sacrifice legal principles to ideology, consider this statement from Justice Alito’s opinion: “A corporation is simply a form of organization used by human beings to achieve desired ends”.

Among those ends, however, is limiting the liability of the corporation’s owners, as discussed in this article from Mother Jones. The author explains how ascribing the owners’ religious beliefs to a corporation undermines the idea of a corporation:

[Quoting from an earlier Supreme Court decision:] “Linguistically speaking, the employee and the corporation are different ‘persons’, even where the employee is the corporation’s sole owner. After all, incorporation’s basic purpose is to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs.” 

That separation is what legal and business scholars call the “corporate veil,” and it’s fundamental to the entire operation. Now, thanks to the Hobby Lobby case, it’s in question. By letting Hobby Lobby’s owners assert their personal religious rights over an entire corporation, the Supreme Court has poked a major hole in the veil. In other words, if a company is not truly separate from its owners, the owners could be made responsible for its debts and other burdens.

(2) The Hobby Lobby ruling was supposedly a limited one. But anytime the Supreme Court rules, lower courts invariably extend the Supreme Court’s “logic” to other cases. Believe it or not, the Supreme Court itself has already ordered lower courts to do just that, as Mother Jones reports:

Less than a day after the United States Supreme Court issued its divisive ruling on Burwell v. Hobby Lobby, it has already begun to toss aside the supposedly narrow interpretation of the decision. On Tuesday, the [Court] ordered lower courts to rehear any cases where companies had sought to deny coverage for any type of contraception, not just the specific types Hobby Lobby was opposed to.

In related news, religious leaders have written to the White House asking that proposed regulations regarding the hiring of lesbian, gay, bisexual and transgender people by federal contractors include a religious exemption.When this issue comes to the Supreme Court, we can expect the Republican majority to agree that discriminating against people based on their sexual orientation and even their gender is one more religious belief the government should not burden.

(3) In maybe he most bizarre development of all, the Court yesterday granted a request from Wheaton College to be temporarily exempted from filling out and distributing copies of a particular government form. The form in question allows a non-profit religious organization to declare its opposition to insurance coverage for contraceptives. From the Supreme Court’s ruling:

The applicant need not use the form prescribed by the Government, EBSA Form 700, and need not send copies to health insurance issuers or third-party administrators.

Instead, the Court said it would be sufficient to send a letter to the Department of Health and Human Services stating the organization’s opposition to contraception without identifying its health insurance issuer or third-party administrator. Apparently, the majority agreed that the prescribed use of Form 700 would constitute a serious burden on Wheaton College’s religious beliefs, while sending a letter to the government wouldn’t or didn’t.

The three women on the Supreme Court pointed out the absurdity of this latest ruling in a dissent called “unusually fierce” by the New York Times. Justice Sotomayor stated that this latest ruling “undermines confidence” in the Court. She also pointed out what should be obvious to everybody:

Thinking one’s religious beliefs are substantially burdened — no matter how sincere or genuine that belief may be — does not make it so.

(5) Remember to vote, even in mid-term elections like the one four months from now, and, most importantly, never vote for a Republican.

Five Bad Men Screw Us Again

I didn’t want to write about the Supreme Court decision in Burwell vs. Hobby Lobby Stores. That’s the recent case in which the Republican majority ruled that a corporation can refuse to provide health insurance for certain kinds of contraception on religious grounds. However, one way to stop thinking about something is to write about it, and this is not a subject that’s fun to think about:

1) It’s no coincidence that the five Republicans on the Supreme Court are prone to rule against and ignore the rights of women to end or prevent pregnancies. Those five Republicans are all Roman Catholics.

2) Having previously declared that corporations should be allowed to spend on political campaigns because they have the same right to free speech that people do, the Republican majority has ruled again that corporations are no different from people. The law at issue in Burwell vs. Hobby states that the government should not “substantially burden a person’s religious beliefs”. Although corporations are treated as persons in some legal contexts, and it’s proper for the government to respect people’s religion up to a point, it makes no sense to ascribe religious beliefs to a corporation.

In addition, people’s right to practice their religion as they wish does not give them the right to harm other people. According to the majority opinion, however, a corporation can not only have religious beliefs, those beliefs should be honored even though acting on those beliefs negatively affects the corporation’s employees, their families and the rest of society (one of the majority’s suggestions is that taxpayers pay for contraception if corporations won’t – as if the Republicans in Congress would agree to that). 

3) Religion can be a wonderfully flexible way to justify all kinds of behavior. In this case, the corporations claimed that dropping all health insurance coverage for their employees, so that their employees could instead get insurance through the government-run exchanges, would also infringe on their (the corporations’) religious beliefs, even though allowing their employees to use the government exchanges would save the corporations money and benefit their employees. “It is our firmly-held, specific religious belief that you should get your health insurance through our company instead of a government website, but it shouldn’t cover certain kinds of care.” Right.

4) Allowing employers to dictate which health insurance their employees have, on religious or any other grounds, is yet another reason the United States should join the rest of the industrialized world and adopt taxpayer-supported, government-regulated, single-payer health insurance.

5) The idea that the owners of a business shouldn’t be forced to spend money for something they don’t like assumes that the money in question is theirs, just like the money in your checking account is yours. However, economists have found that the money a company spends on health insurance would otherwise generally be paid to employees as wages. After all, health insurance is a form of compensation and businesses tend to offer as little compensation as possible (except for senior management, of course). As Uwe Reinhardt writes:

Evidently the majority of Supreme Court justices … believe that the owners of “closely held” business firms buy health insurance for their employees out of the kindness of their hearts and with the owners’ money. On that belief, they accord these owners the right to impose some of their personal preferences – in this case their religious beliefs — on their employee’s health insurance…. [But research shows that] the premiums ostensibly paid by employers to buy health insurance coverage for their employees are actually part of the employee’s total pay package — the price of labor, in economic parlance – and that the cost of that fringe benefit is recovered from employees through commensurate reductions in take-home pay.

6) This is a case in which religion is being allowed to trump science. These corporations object to particular kinds of contraception on the grounds that they are equivalent to having an abortion. But medical researchers have shown that the methods in question (certain intrauterine devices and the “morning after” pill) don’t actually work that way, as discussed here:

The owners of Hobby Lobby told the Court that they were willing to cover some forms of contraception but believed that the so-called morning-after pills and two kinds of IUDs can cause what they believe to be a type of abortion, by preventing a fertilized egg from implanting in the uterine wall or causing an already implanted egg to fail to thrive… The scientific consensus is against this idea…Most scientists believe that [these methods] interfere with the ability of sperm to get to an egg in time to fertilize it before they die….Research does not support the idea that they prevent fertilized eggs to implant.

If a religious belief is based on faulty science, that belief should be given less respect by the rest of us. It’s safe to assume, for example, that even this Supreme Court would have ruled differently if the religious belief in question had been that certain kinds of contraception cause droughts.

7) There have been a lot of dumb arguments in favor of this decision or suggesting that it’s not a big deal. The truth is that this decision could set a very bad precedent, opening the door to other claims for special treatment, especially given the Republican majority on the Court. In addition, trying to find a job with another company isn’t a great option for many people; getting pregnant is a very big deal; IUD’s are among the most effective form of birth control; it can cost some women a month’s pay to get one; the morning after pill is an important option for women; and choosing to have sex shouldn’t disqualify people from getting appropriate medical care (people also choose to smoke, spend a lot of time on their couches and eat at McDonald’s). As the saying goes, if men could get pregnant, abortion would be a sacrament.

8) It’s been clear since their decision in Bush vs. Gore, when the Republican justices decided that we didn’t need an accurate vote count in a Presidential election, that lacking proper legal justification for their decisions won’t stop them from advancing their political agenda. All Supreme Court justices issue rulings consistent with their political perspectives, but these particular justices are extremists. They may have some shame, but it’s hardly worth mentioning.

After a Major Event, Life Goes On, But Surreptitiously

gnote1A major event? Yes, finally replacing my aging but handy Blackberry with a new Android smartphone (good-bye, Verizon, you bloodsuckers!).

Some might say it’s only a phone. It feels more like a lifestyle. You can’t do that anymore. Do this now. How do I do that? Guess! Or download an app. Which app? That app! Wait, what did I just do? I must have touched something. Oh, no!

Come on, why do you zoom in on Google Maps by pinching your fingers together instead of spreading them apart? Isn’t spreading them apart a more expansive gesture? And why can’t I spread my fingers apart in the prescribed way? It’s probably a genetic defect. Those of us who can easily carry out the correct two-finger spreading motion are now better-suited to getting around and finding mates. The rest of us will tend to stay put and die alone. If only I could remember the Alternate Zoom Technique:

In addition to pinching the screen to zoom, you can also double-tap on your map, hold, and then scroll down to zoom in, or scroll up to zoom out.

Coincidentally, the New York Times reported more from the Snowden Files today:

When a smartphone user opens Angry Birds, the popular game application, and starts slinging birds at chortling green pigs, spy agencies have plotted how to lurk in the background to snatch data revealing the player’s location, age, sex and other personal information, according to secret British intelligence documents.

In their globe-spanning surveillance for terrorism suspects and other targets, the National Security Agency and its British counterpart have been trying to exploit a basic byproduct of modern telecommunications: With each new generation of mobile phone technology, ever greater amounts of personal data pour onto networks where spies can pick it up….

[Among] the most valuable of those unintended intelligence tools are so-called leaky apps that spew everything from users’ smartphone identification codes to where they have been that day.

Fortunately, I don’t play with angry birds. But Google Maps is said to be one of the best sources of information for the intelligence agencies. The Times quotes a secret report from Britain’s G.C.H.Q. suggesting that “anyone using Google Maps on a smartphone is working in support of a G.C.H.Q. system”. Thank you. No problem.

We know that corporations collect whatever information they can about us. Now we know that the NSA and GCHQ are doing the same.

But assuming that we don’t want to stop using our phones or the internet and we can’t get our governments to stop this spying, we can take some solace in the fact that these people are collecting so much data, they don’t know what to do with it. Most of us will never stand out in the crowd.

However, if you happen to be planning a terrorist attack, or want to tell the President he or she is a jerk, you should definitely avoid Angry Birds. Or communicate the old-fashioned way:

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